3.0. EDSR 02-05-2001 - Laserfiche WebLink

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h gra o - 3 j N The State of Minnesota has one of the most complicated property tax systems 1, :4'....—®,?r ,t "4; in the nation. There are three factors that affect a property owner's property tax:the estimated market value ofthe property,the classification of the property(how the property is used), and the total local tax rate. cit) Market Value 14The assessor's estimated market value is established by the county assessor on an annual basis with a valuation as of January 2nd. The market value reflects only real property(land and buildings),with a few exceptions including electrical utility personal property. Equipment value would not be taxed; other states do levy a property tax on equipment. Each year,the Minnesota Department of Revenue reviews the actual sales of varioustypes of property P P Prix in the city or county and compares the sales to the assessor's estimated market value. This process is .mrit known as a sales ratio study. If the assessor's market value is found to be higher than 105 percent of the actual sales price or lower than 90 percent the actual sales price,the current year's assessment of property may be unilaterally adjusted. , cser4). Individual roe owners also retain the ability to contest their level of valuation through a Board of property rtY g Equalization process or other appeal processes. Workingwith the local assessor to determine his/her opinion on the market value is always P Y recommended before proceeding with any type of financing for a tax increment project. Class Rates to Taxes - The Minnesota Two-Step Each property type (rental property,homestead, commercial, etc.) is subject to a conversion from market value to tax capacity according to state statute. The conversion from market value to tax capacity is based on the classification,or use of the property. Each type of property is assigned a class rate, or percentage, as determined by the Legislature. Commercial, industrial and other business property tend to have higher class rates than residential and agricultural property. See the attachment showing the class rates for taxes payable 2001. Tax Rates and Jurisdictions The tax capacity is actually the taxable value of the property. This value is multiplied by the local tax rate to determine the amount of property tax a piece of property pays. The local tax rate is a combination ofthe city,county,school district and special taxing jurisdictions tax rates.This is the final step to the calculation of taxes. The local tax rate is applied against the combined tax capacities of all classes of property within their taxing jurisdictions to generate property taxes. Local tax rates vary in Minnesota from 110%to 200%. Therefore, properties with the same market values in neighboring cities could have property tax bills which vary by as much as to two times. The local tax rates are often shown as decimals (1.3000)rather than percentages. di EHLERS&ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113 651.697.8500