The Iowa Court of Appeals recently struck down a district court decision on a Guthrie County-based nursing facility.

The court reversed a ruling that denied a property tax exemption for The New Homestead in Guthrie Center, owned by Capstone Group, Incorporated. The appeal opinion states that Capstone is a tax-exempt 501(c)(3) corporation. Capstone President and Treasurer Michael Michaud testified that the nursing facility has had a cumulative profit of 1.22% since Capstone’s purchase in 2013, with losses in 2016 and 2017. Capstone pays Healthcare of Iowa, Incorporated, a third-party for-profit company, a percentage of the facility’s revenues for its management services and an additional monthly fee for accounting.

The facility was exempt from property tax until May 23, 2017, when the Guthrie County Board of Review changed its classification to taxable multi-residential property, as recommended by the county assessor. After appealing the Board’s decision, the district court rejected Capstone’s exemption claim in November of 2018. The court of appeals ruled this month that Capstone is a charitable institution that operates the nursing facility solely for charitable purposes, and remanded for entry of an order exempting the property. The full opinion document can be found here.