The Iowa Supreme Court has upheld a district court ruling that says apartment buildings and condominiums can be taxed differently. Timberland Partners, a company that owns several residential apartment buildings, filed suit saying the Iowa Department of Revenue’s code breaks the equal protection clause of the Iowa constitution.
The company says the code 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.
Timberland wants to have its apartment buildings taxed as residential because residential properties are taxed at a much lower percentage of their assessed value than commercial properties. Timberland argued the market characteristics of the two buildings "are so similar as to be virtually identical," because both compete for the same occupants.
The Supreme Court rule that any similarities between apartments and condominiums are insufficient to consider them "similarly situated" for equal protection analysis. 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.
And individual ownership rights of condominium owners, are unlike an apartment tenant, as they rights that include the right to participate in the management and operation of the unit or complex.