There are programs and tax credits to give relief to taxpayers who face a significant increase in their taxes or have a level of property tax that is disproportionate to their income. More information is available by calling the MN Department of Revenue (651) 296-4444, visiting MN Department of Revenue website , or reading below.
What is an Income Adjusted Homestead Credit?
What is Targeting?
What is the Senior Citizen Property Tax Deferral program?
How does the Senior Citizen Property Tax Deferral program work?
Who may be eligible for the Senior Citizen Property Tax Deferral Program?
How do I apply for Senior Citizen Property Tax Deferral?
What is Disaster Credit?
How do I apply for the disaster credit?
What is, and how do I apply for, a non-profit or 501(c)(3) property tax exemption?
The purpose of the "Income Adjusted Homestead Credit" is to ensure that taxes do not become disproportionate with a person's income. There are a number of requirements for this program. The 2001 Legislature, in conjunction with comprehensive property tax changes, increased the maximum refund for this program to $1,700. There is an income threshold for the program; your total household income for 2006 must be less than $91,120.
A second program is "Targeting" which provides a refund if taxes increase above 12% and the increase is at least $100 from the prior year. Most Minneapolis homeowners qualify for a refund under this program.
The basic requirements are that one owner must be 65 years of age or older and have a household income less than $60,000. This is a deferral of tax, not a reduction. The taxes accumulate along with interest at a rate not to exceed 5% and a lien is attached to the property.
This is only a brief introduction to the Senior Citizens Property Tax Deferral program. For an application and answers to specific questions, call the Property Tax Division of the Minnesota Department of Revenue at: (651) 556-6091 or 1-800-627-9094, extension 6-6109, TDD/TTY users: call the Minnesota Relay Service at 1-800-627-3529; ask for 800-652-9094, extension 6-0335
This is not a tax forgiveness program –- it is a loan from the state. The deferred tax is paid by the state to your county. Interest will be charged on this loan. The interest rate will be adjusted annually, but will not exceed 5 percent.
While in this program, you will pay no more than 3 percent of your household income toward your property taxes each year, no matter how high your property taxes actually are. The state will pay the rest. You, or your heirs, will need to repay the deferred amount before you can transfer title of the property.
As part of your initial tax deferral application, you will need to provide -- at your expense –- a report detailing any mortgages, liens, judgments, or unpaid property taxes on the property. If there are none, you will still need to provide a report confirming this fact. The report must be dated within 30 days of your application.
Participation in this tax deferral program is voluntary. If you participate, a tax lien will be placed on your property. This lien must be satisfied before you can sell your property. In the event of your death, your heirs must satisfy the lien before they can acquire clear title. You may want to consult with an attorney, an estate planner, or a family member before enrolling.
In order to qualify for this program, all of the following conditions must be met:
- The property must be owned and occupied as a homestead by a person 65 years of age or older. **Effective July 1, 2009, and thereafter; the property tax law amendment "Changes the age requirement for the senior deferral program so that at the time the deferral is initially granted only one spouse must be at least 65 years old, and other spouse must be at least 62 years old. Under prior law both spouses must have been 65 years old to qualify for the deferral." (The homestead can be classified as residential or agricultural, or it may be part of a multi-unit building.)
- The total household income may not exceed $60,000 for the calendar year preceding the year of initial application.
- The home must have been owned and occupied as the homestead of at least one of the homeowners for at least 15 years prior to the year of initial application.
- There must be no state or federal tax liens or judgment liens on the property.
- The total unpaid balance of debts secured by mortgages and other liens against the property must not exceed 75 percent of the estimated market value of the property.
Applications are available in City of Minneapolis Assessors office and online at the Minnesota Department of Revenue's website. All applications must be made by July 1 to defer a portion of the following year’s tax. You may apply in the year in which you become 65 years old, but no deferral will be allowed until the following year.
This form of credit is granted to properties that have been accidentally or unintentionally damaged. The damage must be greater than 50% or more of the market value and the property must be uninhabitable or unusable. The owner of a homestead or non-homestead property can apply for a reduction in the amount of property taxes payable for the year in which the destruction occurs.
The amount of the reduction is calculated using the number of whole months that the property is uninhabitable or unusable. Then the amount of value attributable to the structure is multiplied by the net tax. Finally, the fraction (number of whole months the property is uninhabitable divided by 12) is then multiplied by the result.
For example: A home with an estimated market value of $100,000 and a net tax of $3,000 is damaged by fire on July 10, 2006 and becomes habitable on November 7, 2006. The structure value is $75,000 and produces a ratio of 75%. This is multiplied by the net tax of $3,000. Therefore, $2,250 of the tax is attributable to the structure. This dollar amount multiplied by the fraction of 3/12, which is the number of whole months that the taxpayer was unable to occupy the property, gives the homeowner, a $562.50 credit.
First, call the City of Minneapolis Assessors Office to alert them of the structural damage. In order to process Hennepin Countys Individual Disaster Credit, you must complete an application and return it to the Minneapolis Assessor’s office. This should be done as soon as practical after the damage has occurred.
Additionally, it is necessary to have a copy of your insurance company’s damage report when it becomes available.
Finally, you will need to contact the City of Minneapolis Assessor’s Office when work is completed that makes the property habitable or when the property is sold.
What is, and how do I apply for, a non-profit or 501(c)(3) property tax exemption?
Organizations seeking 501(c)(3) exemptions must file an exempt application for each parcel that may qualify. In order to receive exempt status, there must be a concurrence of ownership and use. The parcel must be used solely for the specified purpose for which the institution received its 501(c)(3) charters. This means that if the land, its improvements, or any part thereof is not used in accordance with stated purposes, the exemption will be reviewed and the ineligible property or portion of the property will be assessed for property taxation purposes. In accordance with Minnesota statutes, "Upon written request of the assessor, the taxpayer filing a statement of exemption shall make available to the assessor all books and records relating to the ownership or use of the property which are reasonably necessary to verify that the property qualifies for exemption."
- Ownership - Deed and date (property owned prior to July 1 may qualify for exemption in the current assessment year)
- Use - Descriptions: pamphlets, brochures, letter explaining the function of the entity and how the property is being used
- 501(C)(3) of the Internal Revenue Code - Federal Certification of Non-Profit or Exempt Status from Federal Income Taxes
- Articles of Incorporation - Eventuality of Corporate Dissolution
- Synopsis of Organizational Function - Mission Statement and Organizational Purpose; who are your clients?
- Minnesota Form 990 Income Tax Return - Who pays for the services provided by the organization?
- Occupants - Tenant lists, rent roles, outlining square footage, etc…
- Property Tax Application – a document completed by applicant and submitted with supporting documentation for exemption.
Last updated Dec. 6, 2011