Property Tax 101
Most people know that the assessors' office will review their
property every few years. Yet few individuals understand how the
property tax process works.
Facts about property tax
The first step is for the assessor to determine the value of a
property using the market value process approach-what similar
properties have sold for. Assessors must follow tax classifications
and rates that are established by the state legislature.
Property value, multiplied by the classification rate, produces
the tax capacity of the property. The total of all properties
equals the tax base or tax capacity. Once that is determined local
governments can determine their budgets. Following that the
Auditor's Office totals up the amount needed and the local tax rate
is then established.
The auditor or treasurer's office mails out tax statements.
Notice of valuation goes out each spring. The appeal process is
listed on the back of that statement.
The appeals process:
- The assessor's office is the first stop in the appeal
process.
- If the appeal is unsuccessful the next step in the appeal
process are the local Boards of Review. These are held in April or
early May in most cities, townships or for locations the county
office.
- If that does not resolve the issue the taxpayer can go to the
Board of Equalization in late June.
- A taxpayer's last recourse is the Minnesota Tax Court.
Property Tax Terminology
Net Tax Capacity
The county assessor determines each property's estimated market
value. Due to limited market value provisions established in
statute, the property's taxable market value could be lower.· The
tax base is each property's net tax capacity, based on the
property's taxable market value and the relevant class rate or
rates (depending on property type) (taxable market value) * (class
rate) = (net tax capacity)
Tax Rate
Each local tax jurisdiction certifies a levy equal to the amount
of revenue it desires to raise through property tax. The levy and
jurisdiction's tax base determine the jurisdiction's tax rate:
(levy) / (total net tax capacity) = (tax rate)
Property Tax
The property tax on a parcel of property is computed using the
rates of all the local taxing jurisdictions where the property is
located: (net tax capacity) * (total tax rate) = (property tax)
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