We know that most people don't relish reading about property
tax laws, and that after a short while their eyes glaze
over and they develop an itchy mouse finger.
But stick with us and don't click away just yet. We've
made learning about the tax laws that effect you and your
property easier by breaking things 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.
Limited Market Value (LMV) will phase out by 2008. Find out
how this phase out could cost you your property!
MSRPO supports legislation to provided incentives to those
who wish to leave their lakeshore land in its natural state.
Learn more about the proposed bill.
Learn what properties are affected by a new state general
tax enacted in 2001 and how Minnesota is spending that
money.
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.
| Q. |
I am just one of 100,000
cabin owners in Minnesota. What can I possibly do to
help keep my property taxes down or even reduce them? |
| A. |
You need to 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. |
| Q. |
How has MSRPO helped me? |
| A. |
Without MSRPO, your current tax bill
would be about 40% higher. |
| 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. |
