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.
Frequently
Asked Questions (FAQ) about property taxes
Start by reading our frequently asked questions about property
taxes, found below, then move on to some of these other topic
links.
Property
Taxes 101
A quick primer on property taxes and the property tax appeals
process.
Useful Links
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 MSRPO helped
me?
A. Without MSRPO, your current tax
bill would be about 40% higher. MSRPO has:
- 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%
- Removed seasonal property from Excess School Operating
levies
- 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. What is the average
income, age and so forth of a cabin owner in
Minnesota?
A. Our last research study revealed
the following profile of a cabin owner in Minnesota:
- Age: 56 years
- Average Years of property ownership: 25
- Average HH income: $50,500
- 37% are retired and living on fixed income.
- On average a cabin owner spends 64 days per year at their
property.
- On average 6 adult family members utilize the cabin
property.
- Cabin owners spend over $4,000 per family in the community
where their cabin is located.
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.
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.