Frequently Asked Questions
What is market value?
MS Statute 273.08 states that the assessor shall actually view, and determine the market value of each tract or lot of real property listed for taxation, including the value of all improvements and structures thereon, at maximum intervals of five years and shall enter the value opposite each description. In addition, each year the appraiser inspects parcels with new construction, alterations or improvements.
Market value is the most probable price, as of a specified date, in cash, or in terms equivalent to cash, for which the specified property rights should sell after a reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting knowledgeably, and assuming that neither is under undue duress. In other words, market value is the price that a property would typically sell for under normal, competitive open market conditions.
How is market value determined?
The Cottonwood County Assessor’s Office uses the mass appraisal process for estimating market values. This process involves the comparisons between similar properties and actual market sales in a neighborhood or district. All sales information collected by the assessor’s office is closely analyzed. Values are adjusted by comparing properties that have sold with properties that have not sold. This sales comparison, by means of substitution, provides the basis for the assessor’s Estimated Market Value. The assessor collects sales information on all types of properties and compares characteristics such as location, size of the parcel, improvements, and amenities that affect what buyers would typically pay for your property.
How do market values change and why?
Property values fluctuate with general market conditions such as the general economy, property locations, supply and demand, demographic changes, new construction, and changes in tax laws. According to Minnesota State Laws, as property values change in the market place, those changes must be reflected in the assessors Estimated Market Value. Sales ratios which measure the difference between selling price and the Estimated Market Value are used to determine the direction that values need to go for the following assessment. The sales ratios use qualifying open market sales that take place between October 1 and September 30 of the preceding year. Commercial property sales are only compared with commercial properties. Residential sales are only compared with residential properties. Agricultural sales are only compared with agricultural properties.
What date is used in valuing and classifying my property?
The market value and classification of property is established as of January 2nd each year.
How is the classification of property determined?
Classification is a definition of how the property is used, determined by use and ownership. Property classes include agricultural, residential, vacant land, seasonal recreational, apartment, commercial, and industrial. Property classifications are based on the property use the preceding year. Property classifications describe the primary use of a property and affect the amount of property tax paid. Class rates are created and defined by the Minnesota State Legislature. A property can have more than one classification such as residential/commercial, agricultural/residential, etc. By state law, various classes of property are taxed at different rates. For example, two neighboring homes of equal value will be taxed at different rates if one is homestead and one is non homestead.
What is homestead?
Homestead is a property tax reduction program, intended to keep taxes lower on owner-occupied homes, according to Minnesota Statute 273.124. In order to receive homestead, you must present proof of ownership, complete a homestead application and provide the social security numbers of all owners. You must be listed as the owner on county tax records. The homestead classification applies to properties that are physically occupied by the owner(s) or qualifying relative(s) as the principal place of residence. Classification as a homestead may qualify a property for a reduced classification rate, a reduced taxable market value, a property tax refund, and/or other special programs.
What are the qualifications for homestead?
You must be the owner and occupant by December 1st of the current year. The homestead application must be turned into the County Assessor’s Office by December 15th to be eligible for the homestead classification for taxes payable in the following year.
Your County Assessor will determine whether you are a Minnesota resident for purposes of the homestead classification. You must be considered to be a Minnesota resident if all or some of the following conditions apply to you:
- You are registered to vote in Minnesota
- You have a valid Minnesota driver’s license
- You file a Minnesota income tax return
- You list a property in Minnesota as your permanent mailing address
- You are employed by a business located in Minnesota
- Your children, if any, attend school in Minnesota, and/or
- You are not a resident of any other state or country
Why do I have to report my Social Security number?
State law (MS 273.124, Subd. 13) requires the Social Security number and signature of each owner who occupies the property. The Social Security number of the spouse of each owner who occupies a property must also be provided – whether the spouse occupies the property or not. If there is not enough space for all required signatures and Social Security numbers, please attach a separate piece of paper with them to the application.
Social Security numbers are confidential information. Under state law (MS 273.124, Subd. 13) they may be given by your County Assessor to the Commissioner of Revenue, County Auditor, County Treasurer, County Attorney, Minnesota Department of Revenue and/or other local, state, or federal tax authorities. You may refuse to provide this information. However, refusal will disqualify you from receiving the homestead classification.
Those who own and occupy their primary place of residence, including manufactured homes, that may qualify for homestead, include owner-occupants, farm partnerships, members of family farm corporations, and certain relatives of the owner.
What are the penalties for having more than one homestead?
A property owner who obtains or attempts to obtain homestead classification for a property other than his or her primary place of residence or the primary place of residence of his or her relative is under state law subject to a fine of up to $3,000 and/or up to one year of imprisonment (MS 609.41). In addition, the property owner will be required to pay all tax which is due on the property based on its correct property class plus a penalty equal to the difference between the tax based on the homestead classification and that based on the property’s correct class (MS 273.124, Subd. 13).
Do you own another property occupied by a relative?
In addition to your own homestead, you may be able to obtain homestead classification for your property you own in Minnesota in which your relative lives as his or her residence. To receive this kind of homestead classification, the property must be the residence of any of the following: child, stepchild, daughter-in-law, son-in-law, parent, step-parent, parent-in-law, grandchild, grandparent, brother, brother-in-law, sister, sister-in-law, aunt, uncle, niece, or nephew. Contact the County Assessor’s Office in the county where the property is located to get an application form.
What are my responsibilities when I move out of my house?
You are required by law to notify the assessor within 30-days if you move out of your home. If you fail to notify the assessor within 30 days, the property may be assessed taxes due as if the property were non homestead.
What is an actively engaged in farming homestead?
Article 5, Section 13 of the 1999 Omnibus Tax Bill Allows agricultural homestead classification for farms of at least 40 acres (or government 40’s) where the farm owner does not live on the farm, but lives within four townships or cities of the farm, if the owner actively farms the land, is a Minnesota resident, and neither the owner or their spouse claim another agricultural homestead in Minnesota. This application requires signatures and social security numbers of all owners of the property, the farm number registered with the Farm Service agency and a copy of the Schedule F filed with the previous year’s income tax return. In 2011, legislation was passed that allows qualifying relatives of the owner to farm the land. Qualifying relatives include a child, grandchild, sibling, or parent of the owner (or grantor) or spouse of the owner (or grantor). Owners and farmers of the property are required to re-apply every year for this homestead benefit.
Please call the County Assessor’s Office for more information on homesteads or any other property tax assessing questions.
How and when do I challenge the value or classification of my property?
Local Boards of Appeal and Equalization are held each year by each taxing district in April and May. Property owners who feel their value or classification is incorrect, can appeal the value or classification to the local board of appeal and equalization. If no satisfaction is received at the Local Board of Appeal and Equalization, the owner can appeal to the County Board of Appeal and Equalization. Failure to appeal value or classification to the Local Board of Appeal and Equalization, makes the owner ineligible to appear at County Board of Appeal and Equalization.
MS Statute 273.20 Assessor may enter dwellings, buildings, or structures.
Any officer authorized by law to assess property for taxation may, when necessary for the proper performance of their duties, enter any dwelling-house, building, or structure, and view the same and the property therein.
Any officer authorized by law to assess property for ad valorem tax purpose shall have reasonable access to land and structures, as necessary, for the proper performance of their duties. A property owner may refuse to allow an assessor to inspect their property. This refusal by the property owner must be either verbal or expressly stated in a letter to the county assessor. If the assessor is denied access to view a property, the assessor is authorized to estimate the properties market value by making assumptions believed appropriate concerning the property’s finish and condition.
MS Statute 274.01 The local board can't make changes benefiting a property owner who refuses entry by the assessor.
The local board of appeal and equalization may not make an individual market value adjustment or classification change that would benefit the property in cases where the owner or other person having control over the property will not permit the assessor to inspect the property and the interior of any buildings or structures.
How and why are assessors licensed?
The Minnesota State Board of Assessors grants licenses to assessors acting under the authority given to it by the Minnesota Legislature. The purpose of the Board is to educate, license and regulate the professional conduct of assessors in order to provide the taxpayers of Minnesota with a fair and equitable valuation of their property. The Board publishes rules that govern the licensing requirements for assessors. The assessing personnel are required by law to attend Continuing Education classes and seminars to maintain their current level of licensure or to attain a higher designation of licensure. All assessors, once granted an assessors license, must maintain adequate continuing education as per their licensure levels over a four year time line.
How are my property taxes determined?
In Minnesota, property taxes provide most of the funding for local government services. Each property’s share of the property tax burden is determined according to its value and use. The County Assessor’s Office collects, tabulates, and updates property data annually for further county calculations. The dollar amount required to cover operating expenses of local governments is levied by each township, city, school district or county to pay for services required by local citizens. This translates into an annual property tax bill due and payable for each individual property.
There are three entities that have a role in determining property taxes. The State Legislature establishes property classes and class rates. The State determines levels of state aid to the local units of government, sets the amount of homestead credit, sets the State General Tax Rate, and mandates unfunded programs to local governments. Local units of government (school district, township/city, and county) determine their tax levy amount. The county assessor assigns each property a market value and property use classification based on state statute. The property tax is then calculated based on the result of actions taken by all three entities.
What causes my property taxes to change?
- Changes to the tax levy (amount of money requested by taxing jurisdictions for operations) made by the city, county, school district or special taxing districts
- Changes to the market value of your property
- Changes in the market values for the area or a particular type of property (example: agricultural)
- Legislative changes to the property classification rates, state aid formulas and other tax laws
- Legislative unfounded mandates (usually seen as an increase in local government tax levy)
- New taxes approved by referendum
- Changes to the homestead laws