Property valuations and taxes
For additional information, see our handout, What Is the Blue Paper.
Why does the estimated market value of my property go up when I have made no improvements?
All property is to be valued at market value. If sale prices of property increase, we are required to adjust our values on all like property to reflect what is being paid in the market.
What effect does the construction of large, expensive homes in my neighborhood have on my value and taxes?
The construction of new homes will tend to hold your property taxes down. The new home will likely be paying a large amount of taxes compared to what the taxes were when the property was bare land. Since property taxes are assessed based on the amount of money local units of government need to collect to operate, this new house will be paying a portion of what existing properties had paid the year before. Your value is based on actual market so the new house will not directly affect your value. If construction of new homes in your area enhances sales prices of existing homes, you will experience a valuation increase based on the overall market change.
Do your estimated market values ever go down?
Yes, market values can go down if the overall market for property goes down. An example would be agricultural property values that decreased dramatically during the late 1980’s. The Assessor’s Office reduced the value of all agricultural property at that time because of declining sale prices.
If I pay less for my property than the Assessor’s market value, will my value be reduced to the amount I paid?
Not necessarily. Some properties sell for less than market value because of circumstances surrounding the sale. Examples would be relative sales, foreclosure sales, limited exposure to the market, etc. Your property still needs to be valued in relation to other property. We also do not automatically raise the value of a property to the sale price if it sells for more than our estimated market value.
If I feel my property value is too high or my property is incorrectly classified, what can I do?
As a property owner, ensuring the accuracy of your property’s estimated market value or classification is important. If you see any discrepancies, the appeals process is the means to make changes.
How close to the actual market does the Assessor’s Market value have to be?
The State Board of Equalization requires our median sales ratio be between 90% and 105%. For example: A property sells for $100,000 that has an estimated market value of $90,000. This would be a 90% ratio of value to sales price. The median ratio is the middle ratio of the group of sales of a particular type in a taxing district. If the median ratio is outside the 90% to 105% range, the State Board will normally order aggregate value changes to bring values into the correct ratio for that taxing district.
With all new buildings being built and all the increases in value for the property, why don’t property taxes go down?
The answer to this question involves a number of factors to be considered:
- The cost to operate local units of government continues to increase the same as other costs. Local units of government are required to provide certain services that continue to go up in cost and the budgets go up to reflect the increased costs. This is passed on to the taxpayers.
- Aids for local units of government, such as homestead credit supplied by the State of Minnesota, have been reduced over the years so the government units increase levies to make up for the loss of revenue.
- Classification rate reductions for some classes of property can cause the share another class of property has to pay to go up.
As you can see, a number of factors affect the tax each individual pays. These examples cover only some of the reasons.
How often is the Assessor required to value my property?
The law requires that at least one-fifth of the properties should be viewed and reassessed each year. Market adjustments are made to all properties every year even if it was not physically viewed. All new construction is to be valued each year.
What are the requirements for homestead classification?
Having a homestead classification may qualify your property for a Homestead Market Value Exclusion or one of several other benefits or exclusions. Visit the Minnesota Department of Revenue’s Homestead Classification page for more information.
Why are taxes on lakeshore property higher than off-lake property?
The reason lakeshore property usually pays more taxes than a similar property not on the lake is due to the value of the lakeshore frontage. Property taxes are based partially on value; and the higher the value, the higher the tax. Sales prove that lakeshore in most cases is much more valuable than other land types. Each lake has its land valued according to the price buyers will pay which varies greatly from one lake to another, depending on the popularity of the lake. Other factors such as school district and township or city tax rates will affect the level of taxes from one property to another. When comparing value or taxes, always make sure you are comparing comparable properties in an area of similar tax rates.
Ditch assessments
Why is there a ditch assessment on my property taxes?
Your property was either included as a benefitted land in the original establishment of a county drainage system, or as a benefitted land during a redetermination of benefits. All costs associated with county drainage systems, established under §103E, are the responsibility of the benefitted properties. Your land was (re)determined to have benefit by the county drainage system either by the system draining wet acres on your land (thereby increasing productivity) or providing an outlet to drain your lands, or due to your lands creating a burden on the system(s) by increasing the need for capacity and ongoing maintenance. Essentially, if water from your lands goes into the county drainage system, you may see a ditch assessment.
The ditch does not benefit my land; can I get out of the assessments?
Many of the benefits of these drainage systems are from 1900–1923 and the landscape, watersheds, and land use may have changed. Property owners may petition the Drainage Authority to be removed from the drainage area under §103E.805, petition for a partial abandonment from the system under §103E.806, or abandonment of the drainage system under §103E.811.
How long is the assessment?
Drainage systems may be assessed for a variety of reasons, including to pay off loans which may have been taken from the county to pay for repairs, improvements, administration or a redetermination of benefits, or to build a repair fund under §103E.735. Annual assessments may change from year to year depending on the amount of deficits, past and present work being done, and work that is expected in the future. The Drainage Authority’s goal is to maintain positive accounts for all drainage systems to avoid negative accounts and interest.