PURPOSE: Section 137.106, RSMo, provides a credit on property taxes under certain circumstances. This rule describes the requirements to qualify for this credit and the amount of the credit. This rule reflects recent statutory changes for applications filed after 2005.

1. (1) This rule only applies to applications filed after 2005.
2. (2) In general, individuals who are at least sixty-five (65) years old on January 1 of the year of application and disabled individuals may receive a credit on their property taxes for their homesteads if those taxes increase more than two and one-half percent (2.5%) in an even numbered year or five percent (5%) in an odd numbered year and the individual’s federal adjusted income does not exceed the statutory limit. The amount of the credit is determined by the amount the General Assembly appropriates to fund the credit.

3. (3) Definition of Terms.

   1. (A) Disabled individual—an individual who is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve

4. (12) months.

   1. (B) Homestead—the dwelling in Missouri owned and occupied by a taxpayer and up to five (5) acres of land surrounding it as is reasonably necessary for use of the dwelling as a home. The dwelling may be a mobile home.
   2. (C) Homestead Preservation Credit—the credit provided pursuant to section 137.106, RSMo.
   3. (D) Maximum upper limit—seventy thousand dollars ($70,000), increased by a percentage equal to the percentage increase since 2005 in the general price level, as defined pursuant to Article X, Section 17 of the Missouri Constitution.
   4. (E) Property tax credit—the credit provided pursuant to sections 135.010–135.035, RSMo.

5. (4) Application of Rule.

   1. (A) To qualify for the Homestead Preservation Credit, a taxpayer must fit one (1) of the following descriptions:

      1. 1. The taxpayer is at least sixty-five (65)

years old on January 1 of the year of application or one hundred percent (100%) disabled and owns the homestead in the taxpayer’s name only;

1. 2. The taxpayer is married and at least

sixty-five (65) years old on January 1 of the year of application and owns the homestead individually or jointly with a spouse and the spouse is at least sixty (60) years old on January 1 of the year of application; or

1. 3. The taxpayer owns the homestead

jointly with a spouse and either the taxpayer or the spouse is one hundred percent (100%) disabled.

1. (B) If property is held in trust, the trust qualifies for the credit if the previous owner of the homestead:

   1. 1. Is the settlor of the trust with respect

to the homestead;

1. 2. Currently resides in such homestead;

and

1. 3. Would qualify for the credit as an

individual but for the transfer of the homestead to the trust.

1. (C) To qualify for the Homestead Preservation Credit, the taxpayer’s federal adjusted gross income for the tax year preceding the year of application must be equal to or less than the maximum upper limit. If the taxpayer is married and the homestead is owned individually or jointly with a spouse, the joint federal adjusted gross income of the taxpayer and spouse must be equal to or less than the maximum upper limit. If the property is held in trust, the taxpayer must combine the federal adjusted gross income of the settlor and the federal adjusted gross income of the trust to determine the federal adjusted gross income for purposes of the maximum upper limit.
2. (D) To qualify for the Homestead Preservation Credit, the taxpayer’s property tax liability for the homestead, not including any increase due to improvements to the homestead that were not made to accommodate a disabled person, must increase from two (2) years preceding the application year to one

1. (1) year preceding the application year by more than two and one-half percent (2.5%) for applications filed in even numbered years or by more than five percent (5%) in odd numbered years.

   1. (E) To qualify for the Homestead Preservation Credit, the taxpayer must have owned and paid property tax in full, including any interest and penalty, on the homestead for the two (2) calendar years prior to application and the application year, and must continue to own it during the year following the application year.
   2. (F) A title that provides that the homestead transfers to another on death does not disqualify a taxpayer or reduce the amount of the potential credit. In the case of joint ownership by unmarried persons or ownership in common by unmarried persons, such owners must individually satisfy the eligibility requirements for an individual eligible owner under this section and the combined income of all individuals with an interest in the property must be equal to or less than the maximum upper limit in the year prior to completing an application under this section. If any individual owner fails to satisfy the eligibility requirements or if the combined income of all owners exceeds the maximum upper limit, then all owners shall be deemed ineligible owners regardless of any one owner’s ability to meet the eligibility requirements.
   3. (G) The taxpayer does not qualify for the Homestead Preservation Credit if the appraised value of the homestead increased by more than five percent (5%) due to improvements made in the calendar year prior to application unless the improvements are made to accommodate a disabled person.
   4. (H) A taxpayer who properly claims a property tax credit for the tax year preceding the year in which the application for the Homestead Preservation Credit is filed is disqualified from receiving the Homestead Preservation Credit.
   5. (I) A taxpayer who receives a Homestead Preservation Credit based on an application filed in 2005 is disqualified from receiving a Homestead Preservation Credit based on an application filed in 2006.
   6. (J) The amount of the credit is the amount by which the increase in the taxpayer’s liability from the base year to the prior year, exclusive of any increase due to improvements to the homestead, exceeds a single, statewide percentage increase calculated to use all of the amount appropriated by the General Assembly to fund the credit.
   7. (K) The credit is calculated annually based on the increase in liability from two (2) years prior to the application year to the year immediately prior to the application year and does not carry forward to future years.

2. (5) Examples:

   1. (A) Taxpayer is 65 years old and his wife is 60 years old. The taxpayers are eligible for the Homestead Preservation Credit if they meet the other eligibility criteria.
   2. (B) Taxpayer is 65 years old, but his wife is 55 years old and totally disabled. The taxpayers are eligible for the Homestead Preservation Credit if they meet the other eligibility criteria.
   3. (C) Taxpayer is single and 60 years old. He is totally disabled. Taxpayer is eligible for the Homestead Preservation Credit if he meets the other eligibility criteria.
   4. (D) Taxpayer owns his home jointly with his wife. Their federal adjusted gross income is $69,000. The taxpayers are eligible for the Homestead Preservation Credit if they meet the other eligibility criteria.
   5. (E) Taxpayer owns his home as an individual. His federal adjusted gross income is $40,000. His wife’s federal adjusted gross income is $35,000. Taxpayer is not eligible for the Homestead Preservation Credit because the joint federal adjusted gross income exceeds the maximum upper limit.
   6. (F) Taxpayers purchased their home after January 1 two years ago but before January 1 of the year before the application year. They are eligible for the Homestead Preservation Credit.
   7. (G) Taxpayers have owned their home for ten years, but they no longer live there. They are not eligible for the Homestead Preservation Credit.
   8. (H) Taxpayers live in a home that is titled in a trust for their benefit. Prior to transfer to the trust, the home was titled in taxpayers’ name. Taxpayers currently reside in the home and meet the other eligibility requirements. Taxpayers qualify for the credit.
   9. (I) Taxpayer owns his home jointly with his grown daughter who does not qualify for the Homestead Preservation Credit. Taxpayer is not eligible for the Homestead Preservation Credit.
   10. (J) Taxpayer owns a life estate in her home, and her son has a right of survivorship. Taxpayer is eligible for 100% of the Homestead Preservation Credit if she meets the other eligibility criteria.
   11. (K) Taxpayers own two homes and spend equal time living in each. The taxpayers can claim the Homestead Preservation Credit for only the one home they have designated as their “homestead.”
   12. (L) Taxpayers rent their house. They are not eligible for the Homestead Preservation Credit.
   13. (M) Taxpayer’s home is located on a tenacre lot. Taxpayer can only claim the Homestead Preservation Credit for his house and up to five acres around the house that are used for residential purposes.
   14. (N) Taxpayer has owned and occupied a mobile home for ten years. Taxpayer is eligible for the Homestead Preservation Credit if taxpayer meets the other eligibility criteria.
   15. (O) Taxpayers have paid taxes for the past ten years on their home, but last year they paid the taxes late. They paid all penalties and interest due on the late payment. They are eligible for the Homestead Preservation Credit if they meet the other eligibility criteria.
   16. (P) Taxpayers’ property tax liability increased 4% in a reassessment year. They are not eligible for a Homestead Preservation Credit because the difference in the property tax liability in a reassessment year must exceed 5% in a reassessment year.
   17. (Q) Taxpayers’ property tax liability increased 4% in a non-reassessment year. Taxpayers are eligible for a Homestead Preservation Credit if they meet the other eligibility criteria because the difference in the property tax liability in a non-reassessment year must exceed 2 1/2% percent.
   18. (R) Taxpayers’ home is valued at $60,000. In the past year they made improvements that increased the appraised value by $8,000. The improvements were not made to accommodate a disabled person. Taxpayers are not eligible for the Homestead Preservation Credit because the value of the improvements exceeds 5% of the value of the home.
   19. (S) Taxpayers have applied and qualify for the property tax credit pursuant to sections 135.010 to 135.035, RSMo. They are not eligible for the Homestead Preservation Credit based on the same property tax assessment.
   20. (T) Taxpayer lives in the homestead and his wife lives in a nursing home. They cannot apply for both the Homestead Preservation Credit on the jointly owned home and the 12 CSR 10-405

property tax credit under sections 135.010 to 135.035, RSMo, on the rental amount of the nursing home.

1. (U) Taxpayers are eligible for a $100 Homestead Preservation Credit, but the General Assembly did not appropriate funding for the Homestead Preservation Credit. Taxpayers do not receive a Homestead Preservation Credit for the credit year.
2. (V) Taxpayer is eligible for a $100 Homestead Preservation Credit, but the General Assembly only appropriates 50% of the money required to fund the credit. Taxpayer will receive a reduced Homestead Preservation Credit for the credit year based on the amount appropriated.

AUTHORITY: section 137.106, RSMo Supp. 2006.* Original rule filed Oct. 17, 2005, effective April 30, 2006. Amended: Filed Oct. 25, 2006, effective May 30, 2007.

*Original authority: 137.106, RSMo 2004, amended 2005, 2006.