Justices: Apartments should be taxed more than condominiums

Chris Rizo Oct. 25, 2008, 5:42pm

David Baker

DES MOINES, Iowa (Legal Newsline)- Apartments should be taxed at a higher rate than condominiums, the Iowa Supreme Court ruled Friday.

The ruling resolved a 2005 lawsuit filed by three apartment developers. James Conlin and Ed Hendrickson, both of Iowa, and Timberland Partners XXI LLP, a Minneapolis company, said the state tax code was unfairly targeting apartment owners.

Last year, Iowa's tax laws called for apartment owners to pay taxes on 99.7 percent of their assessed property value, while condominium owners paid taxes on just 44.1 percent of the assessed property value.

Iowa tax law classifies apartment buildings as commercial property, regardless of their use, but classifies condominiums as commercial if used for a commercial venture and residential if used for human habitation.

The high court ruled Friday that Polk County Judge Don Nickerson was correct to rule that the tax code is fair since condominiums are more like single-family dwellings than are apartments.

"Although condominiums may be marketed and leased like apartments and are similar in structural design and in the rules applied to residents, unlike apartments, each condominium unit is treated as a separate real estate parcel and could be marketed as a single-family unit," Justice David Baker wrote for the court.

Timberland Partners had filed a petition for declaratory order with the Iowa Department of Revenue requesting that the tax provision in question be declared unconstitutional because it violated equal protection clauses of the U.S. and Iowa constitutions.

From Legal Newsline: Reach reporter Chris Rizo at chrisrizo@legalnewsline.com.

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