Agenda - Council - 10/12/1993 - Laserfiche WebLink

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SUMMARY OF TAX LEVIES, PAYMENT PROVISIONS, AND MINNESOTA REAL PROPERTY VALUATION APPENDIX !1 Following is a summary of certain statutory provisions effective through 1992 relative to tax levy procedures, tax payment and credit procedures, and the mechanics of real property valuation. The summary does not purport to be inclusive of all such provisions or of the specific provisions discussed, and is qualified by reference to the complete text of applicable statutes, rules and regulations of the State of Minnesota in reference thereto. This summary reflects changes to Minnesota property tax laws enacted by the State Legislature during the 1992 Regular Session. Property Valuations (Chapter 273, Minnesota Statutes) Assessor's Estimated Market Value Each parcel of real property subject to taxation must, by statute, be appraised at least once every four years as of January 2 of the year of appraisal. With certain exceptions, all property is valued at its market value which is the value the assessor determines to be the price he believes the property to be fairly worth, and which is referred to as the "Estimated Market Value." Indicated Market Value Because the Estimated Market Value as determined by an assessor may not represent the price of real property in the marketplace, the "indicated Market Value" is generally regarded as more representative of full value. The Indicated Market Value is determined by dividing the Estimated Market Value of a given year by the same year's sales ratio determined by the State Department of Revenue. The sales ratio represents the overall relationship between the Estimated Market Value of property within the taxing unit and actual selling price. Tax Capacity For property taxes payable in 1989, the value of the property used to determine the property tax was "Gross Tax Capacity." Gross Tax Capacity, like Assessed Value, was calculated by applying a statutory formula to the Estimated Market Value. Generally, Gross Tax Capacity is approximately 12.5% of Assessed Value for most classifications of property. The Gross Tax Capacity multiplied by the Tax Capacity Rate, instead of the Mill Rate, determined the tax payable on a parcel of property. Beginning with taxes payable in 1990, Net Tax Capacity has replaced Gross Tax Capacity as the basis on which taxes are levied. The Estimated Market Value multiplied by the appropriate class rate (gross or net) yields the tax capacity (gross or net). Net Tax Capacity differs from Gross Tax Capacity primarily by having lower values for homesteaded residential and certain agricultural property. The formulas for converting Estimated Market Value to Assessed Value and Tax Capacity represent a basic element of the State's property tax relief system and are therefore subject to annual revisions by the State Legislature. For taxes payable in 1988 and for prior years, property taxes were levied based on "Assessed Value." Assessed Value of real property was calculated by applying the statutory formula applicable to the property's classification. Property Tax Payments and Delinquencies (Chapters 276, 279-282 and 549, Minnesota Statutes) Ad valorem property taxes levied by local governments in Minnesota are extended and collected by the various counties within the State. Each taxing jurisdiction is required to certify the annual tax levy to the county auditor within five (5) working days after December 20 of the i1-1