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Assessing Property

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Important Property Tax Law Change

pdfImportant Property Tax Law Change
Beginning with property taxes payable 2012, new legislation was enacted eliminating the homestead credit and replacing it with a new benefit, the homestead market value exclusion. The attached "Important Property Tax Law Change" bulletin can provide additional information on how this new benefit differs from the previous homestead credit.

It is important to note, however, that the generalized information on page 2 of the bulletin regarding taxpayer impact can vary greatly between jurisdictions. While this bulletin indicates that the elimination of the homestead credit and replacement with the exclusion is going to mean higher property taxes for most property owners, that statement is NOT true for the homestead property owners in the City of Marshall. Most homestead property taxes in the CIty of Marshall, in fact, estimated to go down for 2012. This can be attributed to the city's large non-homestead tax base, TIF property coming on to the tax rolls, and new construction growth.


Local Board of Appeal and Equalization

April 7, 2014

pdf2014 Local Board of Appeal and Equalization

The purpose of the Local Board of Appeal and Equalization is to provide a fair and objective forum for property owners to appeal their valuation or classification. Property taxes are not within the jurisdiction of the Local Board.


The city assessor’s office is responsible for the valuation and classification of all property within the city for property tax purposes. Examples of public information available at the assessor’s office include:

  • Real estate sales information
  • Estimated market values on real estate and mobile homes
  • Lot sizes
  • Building features (size, year built, central air, fireplaces, basement finish, etc.)
  • Ownership
  • Property classifications (residential homestead, commercial, etc.)

The assessor’s office also processes residential homestead applications. The homestead designation allows for a partial valuation exclusion when owners, or a qualifying relative of the owners, occupy a home as their primary place of residence. You may make application for the homestead credit at the City Assessor’s office.

pdfMy property is worth what?
pdfWhy do property taxes vary from year to year?


Assessing 101 - Frequently Asked Questions

What does the Assessing Department do?
What is “Estimated Market Value”?
What is “Classification”?
What is a “Homestead” and why does it matter?
How does the assessor determine the estimated market value of my property?
What will happen to my estimated market value if I make changes to my property?
When will I pay property taxes on my new improvements or an adjusted market value?
How can my estimated market value change when I haven’t done anything to my property?
Does the estimated market value increase at the same rate on all properties?
How will my taxes change as a result of a change to the estimated market value?
If property values are increasing, does this mean more tax dollars for the city, the county and the school?
What authority does the assessor have to view my property and what happens if I refuse to let the assessor view the interior of my home?
How does the assessor notify me of my property’s estimated market value and classification?
What if I don’t agree with my estimated market value or classification?
What if, after this informal talk with the assessor, I still disagree with the estimated market value or classification?
What evidence do I need to present to the Board of Appeal and Equalization?
Is there any assistance I may be eligible for in paying my property taxes?


What does the Assessing Department do?
Most of the activities performed within the assessor’s office are required by State Statute. The Assessing Department is responsible for valuing and classifying all taxable and exempt property for ad valorem tax purposes. The assessing department also handles homestead applications and addresses property valuation concerns and appeals. Additionally, they provide value and classification information to the City Council, who serves as the Local Board of Appeal and Equalization, local realtors and appraisers, and the general public. The assessor’s office also maintains parcel maps for the city.

The assessor’s responsibility is with market value and classification, not real estate taxes. The assessor does not collect the taxes, calculate the taxes, determine tax rates, or establish property tax laws.

What is “Estimated Market Value”?
Estimated market value is the price a willing, knowledgeable buyer would pay for your property if it were offered for sale on the open market. The assessor does not create this value, but instead interprets what is happening in the marketplace. Values may change due to economic conditions in the area or due to physical changes to the property.

What is “Classification”?
Classification is a definition of how the property is used. Classifications such as residential, commercial, industrial, agricultural and apartments describe the primary use of a property and affect the amount of property tax paid. By state law, different classes of property are taxed at different rates. The classification of your property also affects credits that may be available to reduce your property taxes. Classification tax rates and categories are created, defined and adjusted by your state legislature annually.

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What is a “Homestead” and why does it matter?
The owner of a residential property that is considered a “homestead” may have a portion of their estimated market value excluded from taxation, thus reducing their property tax burden. Beginning with taxes payable in 2012, the maximum value exclusion is $30,400. If your home is valued at more or less than $76,000, the exclusion amount will be less than $30,400. The homestead benefit is reviewed and set annually by state lawmakers. Mobile home owners may also apply for the homestead benefit even if they do not own the land upon which the mobile is located.


To qualify for a homestead classification, you must:

  • Occupy the property as your primary residence;
  • Be one of the owners of the property or a qualifying relative of one of the owners;
  • Be a Minnesota resident; and
  • Make application to the City Assessor.


You do not need to apply for the homestead each year, but once you have been granted the homestead status, you must notify the Assessor’s office within 30 days if you sell or move out of the property. The Assessor may require additional information or a new application if they receive information that circumstances affecting your eligibility for the homestead classification may have changed. It is important to be aware that falsely claiming a homestead is subject to penalties under law (M.S. 273.124, Subd 13).

More information regarding homestead requirements can be obtained by contacting the City Assessor’s office at (507) 537-6771 or by Clicking Here.

How does the assessor determine the estimated market value of my property?
State law requires that the assessor value and classify each property as of January 2nd each year. In order to complete this task, the following steps are taken:

  1. The assessor is required to view your property at least once every five years to gather information on the property’s physical characteristics that may affect what buyers would pay for your property. This includes location, age of the structures, size, condition, construction quality, basement finish, fireplaces, extra baths, central air, decks and porches, etc. In addition, the assessor may visit your property more frequently to view new construction, alterations or improvements you may have made during the previous year. Property inspections take place throughout the year.
  2. The assessor then considers all the physical property characteristics and uses a standardized manual to arrive at an estimated market value for your property. The manual is adjusted and driven by actual sales of real estate in your area.
  3. The assessor performs an annual sales study to analyze market conditions to determine how the assessor’s estimated market value compares to actual property sales. Local sales will impact local values. The Minnesota Department of Revenue requires the assessor’s estimated market values on average to fall within a range of 90% to 105% of actual sale prices. If the assessor’s estimated market values fall below the 90% minimum, increases to market values are required. If the assessor’s estimated market values exceed the 105% maximum, reductions to market values are required.


It is important to note that the sales used in the annual study take place up to 15 months prior to the assessment date. For example, your 2012 estimated market value will be based on sales that occurred between October 1, 2010 and September 30, 2011. The time frame for the study period is mandated by the state and your assessor does not have the authority to adjust this time frame. Because of this lag time and changing real estate markets, the valuation placed on your property as of January 2nd each year may or may not accurately reflect the potential sale price as of that date.

See: My Property is Worth What?

What will happen to my estimated market value if I make changes to my property?
Generally speaking, improvements that would increase the sale price of a property will increase your estimated market value. The following examples are typical items that may increase the estimated market value of your property:

  • Added rooms
  • Additions to an existing garage or a new garage
  • Substantial modernization of the kitchen and/or bathrooms
  • Central air conditioning
  • Fireplaces
  • Finished areas in the basement
  • Extensive remodeling


Normal maintenance, such as periodically painting or replacing worn flooring will help retain the market value of your property, but generally will not affect your estimated market value. However, a combination of several normal maintenance items could result in a change to your market value. If the assessor has adjusted your estimated market value in the past for a maintenance issue (maybe a leaking roof), when you repair the problem, your estimated market value may also reflect that repair.

When will I pay property taxes on my new improvements or an adjusted market value?
The assessment date in Minnesota is January 2nd of each year. The estimated market value determined by the assessor as of January 2nd of each year will affect property taxes payable for the following year. For example, if you build a new garage in June of 2011, the assessor will add the value of that new garage to your 2012 estimated market value for the property taxes you will pay in 2013. Likewise, if you tear down an existing garage in June of 2011 and do not replace it, the assessor will remove the value of the old garage for the 2012 assessment for property taxes you will pay in 2013.

How can my estimated market value change when I haven’t done anything to my property?
Market conditions such as the general economy, interest and inflation rates, or changes in tax laws will influence the value of real estate. An over or undersupply of property on the market may also impact values. As property values change in the marketplace, by law those changes must be reflected in the assessor’s estimated market value.

Does the estimated market value increase at the same rate on all properties?
No it does not. There are differences between individual properties and between neighborhoods. In one area the sales may indicate a large increase in value in a given year. In another neighborhood there may be very little or no change in value. Different types of property within the same neighborhood may show different value changes. There are numerous physical characteristics to be considered in each property, which will cause value changes to differ.

How will my taxes change as a result of a change to the estimated market value?
Your taxing jurisdictions (the city, county, and school), adopt budgets each year after public hearings. These budgets determine the tax levy, which is used to calculate the rate of taxation required to raise the money budgeted. The taxes you pay are proportionate to the value and classification of your property compared to other properties in your taxing district. An increase or reduction in your estimated market value does not directly correlate to an increase or reduction in property tax for the following year. Your market value and classification determine your share of the tax burden with the tax levy determining the actual dollar amount you will pay. Because these levies are not finalized until December of each year, when the assessor determines your market value earlier in the year they are unable to determine how much, if at all, adjustments to an individual market value will impact the tax.
See: Why do property taxes vary from year to year?

If property values are increasing, does this mean more tax dollars for the city, the county and the school?
No it does not. Governmental units must set a tax levy each year. A tax levy is the amount of money that the local government budgets (minus any other revenues or fees). Increasing the tax levy is the only way that a governmental unit will receive more property tax dollars.

What authority does the assessor have to view my property and what happens if I refuse to let the assessor view the interior of my home?
Minnesota Statute 273.20 allows that any officer authorized by law to assess property for taxation may, when necessary for the proper performance of their duties, enter any dwelling, house, building, or structure and view the same and the property therein. Any officer authorized by law to assess property for ad valorem tax purposes shall have reasonable access to land and structures as necessary for the proper performance of their duties.

A property owner may refuse to allow an assessor to inspect their property. This refusal by the property owner may be either verbal, or expressly stated in a letter to the assessor. If the assessor is denied access to view a property, the assessor is authorized to estimate the property’s market value by making assumptions believed appropriate concerning the property’s finish and condition (Minnesota Statute 273.20). The Local Board of Appeal and Equalization and The County Board of Appeal and Equalization are prohibited from adjusting the assessor’s estimated market value if the owner has denied access to the assessor.

How does the assessor notify me of my property’s estimated market value and classification?
The County Assessor’s office mails a Notice of Valuation and Classification to all property owners each spring. This notice will inform you of the proposed estimated market value and classification of your property for property taxes you will pay the following year. It will also give you information on the prior year’s estimated market value and classification. The notice contains information regarding appeal options if you feel an error has been made on your property record.

It is very important that you review this notice. The value and classification stated on the notice will be used to calculate the owner’s share of the property taxes payable in the following year.

What if I don’t agree with my estimated market value or classification?
Contact the assessor to review the current assessment and look for obvious errors with regard to size, description or condition of the property in question. During this informal session, you can learn how your assessment was made, what factors were considered, and what type of records we have on your property. At that time, you can also compare the estimated market value of the property in question with similar properties in the same neighborhood to check for discrepancies. You can also review the sales that have taken place during the previous year. Assessor’s records are public information and are available at the City Assessor’s office. Many times, questions or concerns can be satisfactorily addressed in advance of local board of appeal and equalization meetings. This preliminary review is provided as a service to our property owners; it is not a formal part of the review process provided for by law and it does not take the place of any other appeal proceedings.

What if, after this informal talk with the assessor, I still disagree with the estimated market value or classification?
If you decide to appeal either your valuation or your classification, it can be done either through a three step appeal or a one step appeal. More information on the appeal process is supplied on your Notice of Valuation and Classification.

The three step appeal:

  1. Appeal to the Local Board of Appeal and Equalization which meets in April or May (the date will be given on your notice). They have the right to order changes in your value and classification.
  2. If you are not satisfied with the Local Board of Appeal and Equalization’s decision, you may appeal to the County Board of Appeal and Equalization which meets during the last two weeks of June. They also have the right to order changes in your value and classification.
  3. If you are not satisfied with the County’s decision, you may file an appeal with the Minnesota Tax Court.

You must appear in the order specified; Local, County, and then Tax Court. If you do not appeal at the Local level, the County cannot take action on your appeal. You may make the appeal by attending in person, through a designated representative, or by sending a written appeal request.

The one step appeal may be made directly to the Regular Division of the Tax Court without utilizing the local appeals proceedings.

What evidence do I need to present to the Board of Appeal and Equalization?
State law puts the burden of proof on the property owner to show that the assessment is incorrect. Keep in mind that your evidence must be strong enough to prove that the assessor’s value in incorrect. Only relevant testimony given at the Board of Appeal and Equalization meeting will be considered by the board. Stating that “my taxes are too high” would not be considered relevant testimony for purposes of this meeting.

You should also keep in mind that the purpose of these meetings is to make sure that your property is equally assessed when compared to other properties. Information regarding appeals can also be found by Clicking Here.

Is there any assistance I may be eligible for in paying my property taxes?
There are many programs designed to reduce or refund part of your property tax obligation.

-The most common is the Minnesota Property Tax Refund. You may be eligible depending on your income, the amount of your property tax bill, or the amount of increase in property tax from one year to the next. To apply for these refunds, use the M1PR, Minnesota Property Tax Refund form. You can find this form on the Minnesota Department of Revenue website by Clicking Here or at locations that provide income tax forms.

-Special property tax rates are also available to blind and/or disabled property owners. Contact the Lyon County Assessor at (507)537-6731 for more information.

-A disabled veteran’s market value exclusion is available to qualified veterans. Contact the Lyon County Assessor at (507)537-6731 or your veteran’s service officer for assistance. A fact sheet is available by Clicking Here.

-The Minnesota Department of Revenue offers a tax deferral program to qualifying senior citizens. Click Here for more information or contact the Lyon County Auditor at (507) 537-6731 for an application.

-The Minnesota Agricultural Property Tax Law, more commonly known as “Green Acres”, provides relief to property owners of certain agricultural properties. More information can be obtained from the Lyon County Assessor at (507)537-6731.

 

 

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