Property taxes made easy
Property tax law is about as exciting as watching paint dry - but it is terribly important. Our current property tax code forces people to sell heirloom properties, and creates huge incentives that favor development of sensitive shorelines and forest habitats.
So it is important to get educated. We've made things easier by breaking the property tax code down into digestible "chunks."
Read a little today, a little tomorrow, and pretty soon you're an expert.
Start by reading our frequently asked questions about property taxes, found below, then move on to some of these other topic links.
A quick primer on property taxes and the property tax appeals process.
Links to other resources on the Internet that help you get in touch with YOUR legislator, learn about tax policy, find out how to calculate your property taxes the way the county assessor does, see what others are doing to conserve lakeshore, and lots more.
Property Tax FAQ's
Q. I am just one of 100,000 cabin owners in Minnesota. How can I keep my property taxes down or even reduce them?
A.A) Call your representatives, house and senate, and tell them you support MSRPO's position on lower property taxes for cabin owners. If 10 or 15 of you from your district call, it will have a major effect, because all representatives know that for every call they get, there are 25 others thinking the same way who did not call. Your call will have a big, big effect on lower taxes for all of us.
B) Visit with your assessor. Make sure your assessment is correct, and if it is not, appeal it. MSRPO will offer seminars on how to effectively appeal a property tax assessment. Take one of these webinars, and get involved with that process.
Q. How has MLR helped me?
A. Without MLR, your current tax bill would be about 40% higher and your lake more threatened with Aquatic Invasive Species. MLR has:
- Passed sweeping AIS legislation two years in a row;
- Helped create the Sustainable Forestry Incentive Act, which returns at least $7 per acre for those enrolled and with Forest Stewardship plans;
- Created the rural woodlands tax class of 0.65% to preserve forests and shore line;
- Lowered the tax rate on seasonal from 2.25% of value to the same as a Homestead, 1%;
- Halved our share of the Statewide Business Property Tax....and more.
Q. When is the assessment year?
A. The year preceding the year in which taxes are payable. Market value is determined as of January 2 of the assessment year.
Q. What is the budget year?
A. Same as the payable year except for school districts. School districts budget using a fiscal year that begins July 1.
Q. What is the class rate?
A. The percentage by which a property's market value is multiplied to arrive at its "tax capacity" or taxable value, subject to local tax rate. Classification, with its set of class rates, redefines the tax base and results in a redistribution of taxes among different kinds of properties.
Q. What is the classification system?
A. Under this system, a property's value for tax purposes is a varying percentage(set by law) of its market value. Criteria influencing a property's classification include ownership, use, method of financing, size, period of the year it is occupied or used, and income of residents.
Q. What is the effective tax rate (ETR)?
A. Dollar amount of property taxes to be collected expressed as a percentage of market value. Often used for comparison purposes.
Q. What is the estimated market value (EMV)?
A. The assessor's valuation of a property. All properties must be physically inspected in person at least once every four years.
Q. What is HACA (homestead and agricultural credit aid)?
A. This is an example of an indirect aid to local governments. See (a) under property tax relief programs. It replaced, starting payable 1990, the previous programs of homestead credits and agricultural credits aimed at individual properties
Q. What is homestead?
A. Residential property owned and occupied by the taxpayer on January 2. If you moved into your home after January 2, you may be eligible for a partial homestead. Check with your assessor.
Q. What is a levy?
A. The amount in dollars each local government wants to collect. (They do not set a tax rate.)
Q. What are levying units?
A. In Minnesota, property taxes are levied by counties, cities and townships, school districts, and special districts, which include metro government agencies, hospital boards, watershed districts, transit authorities, park boards, and housing and redevelopment authorities, etc.
Q. What is limited market value (LMV)?
A. The limited market value provision was original set to expire after the assessment year 1998. It was extended to the 2001 assessment year and a part of the 2001 tax reform bill was extend through the assessment year 2007 in a gradual phase-out, with the percentage of value excluded slowly diminishing. In 2006 MSRPO worked to extend the law to 2009. It applied to all real estate in Minnesota.
Q. What is market value?
A. The price a willing buyer would pay a willing seller in an arms-length transaction
Q. What is a mill?
A. One one-thousandth, 1/10 of 1 percent, or $1 per $1,000 of taxable valuation. Prior to 1988, property tax rates were expressed in mills.
Q. What is net property tax?
A. As opposed to "gross property tax"-property tax after accounting for state aids and tax credits.
Q. What is the payable year?
A. Year in which tax statements are issued and taxes become payable-on May 15 and October 15 for real estate.
Q. What are special assessments?
A. Benefit taxes imposed to help finance public improvements that are likely to increase property values.
Q. What is a tax base?
A. Total value of taxable property within the community.
Q. What is a tax capacity?
A. The same as taxable value; property taxes are now expressed as a percent of tax capacity.
Q. What is the tax increment?
A. Portion of tax used to finance economic development or renewal project bonds based on increased tax capacity.
Q. What is the tax payable?
A. The total tax rate times the taxable value of each property. tax rate. The percent of the total taxable value of property needed to achieve the dollar amounts levied by the respective local units. LEVY ÷ TAX BASE = TAX RATE.
Q. What is the total tax rate?
A. The rate arrived at by summing the tax rates of all the units in the area authorized to levy taxes on a particular parcel of property.
Q. What is truth-in-taxation?
A. State law providing for notices of taxes to taxpayers and for public budget hearings.