The Minnesota Realtors put out their annual housing report again this year in early February. Following are a few key metrics from the 2025 housing report that may be of interest to both buyers and
Do you understand the MN property tax system?
Dated: May 10 2022
Views: 39
The following article was written by Jerry Hertaus. Jerry is a longtime friend, fellow Realtor, State Representative from the Minnetrista/ Mound area, and the Lead member of the Minnesota House tax committee. I think it goes a low way in making it more understandable why this increase took place and what it means. I know that for many the increase in value was 15-21% ….and they didn’t sell their property.
I would be interested in your thoughts after you have read Jerry’s article…
“What is missing from the discussion concerning assessed values for pay 2023 is a lack of understanding about the property tax system.
First Minnesota has the most complicated property tax system in the nation with more than 56 different classes of property taxed at different rates(factors) x the assessed value.
The job of the assessor is to keep valuations current with respect to the free market. From there, the property tax classification system attempts to shift burdens of property tax to different classes of property.
This year, in the metro and suburban areas, property owners are seeing significant increases in valuations. However, and for example, proposed 30% increase in assessed value will likely not equate to a 30% increase in taxes for the proposed tax year. You cannot extrapolate the proposed increase in property valuation for the next tax year to the current levy and mill rate applied by local government units (LGU's) for taxes payable this year.
What matters most is the local levy approved by LGU's (county, school and city) for the next budget year.
In general, and yes some shifting from house to house or property to property will likely occur, but for the most part overall proposed assessed values are increasing on all properties. Therefore, if LGU's don't significantly increase their levy's (budgets) you will likely not see significant increases of taxes due from that local jurisdiction. Assuming all proposed property assessments for all properties increase in a proportional manner, LGU's would be able to apply a lower mill rate to all property to generate the levy needed to fund local governments. That said, it appears that most LGU's are proposing levy increases of 4-6% and that should be more in line with actual increases of taxes payable for the following year.
Most local assessing practices employ the bulk appraisal system. They cannot physically evaluate every property every year individually, but do attempt to do so on approximately 20% of all properties and then apply their findings to the remainder of the 80% of properties.
Those who may find the biggest increase in assessed values are often those property owners who just recently purchased and the CRV filed at closing will trigger a "catch-up" of valuation.
Each taxpayer may appeal their valuations, first at their local Board of Equalization meetings scheduled each year, most of which occur this month.
Lastly, Minnesota is a progressive state concerning taxation. The more you have, which is usually measured by property and income, the more you pay. Property taxes are regressive and this year at the Legislature, too much attention and too much resources are being directed towards renters to the detriment of property owners.”
Ruth Lecy
With over 35 years of experience in residential real estate I have the expertise you are looking for. My experience spans from land and lot sales and purchase; to first-time buyers; to luxury multi-m....
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