Iowa lawmakers consider apartment tax rate cut as part of reform - KWWL - Eastern Iowa Breaking News, Weather, Closings

Iowa lawmakers considering apartment tax rate cut as part of reform

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IOWA CITY (KWWL) -

You'd be hard-pressed to find a tenant excited about paying more rent.

"It's terrible.  You know, we want to save as much money as we can," said Cody Slager, a University of Iowa student living off campus.

But many landlords say, given the current tax system in Iowa,  they have little choice.

"I don't think it's a question of landlords or land owners pocketing the extra money," said property manager and owner David Kacena.

Kacena says taxes on properties like his are excessive.

"I've got properties that are 29 to 30 percent of the revenues are paid out in taxes. That's 105 days just to pay the property taxes," Kacena said.

Under the current system, apartment owners pay taxes on their property's entire valuation, a cost that's often then passed on to the tenants.

But state lawmakers are considering rolling that tax rate back over the next five years to the residential rate, meaning apartment owners would pay taxes on only about half of the property's value just like homeowners.

In college towns like Cedar Falls, Dubuque or Iowa City, rolling back the rate on these properties would be a significant loss to the tax base.

"It hurts communities like Iowa City, Ames, the Des Moines area where multiple housing is more prevalent," said Iowa City manager Tom Markus.

If these changes were implemented, Iowa City would stand to lose $2.8 million a year, straining its ability to provide services like police, fire, and public works.

City leaders are asking lawmakers to look elsewhere in reforming the tax system.

"Landlords are in that for a commercial purpose which to me means that it should remain in the commercial tax category," Markus said.

A component of a massive effort for legislators in Des Moines to reform the current property tax system.

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