Section 10 Residential Real Property

• Library: Tax Law 2009

Residential real property, as defined in §13.4 above, is assessed at 19% of true value in money. Section 137.115.5(1), RSMo Supp. 2007. Specifically excluded are facilities used primarily for transient housing for which the rent or lease receipts are subject to state sales tax. Section 137.016, now RSMo 2000, was amended in 1995 in an attempt to eliminate significant controversy that had arisen under prior law by extending residential subclassification to all apartment properties. Taxing districts are permitted to adjust their operating levy to recoup any revenue loss as a result of the classification change, provided that the adjustment does not exceed the highest tax rate in effect after the 1980 tax year.

The amendment to the definition of residential property
in § 137.016.1(2) was initiated by frequent disagreement on whether property should be assessed at the 19% residential rate or the 32% commercial rate. This was particularly
true with apartments that were eligible for residential subclassification under prior law if they were “improved by a structure . . . which contains not more than four dwelling units.” Former § 137.016.1(1), RSMo 1994.

In Associated Industries of Missouri v. State Tax Commission of Missouri, 722 S.W.2d 916 (Mo. banc 1987), appeal dismissed sub nom., Albertus v. State Tax Commission of Missouri, 483 U.S. 1014 (1987), the majority of a sharply divided United States Supreme Court upheld the constitutionality of this “rule of four” definition of residential real property in the predecessor version of § 137.016. The Supreme Court was unable to conclude that the legislature lacked any rational basis for enacting the statute. But it soon became apparent that...