U.S. Property Tax Association, Inc.


Text To: 612-735-1985

Fighting For The Underdogs In Commercial Property Tax Appeals

Part II: A look at Minnesota’s different property tax classes

On Behalf of | Jul 28, 2020 | Commercial Property Tax Appeals

In a previous post to our Minnesota Commercial Property Tax Appeals Blog, we began looking at the states property tax classes: Residential, Agricultural, Commercial/Industrial/Public Utility and Other Residential. (Please check the previous post for an introduction to the topic.)

Focused on commercial properties

Our focus here is going to be Minnesota’s tax rates for commercial and industrial properties. For commercial/industrial property valued at up to $150,000, the tax rate is 1.5 percent. For those properties valued at more than $150,000, the tax rate is 2 percent.

Before we go further, it should be stated that in addition to the different class rates, there are also different tax burdens because of voter-approved levies applied to some types of property but not to others.

Some property types also qualify for property tax credits that lower the net tax for the property’s owner. Just to make things more confusing for casual readers of the state’s website, there are also variations in tax rates between different taxing jurisdictions in Minnesota.

Examples of tax bills

With those caveats in mind, let’s take a look at property taxes on commercial property with a market value of $200,000. It will be taxed at 2 percent, with a net tax of $4,398. The effective tax rate will be 2.2 percent. (The state notes that effective tax rate is the net tax divided by market value.)

The state also says that a commercial property valued at $2 million is taxed at 2 percent, with a net tax of $59,838 and effective tax rate of 2.99 percent.

In many cases, a tax assessor places an inflated value on a property that results in a too-high tax bill. A more accurate property assessment – or property classification – is then a critical component of a successful commercial property tax appeal.