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Local Option

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The local option credit and local option abatement have the same damage and application requirements, but differ in what year they are applied. The abatement is applied in the year of the disaster, while the credit is applied in the year following the disaster.

If the abatement is granted after the property owner has paid their taxes for the year, the county must directly refund them the amount of the abatement.

Available for All Types of Disasters

The local option abatement and credit are available both inside and outside a declared disaster area.

However, if the property is located within a declared disaster area, any credits or abatements granted are reimbursed by the state and are larger in calculation. See the Calculation section for additional details on the difference in calculation.

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Basic Requirements

A qualifying building must be at least 50% damaged or destroyed, meaning the reassessed value post-disaster is 50% or less of the assessed value.
The property owner must apply, subject to approval by the county board.
The classification of the building does not affect eligibility for local option relief.

Application

The application is for both the credit and the abatement because they have the same requirements. The application is located in our resources section. The property owner only needs to fill out one application per parcel, even if multiple buildings on a parcel qualify.

Due Dates

Local option credit is due at the end of the year in which the disaster occurs.
Local option abatement is due “as soon as practical” after the damage occurs.

The county board may approve or deny the application for the credit, abatement, or both. While some counties may have a policy of not granting abatements, they may choose to ignore this policy for disaster credits, because they are a separate abatement with separate requirements. Regardless of the approach for abatements, we encourage counties to approve applications for credits. The underlying assumption of the disaster credit is that a property tax bill is normally based on a building having the same market value for an entire year, as established as of January 2 of the previous year. However, if the structure loses a portion of its value due to damage by a disaster at some point during the assessment year, the Local Option Credit allows counties to recognize the property’s loss in market value due to the damage.

We encourage assessors to be lenient with the due date for the abatement. If the assessor does set a firm due date, they should ensure that property owners who qualify are informed. If the county wishes to apply to the Executive Council to be a declared disaster area, any abatements must be approved by the county board before the application is submitted to the state on November 1. More information on applying to be a declared disaster area is in the Applying to be a Declared Disaster Area section.

For disasters that occur very late in the year, it is possible that the deadline for the credit (the end of the year) will pass before property owners can apply. The assessor may determine if they will accept abatement applications into the new year, as they are allowed to do so by statute.

State Assessed Property

Utility property that is normally state assessed will be reassessed by the Commissioner of Revenue if the property owner makes application. These applications are granted by the Commissioner of Revenue, however the county board will be notified for the application.

Local Option Chart [+]

The chart below summarizes the similarities and differences between the local option abatement and local option credit.

Local Option
Building must be 50% damaged/destroyed
Property owner must apply
Available for both widespread disasters and isolated incidents
Calculation changes dependent on if the property is inside a declared disaster area
Reimbursed by the state if in a declared disaster area

Abatement Only	Credit Only
Issued in the year of the disaster	Issued in the year following the disaster
Application is due “as soon as practical”	Application is due by the end of the year
Can be approved or denied by the county board	Can be approved or denied by the county board
If property taxes have been paid, can be sent as a refund to the property owner

Examples [+]

Example 1: A parcel classified as 4c(12) Seasonal Residential Recreational has two buildings on the property:

Building A is a cabin valued at $200,000
Building B is a storage shed valued at $10,000

A severe storm blew a tree down on the cabin, while the storage shed suffered minimal damage. The assessor reassessed the property and determined the following reassessed values:

Building A’s reassessed value is $100,000
Building B’s reassessed value is $9,000

In this situation, the property owner could apply for a local option credit and abatement for building A (the cabin) because its reassessed value is 50% of the previously assessed value. Building B would not be eligible to receive any relief because it was only 10% damaged. Note that we determine eligibility based on the individual structure’s values, and not based on the total improvement value.

Example 2: A parcel classified as 3a commercial has three buildings on the parcel, valued at $500,000 each. After the reassessment, the reassessed values are:

Building A’s reassessed value is $0
Building B’s reassessed value is $100,000
Building C’s reassessed value is $300,000

In this situation, the property owner could apply for a local option credit and abatement for buildings A and B. Building C is not eligible for the local option credit or abatement because building C did not suffer 50% damage. Even though the total value of all improvements on the property decreased by more than 50%, because buildings must qualify on their own, only buildings A and B are eligible for relief.