Frequently Ask Questions
How are property taxes determined each year?
There are three primary factors that determine your property tax:
- The tax levies of the districts you live in
- The value of your property relative to the value of all property in the taxing district
- The classification of your property. How you use your property.
In addition, there are a number of state laws that affect both the amount of your property tax and the way it is determined.
What is the tax levy?
Each year local governments go through a budget process to determine what services they will provide, how much these will cost, and where they will get their money.
After taking into account other sources of revenue (such as state paid aid, fees, etc.) the rest is levied on taxable properties. The tax rate for each taxing district is determined by the county auditor by dividing this levy by the taxable value of the property in the district.
Public meetings are held each year to give taxpayers a place to voice their concerns to elected officials. These meetings are indicated on the proposed Tax notices property owners receive in late November.
How does my value affect my property tax?
Your share of the levy is based on the value of your property relative to the value of all other property in the district. For example, if a local government decided not to change the amount of its levy from one year to the next, your tax may go down, go up or remain the same. If the value of your property doesn't change, but the value of the other properties in your district go down, your tax will increase because your share of the total value increased. Likewise, if the value of the other properties in your district goes up, your tax will decrease because your share of the total value decreased.
Why does it matter how I use my property?
In Minnesota, properties with the same market value will be taxed different amounts depending on how they are used. For instance, commercial property will have a higher tax than residential property of the same value. This is done by using classification rates set by the state legislature to give more weight to the value of commercial property as compared to residential property.
Do I have to let the appraiser into my property?
The short answer is no. However, it is the practice of appraisers to make sound judgments and assumptions about properties they do not get into. They do this by comparing them to sold properties and other typical properties in the neighborhood. In an effort to make sure our data is accurate and uniform, an interior inspection is the only way for us to be sure we are actually valuing what is on the property.
That said, if you choose not to let in an appraiser, you do not have the right to appeal your valuation or classification to the annual Local Board of Equalization and Review.
What is market value?
The International Association of Assessing Officers defines market value in the following manner:
Market value is the most probable price expressed in terms of money that a property would bring if exposed for sale in the open market in an arm's length transaction between a willing seller and a willing buyer, both of whom are knowledgeable concerning all the uses to which it is adapted and for which it is capable of being used. State law requires the assessor to value all property at its market value.
How is my market value calculated?
Sales of real estate are used as a guide in determining the assessor's market values. These sales are analyzed to determine which factors contribute to the value. These factors are then put into a model or formula to apply to all properties. The values are then tested to make sure that the quality of the assessment meets statistical requirements.
Why does my market value change even if an appraiser has not been to my home recently?
Trends in the real estate market due to local economic conditions, interest rates, supply and demand and changing tax laws influence the value of property.
How am I notified of any valuation change?
All properties with changes in classification or market value changes of $100 or over will be notified with a valuation notice. These notices are sent out annually at the end of March.
How do I know if my valuation is correct?
The property owner should first make an attempt to find out what the property is worth. This can be done by checking out sales of homes in your neighborhood, checking values of similar homes and talking to Realtors and appraisers. Sales information is available during working hours in the Assessor's office for public viewing.
How can I appeal my valuation?
If property owners do not agree with the market value, they should first contact the Assessor's office to discuss the matter. Many questions and concerns can be addressed by this informal appeal process. Formal appeal would take place initially through the local boards of review.
After the Local and County Board of Appeals meetings values cannot be appealed. By the time your proposed or actual tax bill comes out it is too late to appeal your value or classification.