Our Clients’ Frequently Asked Questions
How many valuation methods do property tax assessors use?
An assessor is barred from using only one valuation method for every single property and must justify his or her chosen methods.
When are Minnesota property values established?
In Minnesota, a property’s classification and value are established as of January 2nd of each year.
What do property tax assessors consider in determining market value?
Tax assessors estimate market value by examining a property’s characteristics, including size, age, condition and special features. When the assessor determines your property’s market value, he or she is obligated to consider every relevant factor, including actual market sales or market rents.
How often are Minnesota property values assessed?
An inspection of the property is required once in every five years, but the property’s value may be adjusted based on local market activity even in years when the property is not inspected.
Is there anything I can do to lower my property taxes?
You have the right to appeal the market value estimate of your property if you believe your property is improperly classified, valued above its likely resale price or valued differently than comparable properties.
If you can show that the market value for your property is less than assessed, you may be able to lower your taxes. An experienced attorney can often negotiate a change in a property value assessment by providing evidence of comparable sales to demonstrate market value.
How can commercial property be misclassified by an assessor?
Under Minnesota, taxable property includes land, buildings, attachments and some improvements. There are several things that are exempt from this definition of taxable “real property,” including tools, implements, machinery and equipment used in business operations. Therefore, if the tax assessor has classified one of these exempt items as taxable real property, you may be able to lower your property taxes.
How was my property assessed for tax purposes?
In Minnesota, there are three approaches that assessors can use to valuate property:
- The Market Comparison Approach: Your property may be valued on the basis of other sales of similar properties. The market comparison approach can be difficult for tax assessors to use when there are few comparable property sales or if a property is unique.
- The Cost Approach: Tax assessors may value your property based on what a willing buyer would pay for it. The cost approach is essentially an estimate of the land value minus the depreciated value of the improvements. Although the cost approach can work well for new properties, it becomes problematic for valuating older buildings because of the imprecise determination of depreciation. Hidden defects such as building code violations may also cause a cost approach analysis to be highly inaccurate.
- The Income Approach: Income-producing properties are generally assessed using the so-called “income approach” which is based on the income the property is expected to generate. In this approach, the value of a property may be determined by using capitalization rates, or cap rates, which are applied to the first year net operating income. A discounted cash flow analysis may also be used to determine the property’s value. When determining the value of the property, it is important to consider economic downturns and their impact on vacancies or decreased rents.
Although your tax assessor may have used one of these generally accepted approaches when valuating your property, this does not necessarily ensure that your property’s value was correctly determined. The tax assessor may not have had all of the information about your property, or may have focused on local comparable sales that might not be as similar as sales found in a broader market. An attorney can help you examine whether you still have a valid claim for appeal.
What happens if a tax assessor doesn’t reduce my property taxes?
If we are unable to convince the tax assessor that your property’s value is less than assessed, the next step is to appeal the case to your county’s Board of Appeal and Equalization and then to the Minnesota Tax Court.
How long do I have to appeal my Minnesota property tax assessment?
You have until April 30 of the year your property tax becomes payable to appeal your assessment; for instance, you must appeal your 2023 property valuation or classification on or before April 30 of 2024.
What is the structure of the Minnesota Tax Court?
The Minnesota Tax Court is comprised of three judges who have some type of background in or knowledge of property taxes, one of which will hear and decide your case. A tax court judge is required to use his or her independent judgment in evaluating all offered testimony and evidence, including information from the tax assessor regarding how the assessment was reached and your own appraisal expert’s valuation.
How long will my property tax appeal take?
Although there are certain general timelines, the length of time it takes to complete a property tax appeal varies widely. In general, the tax court will hear a case within one year of filing an appeal. The hearing itself continues until both sides have presented all of their evidence, including information on property size, obsolescence, comparable sales and expert opinions. Once your hearing has ended, the court should make a decision within 90 days. If you are not satisfied by the decision, you can continue your appeal to the Minnesota Supreme Court.