Considered one of the country's most affordable markets, Missouri is an attractive option with huge popularity among homebuyers, real estate investors, and property managers.
Additionally, this state is home to lively cities, iconic landmarks, beautiful state parks, and a rich history.
If you buy a property there, you'll definitely have a plethora of opportunities. Also, there are many activities to bond with your family and friends.
However, as a landlord, property manager, or real estate investor, you should consider another important factor if you plan to live in Missouri: property taxes.
When do you have to pay personal property taxes if you're in the Show-Me State? Does Missouri offer exemptions or relief programs to help you lower these costs?
Read on to find the answers!
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Understanding Different Types of Property Tax Bills in Missouri
In Missouri, local governments obtain revenue from property taxes, using them to fund law enforcement, schools, city administration, and key local services.
Since they're "ad valorem," property taxes are based on the value of the property but vary due to other factors.
Properties are divided into three categories or classes for tax purposes. These are:
- Real property: Land, structures or buildings, growing crops, improvements, and fixtures, as well as related rights or privileges
- Tangible personal property: Things that aren't permanently attached to the land and are movable, such as farm implements, automobiles, and boats
- Intangible personal property: Intangible assets, such as patents, stocks, bonds, and notes
Additionally, real properties can fall into the following subcategories:
- Agriculture or horticulture
- Utility, commercial, industrial, railroad, and others
How Many Times Do You Pay Property Tax a Year in Missouri?
Although taxes on personal property are assessed on January 1, taxpayers often receive tax bills from the Collector's Office during November.
Property owners should pay the full amount of taxes before December 31. Actually, under state law, taxpayers should prioritize these bills. You cannot get or renew a license plate if you haven't paid your taxes, for example.
Taxpayers are also required to return the assessment lists detailing the taxable property they own to the assessor by March 1.
Consequences of Late Payments
In Missouri, property owners who fail to pay taxes or send the requested assessment list on time are subject to penalties, interest, and late fees.
If property taxes remain unpaid for a long time, the county collector is authorized to sell your home, portion of land, or building at a tax sale.
Residents and property owners must pay the full tax amount by the due date, even if they don't receive the tax bill. Even if there's an issue or the bill isn't mailed, that doesn't relieve the obligation to pay taxes.
If you don't receive the tax bill by December 1, contact the Collector's Office as soon as possible. Otherwise, you may be charged applicable late fees.
Although penalties vary from county to county, they're usually around 10% of the amount of tax due.
Missouri law allows the county collector to sell property with overdue taxes to recover the amount owed, interest, and other charges.
Tax sales or public auctions often occur within three years of the original due date. However, the county collector might consider an earlier sale if taxes are delinquent under certain circumstances.
However, the tax collector must publish a notice in a newspaper once a week for three consecutive weeks and send two notices to the owner before the sale if the property is worth more than $1,000.
Property owners can avoid these penalties by paying delinquent taxes and other charges. Also, there's a one-year redemption period after the auction.
How to Pay a Property Tax Bill in Missouri
Since property taxes are paid locally, taxpayers should contact their county collector for available payment options or to request receipts.
In most counties, residents can pay taxes online, in person, or by mail. However, others accept payments in the form of checks, money orders, cashier's checks, and more.
How Much Is Property Tax in Missouri?
The amount of tax Missouri residents owe is based on the following factors:
- The assessed value of the personal property owned on January 1 of that year
- The levy rates set by political subdivisions, such as city, fire, and school districts
However, taxes on real estate and other personal property aren't too high in Missouri. In this state, the average effective property tax rate is 0.88%. It's slightly lower than the national average (0.99%).
Depending on where you live, real estate taxes may be higher. St. Louis County has an average effective tax rate of 1.45%, while it's just 0.43% in Shannon County, for example.
How is Property Tax Calculated in Missouri?
The county assessor determines the value of the property using a standardized method. This data should reflect its market value or true value in money.
If you own other types of taxable personal property, such as vehicles, the assessed value is listed on your tax bills.
To calculate your personal property tax, consider the following steps:
- Divide the assessed value of your property by 100
- Multiply that value by the local levy rate
This is how the process should look:
Property Tax = (Assessed Value/100) x (Levy Rate)
How Can I Lower My Property Taxes in Missouri?
Although property tax rates are relatively low in Missouri, there are legal ways to reduce these costs and maximize your real estate investment.
We'll go over some of your options below.
Appeal the Assessment Value of Your Property
Do you think the assessment of your property isn't fair? You can start an appeal process according to the guidelines set by the Missouri State Tax Commission.
However, it's important to know that you may need evidence to prove why the assessment result is higher than the market value.
These are the three steps to the appeal process:
- Informal appeals: Contact the Assessor's Office for an informal meeting about the assessment of your property
- Board of Equalization: Contact the county clerk for a hearing if you aren't satisfied after the informal meeting
- Missouri State Tax Commission: Appeal to the State Tax Commission 20 days after the hearing or by September 30, whichever is later, if you still disagree with the assessment
In Missouri, certain properties are exempt from taxes, including the following:
- Property or land belonging to the state, city, county, or other political subdivision
- Real estate and tangible personal property used exclusively for agricultural or horticultural societies
- Nonprofit cemeteries
- Property that is regulated and used exclusively for religious worship, charitable purposes, schools, and colleges
- Household goods, personal use and adornment items, furniture, and apparel used by property owners in their dwellings
- Motor vehicles leased for at least one year from a state or political subdivision or to religious, educational, or charitable organizations that are exempt from federal income taxes if they're used for the same purposes
- Real or personal property leased or transferred by an interstate compact agency under specific circumstances and in accordance with sections 70.370 to 70.430 or sections 238.010 to 238.100
Credits and Other Relief Options
Missouri offers property tax credits to certain individuals, including senior citizens and 100% disabled people. Residents who pay rent or real estate tax on the home they own and occupy may be eligible to claim up to $750 or $1,100.
Also, there are military retired pay and property tax exemptions for service members, veterans, and their families.
Missouri is an excellent place to live. The real estate market is attractive, and property tax rates are affordable.
However, you should know how these taxes work, potential penalties or late fees, propositions, assistance programs, exemptions, and many other things to develop an efficient tax strategy.
Fortunately, we've included that information in this article! Also, you can contact a tax professional if you need further guidance.
If you're looking for more tips on property management accounting, check out our whitepaper on the best tips for simplifying this complex process.