City Assessor's Office

City of Lakes Building
309 2nd Ave. S., Room 100
Minneapolis, MN 55401
Call 311 or (612) 673-3000

Office Hours:
8:00 a.m. - 4:30 p.m.
Monday – Friday
 

Introduction to Property Taxes

In Minnesota, real estate property taxes account for approximately one third of the State and Local taxes. Real estate property taxes, in part, pay for services needed to fulfill the City’s mission including; the Fire and Police Department, street construction and maintenance, and water and sewer.

Hennepin County collects property taxes and distributes the money to various local government entities including the City, County, School District, and special districts like Metro Transit.

Why are properties assessed?
What is an assessment?
How does my property value affect my property taxes?
What causes my property taxes to go up?
What causes my property taxes to go down?
How can my property taxes go up more than my property value?
Are there any limits on how much my property taxes can go up?
Are there any options to reduce the amount of property taxes I pay?
When is it going to stop? My taxes keep going up and I can barely afford to live in my home?
Why does county, city, and school district spending change so much?
I thought that the State was paying the School Property Tax portion of my bill beginning in 2002?
I read that the Tax Reform would result in a tax decrease, yet my taxes went up (or stayed the same).

Why are properties assessed?

Properties are assessed to determine what share of the taxes each property will be required to pay. The specific dollar amount is determined according to the properties value, property classification or use and property tax levies. Assessors are responsible for estimating property values and setting classification for tax purposes. In Minneapolis, the City Assessor’s Office is responsible for determining property assessments.

What is an assessment?

An assessment is the accurate and equitable valuing and classifying of real estate property or parcels within the City of Minneapolis, to determine the real estate property’s market value and thus establishing the City’s tax base.

Valuing a property requires that assessors view each property and research local market conditions to appraise market value. Property values change continuously based on a number of factors, most of which are changing economic conditions or a physical change to the land or building. The property values are set at 100% of market value as determined by annual State Department of Revenue sale surveys. Per Minnesota statute, all property is valued each year and is inspected at least once every five years.

Classification refers to how a property is used. Examples of property classifications are: residential homestead, residential non-homestead, seasonal recreational, commercial, exempt, apartment, industrial, utility, etc. If a property is not currently being used, it is classified according to its most probable, highest and best use.

The City of Minneapolis Assessors would be happy to explain to property owners how the market value of their property was determined, and also explain the avenues of appeal if a property owner disagrees with the assessment.

How does my property value affect my property taxes?

Two major pieces of information affect the calculation of your property taxes. The first is the value of your property and how it relates to the total value of all property in the City of Minneapolis. The second is the total tax bill for all units of local government.

Here is a brief explanation of how the property tax system works. The City of Minneapolis, Hennepin County, Minneapolis School District and other taxing authorities set their annual budgets. Next they determine how much of their budget they can get from sources other than tax levies, the rest of the money they need for their budget or tax levy will need to come from property taxes. The tax levy is the amount of money that must be collected from real estate property taxes to operate all the local government programs and services each year.

Your share of the total property tax dollars needed is determined by the market value and classification of your property, which result in a calculation of your share of the needed dollars or your tax capacity.

The needed property tax revenue (tax levy) is divided by your property’s tax capacity. The result is a set of mathematical calculations (tax rate) taking into consideration each taxing authorities need and any legal limits. The tax rate is used to spread the tax levy equally among all properties in the local government's area. It is the result of dividing the taxable value by the tax levy so that the levy is spread across each individual, taxable parcel.

The Minnesota Center for Public Finance Research, formerly known as the Minnesota Tax Foundation, a non-profit, non-partisan group publishes a detailed annual booklet " a href="http://www.mntax.org/cpfr/uypt.php">Understanding Your Property Taxes". It is a good summary that goes into a much more detailed description of the process.

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What causes my property taxes to go up?

These factors can affect your property taxes.

What causes my property taxes to go down?

These factors can affect your property taxes.

How can my property taxes go up more than my property value?

There are at least two situations in which this can happen. First, if the total value of all of the property in the City goes down and the value of your property stays the same, the tax rate will be higher for all properties and your relative share of the taxes will go up.

Second, if your property value stays the same, and the total value of all of the property in the City stays the same, but the amount of needed tax dollars divided between those properties goes up, then your relative share of the taxes will go up.

Are there any limits on how much my property taxes can go up?

Residential property benefited from the Limited Market Value (LMV) Minnesota Statute between 1993 and 2008. It was designed to protect property owners from large jumps in property taxes from year to year that are a result of valuation increases due to a particularly healthy real estate market. LMV limited the percentage increase allowable in a single year. State law requires the establishment of property values that are very close to a property's actual market value. While LMV was in effect the "correct" or accurate market value stayed in the assessor's records and would eventually catch up with the property when the real estate market settled into a slower growth pattern in property values.

For more information about limited market value, read the MN House of Representatives' Research Office explanation. For all other property types, there was no limit on the amount property taxes can go up.

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Are there any options to reduce the amount of property taxes I pay?

Credits: Certain types of property - including most residential property - qualify for property tax credits, which reduce the amount of tax that would otherwise be due. In the City of Minneapolis, the homestead credit, special homestead credits for property owners who are disabled, blind or for senior residents and other programs may help reduce the amount of taxes due each year. Learn more about tax relief programs.

M1PR - Homeowner's Property Tax Refund: This program won't lower your property taxes, but may mean you can receive a refund from the state of Minnesota if your income is low relative to your property taxes. The property tax refund program provides a refund to property owners who meet certain financial guidelines.

A SPECIAL property tax refund program offers relief to property owners, regardless of income, whose taxes go up more than 12 percent and at least $100 from one year to the next. The state will refund 60 percent of any amounts paid beyond those limits, up to a maximum of $1,000.

For more information on property tax refunds, rebates, and credits, see the Minnesota Department of Revenue's website or call 651-296-3781; TDD 651-297-2196. Taxpayers must complete a form available from the state Revenue Department called the Schedule M-1PR.

When is it going to stop? My taxes keep going up and I can barely afford to live in my home?

Share your concerns with elected officials at the Truth in Taxation meetings. Find out about Tax Reduction Programs and Tax Deferral Programs.

Why does county, city, and school district spending change so much?

That question does not have a simple answer. There are several reasons that spending changes. Here are some possible reasons:

The budget documents of the county, city, school district provide a detailed breakdown of expenses from year to year. These are public documents and are available for your review.

See the City of Minneapolis Budget.

I thought that the State was paying the School Property Tax portion of my bill beginning in 2002?

The property tax reform that passed in the 2001 Legislative Session has the State paying for the base education levy that totals $900 million statewide. The State is paying the City of Minneapolis over $100 million to cover the cost of state mandated education. However the school portion of the property tax includes both the base levy and other items. For property taxes payable in 2001, the Minneapolis school tax rate was 52.157%; for taxes payable in 2002 it was 32.863%; thus, the school portion of your property taxes was reduced by 37%, not 100%.

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I read that the Tax Reform would result in a tax decrease, yet my taxes went up (or stayed the same).

Tax reform created many changes in the property classification rates. Compared with other property types:

The method of distributing the property tax burden is decided by the State Legislature. For example, a lower valued home may have a tax increase while a higher value property receives a decrease, even though both of them had a value increase of the full 15.0% under the limited market value law. Many of these changes are a function of the changes in classification rates.

Property taxes have a fluid nature so when one property type receives a larger tax break than another property type, it results in taxes shifting, not tax elimination. The impact on Minneapolis homeowners from the property tax reform has resulted in a tax shift from commercial properties to homeowners. Some of the reasons for this are:

  1. The class rate changes benefited commercial and industrial property (declines of 37.5% and 41.1% in the two class rate tiers) as compared to residential property (declines of 0%, 39.9% and 24.2% in the three tax rate tiers). Apartment class rates were reduced in phases with an ultimate 47.9% decrease in their class rate. The commercial/industrial property class rate changes are partially offset by the new state property tax imposed on this property type.
  2. Independent of the class rate changes are changes in market conditions that have occurred over the past +/- three years with commercial property values, specifically offices. The weak economy and migration of several large corporations from multi tenant, investor owned buildings (such as the IDS building) into their own buildings (such as the new Target campus downtown) has resulted in lower values for office buildings. The central business district paid +/- 40% of the city's taxes prior to 2001 Tax reform and the weak market conditions, it now pays +/- 33% of the taxes.
  3. In 1997, residential property paid 33% of the city's tax burden while commercial/industrial property paid 56%. With the phase out of limited market value and class rate changes made by the State Legislature, this amount will be nearly reversed for taxes payable in 2007 (55% of the tax burden paid by residential and 35% by commercial/industrial).

Last updated Apr 17, 2014