Property Tax Increases

Summary

As the Limited Market Value (LMV) for tax purposes phases out this year, property taxes may rise for some homeowners.

Background

With property values appreciating rapidly in the late 1990's thru the early 2000's, in 1993 the Minnesota state legislature established a limitation on annual increases in the market values of farm, residential, and seasonal recreational residential property, effective for taxes payable 1994 which was then extended thru 2001.

Assessed values that are shown on our Minnesota county property tax statements are one or often two years behind -- the value that shows on your 2009 statement was likely established in 2007.

This is important to know as the 2001 legislature introduced a “phase-out” plan which gradually raised the allowed annual increases in values until assessment year 2007 when all property will be at full estimated market value.

For taxes payable in 2009 the increase is limited to the greater of +15% of the previous LMV, or 50% of the difference between last year's LMV and this year's estimated market value (emv = "true" market value) and in 2010, there is no limit.

Depending on each home or parcel's market value trend, the EMV's may go up or may not see much of a change as the LMV is phased out this year.

Your Property Your Tax Amount

Finally, realize that in simple terms, the following determines property tax amount:

Property Tax = EMV x "Mill Rate"

So if the EMV goes down (as in the case of a declining market value home), if the mill rate goes up, the property taxes will remain unchanged or could even go up. Property taxes are based on the municipality's budget. The local government determines how much $$$ they need to balance the budget and then adjust the mill rates to produce the necessary property taxes to balance the budget. I know, it seems like reverse math but that's essentially how it works.

For more on how to appeal your property taxes:

http://bit.ly/PropertyTaxAppeal