Missouri's exit is cheap. Know which half of the tax break you actually get
Missouri is one of the cheapest states in the country to get out of a deal. But St. Louis runs on two separate governments with two sets of rules, the state's property tax runs on a two-year clock, and the new capital gains law does less for a flipper than the headlines suggest. Here is how to underwrite around all three.
Start with what Missouri does not charge. Article X, Section 25 of the state constitution, added by voters in 2010, bars the state, counties and cities from imposing any new tax on the sale or transfer of real estate. Many states take a percentage of the price every time a property changes hands; Missouri does not. On a flip, that money stays in the deal on the way in and on the way out.
Then, in July 2025, Governor Mike Kehoe signed House Bill 594. For tax years beginning January 1, 2025, an individual can subtract 100 percent of the income reported as a capital gain on the federal return when working out Missouri taxable income, making Missouri the first state with an income tax to exempt capital gains entirely for individuals.
The phrase that matters is reported as a capital gain for federal purposes. A house bought, renovated and resold within months is usually treated federally as property held for sale to customers, and the profit is reported as ordinary business income, not as a capital gain. If that is how your flip is reported, the Missouri subtraction does not apply to it. A rental you buy, hold and later sell is a different story: that sale generally does produce a capital gain, and the Missouri tax on it now falls away.
The subtraction is for individuals, including owners of pass-through LLCs; corporations do not get the same treatment under the law as passed. Federal tax still applies either way, and how a particular sale is treated depends on its facts, so confirm it with a CPA before you count the saving. This is general information, not tax advice. The practical reading: Missouri's new law rewards the buy-and-hold investor far more than the quick flipper.
The property tax runs on a two-year clock, and the next tick is 2027
Missouri taxes residential property on 19 percent of its market value and commercial property on 32 percent, under section 137.115 of the Revised Statutes. The assessed value is then multiplied by the combined levies of every district the property sits in, quoted per $100. On a house worth $200,000, the assessed value is $38,000, so every $1 of combined levy adds $380 a year to the bill. Look up the actual levies for the exact address; they vary widely between school districts.
The timing is what trips investors up. Missouri reassesses real property as of January 1 of every odd-numbered year, and that value carries through the following even year. A house you buy in 2026 is still carrying its 2025 value. The next general reassessment is January 1, 2027, and the assessor can also add value for new construction or improvements, which is exactly what a heavy renovation looks like on paper. In 2025, assessments rose sharply in many counties as the State Tax Commission pressed counties that had fallen behind market prices.
So do not underwrite a Missouri rental on the seller's current tax bill. Budget for the 2027 reassessment and for the value the assessor may add once your renovation shows up. If a notice comes in too high, the appeal goes to the county Board of Equalization first; deadlines differ by county, so check yours the day the notice arrives.
St. Louis: two governments, two sets of rules
The single most important fact about investing in St. Louis is that the City of St. Louis is not in St. Louis County. It has been an independent city since 1876, with its own assessor and collector, its own courts and its own inspection rules. The County surrounds it and is made up of dozens of separate municipalities, many of which keep their own occupancy codes. Before you price a St. Louis deal, work out which jurisdiction the address sits in. St. Charles County and Jefferson County are separate again.
Prices depend on it. The City and County are different markets, and neighborhoods within each differ by more than the two medians do. No metro median is an after-repair value: price each deal from renovated, comparable sales a few streets away.
And the paperwork depends on it. In the City, a rental unit needs a Certificate of Inspection from the Building Division before a new occupant moves in, and a property being sold needs one before occupancy too. Many County municipalities, University City among them, run their own occupancy inspections, with their own fees, on a sale or a new tenant. Build the inspection, the fee and the repair list into the schedule before the renovation budget is final.
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Kansas City, Springfield and the rest of the state
Kansas City, Missouri has its own rule to know. Since voters approved the Healthy Homes Rental Inspection Program in 2018, rental property owners in the city must register and hold a permit, renewed each year with a per-unit fee, and the Health Department inspects on complaint and can order repairs. The metro also straddles the state line: a house in Kansas City, Kansas is under Kansas law and Kansas property tax, not Missouri's.
Springfield and Greene County saw large 2025 increases, which makes the tax line on any rental there worth checking twice. Across smaller markets, the question is usually value rather than tax: many of the cheapest houses in rural Missouri need less than the $50,000 minimum loan, and lenders look hard at property with few comparable sales.
Foreclosure. Missouri lenders usually foreclose outside court by trustee's sale under a deed of trust. A limited one-year redemption right exists only in narrow cases, such as when the lender buys at the sale and the borrower gives the required notice, so a buyer at a Missouri trustee's sale should still have title review the file.
How the loan gets sized in Missouri
Fix and flip, rehab and bridge pricing starts at 12.99 percent plus 2.99 points. Borrowers who have paid off two loans with the lending partner in good standing can qualify for loyalty pricing of 10.99 percent plus 1.99 points. Loans start at $50,000, the minimum credit score is 600, and the loan can cover up to 100 percent of cost (purchase plus rehab) but no more than 70 percent of after-repair value, whichever binds first. Leverage depends on the projects you can document from the past three years. Property must be non-owner-occupied and held in an LLC or corporation.
For a rental, the DSCR program lends from $75,000 to $2 million, up to 80 percent of value on a purchase or rate-and-term refinance, with no minimum credit score. Renovate, rent, refinance into DSCR and hold is also the plan that gets the most from Missouri's capital gains law.
A St. Charles County example: a house worth $260,000 after renovation supports up to $182,000 at 70 percent. If purchase and renovation together cost $190,000, the investor brings about $8,000 plus closing costs, and there is no transfer tax on the eventual sale. The lending partner's team confirms leverage for each address, including any St. Louis City or County deal, and the lender decides.
Before you sign a Missouri contract
1. Confirm the jurisdiction. City of St. Louis, St. Louis County and its municipality, St. Charles County or Jefferson County. It changes the inspection and the tax.
2. Check the loan size clears $50,000. Below that, a hard money loan may not be available at all.
3. Budget the property tax for 2027, at 19 percent of the value you expect after renovation, times the real levies for that address.
4. Book the occupancy inspection early. City Certificate of Inspection, the municipality's permit in the County, or the Healthy Homes registration in Kansas City.
5. Get written contractor bids and build in at least a ten percent contingency for old brick and plaster.
6. Decide the exit, and ask your CPA how it will be taxed. A quick flip is usually ordinary income; a rental held and sold later is where the capital gains exemption can apply.
What gets a Missouri deal declined
An after-repair value built from a metro median. City and County medians differ, and neighborhoods within each differ by more.
A rental budget built on the seller's tax bill. The 2027 reassessment and your renovation will both show up.
A St. Louis rehab you mean to move into when it is done. If you or a close family member will live there, it is owner-occupied, and our lending partners do not finance it.
Want the long version? Two free landlord books cover what a rental really costs to hold and what the new federal housing law actually changed.
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Questions investors ask
How much do hard money loans cost in Missouri?
Our lending partners' fix and flip and bridge pricing starts at 12.99 percent plus 2.99 points. Borrowers who have paid off two loans with the lending partner in good standing can qualify for 10.99 percent plus 1.99 points. Appraisal, title and closing costs come on top, but Missouri adds no transfer tax at the sale.
Can I get a hard money loan in St. Louis City or St. Louis County?
Our lending partners review non-owner-occupied investment property in both, and in St. Charles and Jefferson counties, held in an LLC or corporation. The lending partner's team confirms the available leverage for each address before you commit, and the lender decides.
Does Missouri's capital gains exemption apply to a flip?
Usually not. The exemption covers income reported as a capital gain on the federal return, and a quick flip is normally reported as ordinary business income. A rental held and later sold generally does produce a capital gain. Confirm how your sale will be treated with a CPA; this is general information, not tax advice.
Is there a real estate transfer tax in Missouri?
No. Article X, Section 25 of the Missouri constitution bars the state and local governments from imposing a tax on the sale or transfer of real estate.
When will my Missouri rental be reassessed?
Missouri reassesses as of January 1 of each odd-numbered year, so the next general reassessment is January 1, 2027. Residential property is taxed on 19 percent of market value, and the assessor can add value for improvements in any year.
Do I need a rental permit in Kansas City, Missouri?
Yes. Under the Healthy Homes Rental Inspection Program, rental property owners in Kansas City, Missouri must register and hold an annual permit, and the Health Department inspects on complaint.
Sources
- Missouri House, HB 594 (2025), 100 percent subtraction of federal capital gains for individuals from tax year 2025 (accessed Oct 2026)
- RSMo 137.115, Missouri Revisor of Statutes, 19 percent residential and 32 percent commercial assessment, odd-year reassessment (accessed Oct 2026)
- Missouri State Tax Commission, reassessment cycle and county assessment oversight (accessed Oct 2026)
- City of Kansas City, Missouri, Healthy Homes Rental Inspection Program, rental registration and permit requirement (accessed Oct 2026)
- City of St. Louis Building Division, occupancy permits and Certificate of Inspection for rental units (accessed Oct 2026)
Dominion Hard Money does not lend its own funds; it arranges financing through third-party lending partners. All financing is arranged for business purposes only and secured by non-owner-occupied investment property. Not a commitment to lend. All loans subject to underwriting, property review, and approval by the lender. Terms vary by property, borrower experience, and exit strategy.