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2012-12-19 Special Assess MeetingCity of Mound Presentation on Understanding the Assessors Estimated Market Value and the corresponding Real Estate Taxes The question is What would your home sell for on January 2, 2012? At issue is the Assessors Estimated Market Value [AEMV] for 1/2/2012. This AEMV is the basis of your pay 2013 Property Tax. Materials Hand out of this presentation DOR Fact Sheets 12a / 12b / 12c Hand out on Filing Property Tax Petitions Map of NH 01-16-07 Jim Atchison County Assessor 612-348-0567 'aures atch' rd hrince in,rin us Earl Zent Assistant County Assessor 612 34"602 earl zeri h Outline • Handouts • Resources on Property Tax • Who Determines your Property Tax • Role of the Assessor • Specifics of your neighborhood • What are your options for pay 2013 - Property Tax Refund - Property Tax Petition Additional Resources Hennepin County - mi banned n us • Property Information Search • Current and historic values/Maps • Annual Assessor Report • County Attorney for Tax Petitions State of Minnesota - Department of Revenue wmv.niyeaue state Mn -The Office of the Revisor of Statutes • %WVV rev aor urn coy - MS 270 - 289 12/19/2012 1 Types of Sales All Sales are considered All Sales are in the study, until removed for specific non market reasons • Lender Mediated - Sheriff or Foreclosure Sales* Coli HIUM ft, - Bank Sales' After Redemption Period -"Short Sales" "Any time' Short of liens • Traditional -Short Sales are included in our analysis Statistics Considered — Median — Mean — Price Related Differential [PRD] —Coeffenct of Dispersion [COD] — Stratifications by Sale Price and AEMV — Sales Chasing Neighborhoods SFR — Detached Condos, Coops, Townhomes, Double, Triplexes SFR — Attached Water Influences No Water Influences ,9 17 Sales Ratios AEMV / Sales Price = Sales Ratio $95,000 / $100,000 = 95.0% Equitable Assessments • Sales Ratio Analysis - Type of home - Value Range - Neighborhood - Property Type - Jurisdiction 12/19/2012 Reviewer • City Assessor • County Assessor reviews all local jurisdictions in County • Department of Revenue reviews all county assessments across state Specifics of Your NH 01-16-07 — Harrisons Bay S Fairview La One of 23 NH's on Harrisons Bay A total of 46 properties are in this NH 0 �a CI Neiahborhood 01-16-08 Harrisons Bay S Arbor Pt to Marina These properties are in a different neighborhood due to: • NO Wake Zone • Proximity to Marina • Boat traffic through Seton Channel • View of Seton Village Sales in NH for 2012 Assmt Radios• .... .6 + .. Page u1EMVI.., ge+Rrem nA a Toa00b..., Sale Price 11 AEMV R.U. 2051 nJw 8 1tl.w ae Wo ee. u1NeuEd Arbor n -M. s W.. ne.. en 37ago.700d 63.2% 2017 lee Wo0Ne LMw.• Arbor 11 -Aug $ IQ," 495,000 66.9% 5112 M Regular PTR FOR 2011 • Total household income less than $100,780 • Maximum refund is $2,460 12/19/2012 "Going In" Sales Ratio ProDertv Tax Refund - RTR As a homeowner, you may be eligible for one or both... • Regular property tax refund • Special property tax refund Special PTR FOR 2011 • Homestead for both 1/2/12 and 1/2/2013 — Relative homesteads DO NOT qualify • Net tax increased more than 12% • Increase of more than $100 • NO INCOME LIMIT • Maximum refund is $1,000 5 Sale Address Date Sale Price 11 AEMV R.U. 2051 Arbor 11 -Aug $ 1,122,500 709,000 63.2% 2017 Arbor 11 -Aug $ IQ," 495,000 66.9% 5112 Edge 11 -May $ 381,000 298," 78.2% 2009 Arbor 11 -Aug $ 337,000 298,000 88.4% Medbn RS% ProDertv Tax Refund - RTR As a homeowner, you may be eligible for one or both... • Regular property tax refund • Special property tax refund Special PTR FOR 2011 • Homestead for both 1/2/12 and 1/2/2013 — Relative homesteads DO NOT qualify • Net tax increased more than 12% • Increase of more than $100 • NO INCOME LIMIT • Maximum refund is $1,000 5 What are my options if I don't agree with my assessed value? Do your research... -Verify information about your property - Review sales data to rind out what other similar properties in your area are selling for. Web site: www.hennepin.us and then call your assessor (612-348- 3046) if you have questions or concerns. Appeals Process II Open Book / Local Board of Appeal and Equalization • Mesta in April • Open Book Is a few to face discussion with the city appraiser County Board of Appeal and Equalization • Users the V week of June • Seven appointed board! members • You must sign up to start to review and attend. Tax Court File pelltion by Apn130, 2013 for your 2012 assessed value. Pay 2013 Real Estate Taxes Options • If you believe the AEMV is incorrect - Have the city appraiser inspect your property - File a pay 13 Property Tax Petition • If the value is correct — File a Property Tax Refund Appeals Process Call the assessor's office number listed on your value notice Multi -step appeal process for taxpayers contesting property valuation/classification — City Assessor/Board of Equalization — County Assessor/Board of Equalization — Tax Court Petition Tax Court Specifics Handout Appeals Process III Open Forum 12/19/2012 JAMES R DUSTRUDE DAVID & BARBARA BODE CATHERINE L VAN DER SCHANS 2001 ARBOR LA 2003 ARBOR LANE 12671 SHERWOOD PLACE MOUND MN 55364 MOUND MN 55364 MINNETONKA MN 55305 SHELLI WOJCIECHOSKI GENE B SAVAGE JR JOHN M EVANS & 2033 ARBOR LA 2541 ZINRAN AVE S SHIRLEY L EVANS MOUND MN 55364 ST LOUIS PARK MN 55426 2025 ARBOR LA MOUND MN 55364 JOHN W RANGE/JENNIFER RANGE LINDA S & TERRY L ADAMS HOWARD D & LINDA J SCHER 2039 ARBOR LA 2029 ARBOR LA 2017 ARBOR LA MOUND MN 55364 MOUND MN 55364 MOUND MN 55364 LISA E MATSON CHRISTIAN & KRISTEN KLEIN STUART J PAGEL 2045 ARBOR LA 2051 ARBOR LA 2057 ARBOR LA MOUND MN 55364 MOUND MN 55364 MOUND MN 55364 EDWARD G & LAURA L ROCKWELL DAVID & LORRAINE PAINTER ERIC WITTINE & SUSAN WITTINE 4888 EDGEWATER DR 4890 EDGEWATER DR 4894 EDGEWATER DR MOUND MN 55364 MOUND MN 55364 MOUND MN 55364 ROBERT J BROSE DANIEL LINK/HEATHER BERGER LARRY L NIENKERK 4898 EDGEWATER DR 4900 EDGEWATER DR 4908 EDGEWATER DR MOUND MN 55364 MOUND MN 55364 MOUND MN 55364 DEAN MOODIEMONSTEVE K SUNNARBORG BONNIE LEE GAASLAND 4916 ED E EDGEWMOODIEATER 4924 EDGEWATER DR 4936 EDGEWATER DR MOO EDGEWATER DR MOUND MN 55364 MOUND MN 55364 MOUND MN 55364 KRISTOPHER KRAMER KELLY FRANCIS JOSEPHSON JANICE L RAHM 4942 EDGEWATER DR 4948 EDGEWATER DR 13816 UTAH AVE MOUND MN 55364 MOUND MN 55364 SAVAGE MN 56330 TERESA A MAZZITELLI JOSEPH M & DIANE H SOTAK STEPHEN J ZIELINSKI 4964 EDGEWATER DR 4972 EDGEWATER DR 5000 EDGEWATER DR MOUND MN 55364 MOUND MN 55364 MOUND MN 55364 RYAN R H ER OTBACH NANCY MRS MARGARET THORNE JANICE MARIE OLSON 5012 EDGEWATER DRIVE NE 5016 EDGEWATER DR 8995 AVILA LA COVE EDEN PRAIRIE MN 55347 MOUND MN 55364 MOUND MN 55364 VIRGINIA G MILLER RICHARD E LONG & LOIS R LONG TRAVIS DEMERS/SUSAN DEMERS 5020 EDGEWATER DR 5024 EDGEWATER DR 24185 WOOD DR MOUND MN 55364 MOUND MN 55364 SHOREWOOD MN 55331 PATRICK W PELSTRING KAIA M EMERSON-PELSTRING 5032 EDGEWATER DR MOUND MN 55364 MICHAEL J/BARBARA A WILKUS 5120 EDGEWATER DR MOUND MN 55364 JOSEPH M GEFFRE 5430 THREE POINTS BLVD #111 MOUND MN 55364 PATRICK A FURLONG 5044 EDGEWATER DRIVE MOUND MN 55364 STEVE & MICHELLE AGRIMSON SAM DECKER 5056 EDGEWATER DR MOUND MN 55364 CRAIG A ROSE 5100 EDGEWATER DR MOUND MN 55364 RICHARD CHARLES JACKSON 5048 EDGEWATER DR MOUND MN 55364 JANE E & JOHN R ANDERSON 15016 LYNN TER MINNETONKA MN 55345 CAREY MANSON 5104 EDGEWATER DR MOUND MN 55364 DOUGLAS DAHM TODD B & WANDA K SIGURDSON JONATHAN A GOODE & 5108 EDGEWATER DR 17050 41ST PL N JUSTINE A GUYOT-GOODE MOUND MN 55364 PLYMOUTH MN 55446 5116 EDGEWATER DR MOUND MN 55364 INSTRUCTIONS FOR FILING PROPERTY TAX PETITIONS IN HENNEPIN COUNTY, MINNESOTA Revised April 19, 2012 http;//www.hennepinattorney.org/taxpetition.aspx THIS DOCUMENT IS INTENDED TO PROVIDE PUBLIC INFORMATION, NOT LEGAL ADVICE Where to Get the Forms Minnesota Tax Court Form 7 (Regular Division or Small Claims Division) along with instructions can be obtained from: www.taxcourt.state.mn.us Click on "Forms", choose MN Tax Court Form 7 — Property Tax Appeals Information Sheet Minnesota Tax Court (651) 296-2806 Hennepin County Government Center, District Court, 2nd floor, Public Service Level, Civil Intake counter Which Division to Use and Filing Fees a. Regular Division - A decision by the MN Tax Court in a Property Tax Petition brought through Regular Division is appealable to the MN Supreme Court. Filing fee for Regular Division = $322.00 Make checks payable to "District Court Administrator." b. Small Claims Division — The Small Claims Division is a low cost way to appeal property tax issues. To file a Small Claims Division petition, you must meet one of these conditions: i. The issue is a denial of a current year application for the homestead classification for the taxpayer's property; ii. only one parcel is included in the petition, the entire parcel is classified a: residential homestead and, the parcel contains no more than one dwelling unit; or iii, the assessor's estimated market value of the property included in the petition is less than $300,000. If one of these conditions is met, you may appeal in either Small Claims Division or Regular Division. If not, you may only file in Regular Division. Filing fee for Small Claims Division = $162.00 Make checks payable to "District Court Administrator." When to File — Filing Deadline Petitions may be filed after May 1" of the year before the tax is payable. Petitions must be filed on or before April 30'h of the year in which the tax is payable. (If the deadline falls on a weekend, petitions will be accepted the following Monday.) If your value or classification is changed other than by an abatement or a court decision after February 28`h of the year in which the tax is payable, you must file a petition on or before 60 days from the mailing of the notice of the change. How to Prepare the Petition for Filing Fill in the blanks on the front of one MN Tax Court Form 7, making sure that you have included the following: a. Petitioner's name b. Municipality (location of property petitioned) c. Allegation of ownership interest (already part of the form) d. Signature of Petitioner or Petitioner's attorney e. Complete address and daytime phone number of Petitioner or Petitioner's attorney (printed or typed) f. Attorney's state registration number, if applicable Make three copies of the front side of the Petition (the back side is not necessary). Next, make four copies of one of the following: 1. Valuation Notice; 2. Notice of Proposed Tax; or 3. Property Tax Statement (The whole statement need not be copied — be sure that the Property ID# and Estimated Market Value appear on the copy.) Staple a copy of the above-mentioned Notice or Statement to the back of the original and to each of the four copies of the Petition. How to File The Petition is filed in person at the following offices, all of which are located in the Hennepin County Government Center, 300 So 6th St, Mpls, MN 55487 a. Hennepin County Attorney's Office — Go to the 20`x` Floor, Administration Tower, follow signs to the Civil Division — On the phone in the reception area, press the button to the right of `Property Tax Petitions'. Service is admitted by the tax section (612-348-5521) A2000 Government Center, by stamping the original that one copy has been received. b. Hennepin County Auditor/Treasurer — Go to the 6r" Floor, Administration Tower, Current & Delinquent Tax Counter (Room A603). Service of one copy is admitted by the Auditor/Treasurer at the Current & Delinquent Tax Counter, A603 Government Center, by stamping the original. c. Hennepin County District Court — The last step is to file the original (plus the filing fee — see paragraph 2) with District Court Civil Filing (612-348- 3164). They are located on the PSL — Public Service Level — 2nd floor, Civil Intake Counter. NOTE: District Court is closed for business Wednesdays after 1:30. If you are filing your petition after 1:30 on a Wednesday, you may place your filing in the drop box at the end of their counter area. File numbers (MNCIS numbers) are typically assigned 7-10 days after filing (depending on the number of filings received). You may provide a self- addressed stamped envelope, and a receipt with the file number will be sent to you. You may look up your case filing by name online at www.MNCOURTS.izoy/publicaccess -(click `I Accept' at the bottom of the page) or contact Civil Filing. This site reflects the cases as closed; this is only in regards to Hennepin County District Court. Cases will be transferred to Minnesota Tax Court after the April 30th deadline. d. The third copy is for the Petitioner to keep for his/her records and will not be stamped by the Auditor/Treasurer or Attorney's Office. (The original is stamped only to prove to District Court that copies have been served County Attorney and Auditor/Treasurer.) A copy of the Attorney/Auditor/Treasurer stamped original may be made, at a cost of 10¢ per page, in the law library located on the 24th floor of the Courts Tower in the Government Center before filing with District Court. District Court personnel will file - stamp your copy of the petition with the date & time filed at no cost. If you decide to purchase a copy of the petition from District Court there is a document fee of $8.00 for a plain copy of the petition, $14.00 for a certified copy. What Happens After the Petition Has Been Filed? After the filing deadline, a listing of all petitions filed in Hennepin County is sent to the Tax Court in St Paul. They will then proceed to schedule these cases for trial. (Because approximately 2,000 petitions are filed each year, it may take a year or more for a case to be scheduled for trial.) After a case has been set for trial, you should contact the Assessor to try to resolve the issue petitioned. If no agreement is reached, the case will then be tried before a Tax Court Judge. Tax Payment Requirements The tax may be paid in full or in the following manner: Deadline to File Petition First Half Tax Due (May 15`h) Second ** Half Tax Due (October 15th) April 30` IN FULL If the total 2" half ad valorem tax is $2,000 or less, 50% of the 2"d half tax plus the BALANCE of Special Assessments must be paid. If the total 2"d half ad valorem tax is greater than $2,000, 80% of the 2"d half tax plus the BALANCE of the Special Assessments must be paid. (Special Assessments are shown as Principal and Interest on the Tax Statement) ** If the tax is not paid in full, even though the law permits a lesser amount as indicated above, future property tax records (including Tax Statements) will indicate that there are Delinquent Taxes. This may present problems in: 1. Selling the property 2. Filing for the Property Tax Credit from the State 3. Acquiring or renewing a Liquor License If the decision of the Tax Court is in the Petitioner's favor and a refund is due, it will include any overpayment plus interest calculated to the date the check is issued. (If processed before the tax becomes due, a corrected Tax Statement will be mailed.) If the tax has not been paid in full and there is a balance due to the county, a statement will be mailed granting 20 days to pay that balance of the tax, plus interest on the amount calculated to the date the statement was mailed. Note: • Failure to pay the taxes in full (or the lesser amount permitted by law) in a timely fashion will result in the automatic dismissal of the Petition (MN Stat 287.03) • Failure to provide income and expense figures information specified in MN Stat 278.08, Subd 6 to the assessor by August 1 st of the taxes payable year may result in dismissal of the petition. If the property is located in: • Minneapolis • Bloomington • Brooklyn Park • Eden Prairie • Edina • Maple Grove • Minnetonka • Plymouth • St. Louis Park please send the information directly to the assessor of these municipalities. If the property is located in any other municipality, the information should be sent to the Hennepin County Assessor. It is not necessary to send this information to the Hennepin County Attorney. Also, please notify the assessor if this property is not income producing — e.g. owner - occupied. If you have any questions, please call (612) 348-5521. MINNESOTA- REVENUE Understanding Property Taxes Property Tax Fact Sheet 12a www. tax a s. s to te. m m us This fact sheet is the first in a series of three fact sheets that were designed to assist taxpayers in the understanding of the basic concepts of their annual assessment and properly tax administration. Please see Fact Sheets 12b and 12c for additional information. Why do we have property taxes? The money raised by property taxes is a major source of funding for school districts, cities and townships, counties, and special taxing districts. Local property taxes help fund many programs and services including public schools, fire stations, police protection, streets, libraries, and more. Certain types of properties — including seasonal/cabin, commercial/industrial, and un -mined iron ore — are also subject to a state -level property tax. Receipts from this "state general tax" go into the general fund. A key benefit of the property tax system is that the revenue it raises tends to remain stable. Compared with sales or income taxes, the property tax is less susceptible to recessions or other changes in income or spending trends. In addition, since local jurisdictions only levy what they need to cover their annual needs, there is no surplus or deficit. What affects my property tax bill? Government spending and revenues will affect your tax bill the most. If spending increases or revenues from other sources such as state aid decrease, your property taxes may increase. Conversely, if spending decreases or revenue from other sources increases, you may see a decrease in your property tax bill. Since property taxes are levy -based, it is possible to have your property tax increase while your market value decreases and vice versa. Your share of the overall property tax levy is determined by the market value and classification of your property. The estimated market value and classification of your home are determined by the Property Tax Division - Mail Station 3340 St Paul, MN 55146-3340 assessor as of January 2 of each year. Assessors estimate the value of your property using historical sales of similar properties. There is no direct relationship between estimated market value and property tax liability. Instead, your property's taxable market value is used to determine how much property tax is due. These two values may differ for a number of reasons, including tax deferral programs, homestead and other value exclusions, or reductions for specific types of property. The classification of your property is based on its use on January 2. Each class of property (residential, apartment, cabin, farm, commercial, etc.) has a different classification rate. These rates are set by the Legislature and calibrated so that some property types pay a greater share of the property tax than others. For example, commercial properties pay more than residential homesteads and agricultural properties. How are my taxes determined? First, each local jurisdiction will determine the revenue needed from property taxes. This amount — the levy — is calculated by subtracting all non -property tax revenue from the total proposed budget. Total Proposed Local Budget - All non -property tax revenue (state aid, fees. etc.) Property tax revenue needed (levy) The levy is then spread among all taxable properties according to their net tax capacity. A property's tax capacity is calculated by multiplying the taxable market value by the state -mandated classification rate. (Taxable Market Value) x (Class Rate) = Tax Capacity This fact sheet is intended to help you become more familiar with Minnesota tax laws and your rights and responsibilities under the laws. Nothing in this fact sheet supersedes, alters, or otherwise changes any provisions of the tax law, administrative rules, court decisions, or other revenue notices. Alternative formats available upon request. Revised 08/11 Minnesota Revenue, Understanding Property Taxes 1 The final step is to calculate the local property tax rate by dividing the property tax revenue needed in a jurisdiction by its total tax capacity. Local (Propertytax revenue needed) Tax Rate (Total Tax Capacity) The county auditor will also calculate and apply any credits, referendum levies, and the state general tax (for certain types of property). Combining the above calculations, the basic formula to determine an individual property's tax amount is: Taxable Market Value x Class Rate = Tax Capacity x Local Tax Rate Base Tax - Credits + Referendum Amounts + State General Tax = Total Property Tax Payable What is a "Truth in Taxation" notice? Every year, after November 10, but before November 25, all property owners receive a "Truth -in -Taxation" notice by mail. The notice contains: • valuation and classification information on your property for the current and previous assessment years; • your current -year property tax amounts; and • an estimate of how your taxes may change based on your taxing district and local budget decisions for the following year. The Truth -in -Taxation notices are required to show dates, times, and places for the scheduled meetings in which the budget and levy will be discussed and finalized. These meetings must occur after November 24. The public must be allowed to speak at these meetings for the city, county, and school district and they must not be held prior to 6 p.m. These meetings are held to give taxpayers an opportunity to voice their concerns over the jurisdiction's proposed budget. They are not a forum for taxpayers to appeal their market value or their individual proposed property tax amounts. Property Tax Statement The County Treasurer's Office mails a tax statement to property owners by March 31 of each year. The statement provides an itemized list of the property tax due to each taxing authority. The dollar amounts must be listed separately for the state general tax (if applicable), county, municipality or township, voter - approved school tax, other local school tax, and other special taxing districts. The statement must also include any tax on contamination value and any other special assessments on the property. Real property taxes are due in equal installments on May 15 and October 15 of each year (unless the amount is $50 or less [$250 or less starting with taxes payable in 20101 in which case taxes are due in full on May 15). If a property is classified as agricultural property, the 2"' half is not due until November 15. Conclusion in conclusion, it is essential that taxpayers understand that there is no direct relationship between estimated market value and property tax revenue. It is possible to have your property tax increase while your market value decreases and vice versa. Government spending and revenues will affect your tax bill the most. For additional information, please refer to Fact Sheet 12b How the Assessor Estimates Your Market Value and Fact Sheet 12c Understanding Your Assessment and the Appeals Process. Minnesota Revenue, Understanding Property Taxes 2 MINNESOTA• REVENUE www. taxes. sta te. mm us How the Assessor Estimates Your Market Value Property Tax Fact Sheet 12b This fact sheet is the second in a series of three fact sheets that were designed to assist taxpayers in the understanding of the basic concepts of their annual assessment and property tax administration. Please see Fact Sheets 12a and 12c for additional information. Property Tax Assessment Process Minnesota has what is known as an ad valorem property tax. This means property tax is divided among taxable properties according to their value. The final amount of property tax the owner of a property pays in any given year is the end result of a process that begins over two years before property tax statements are actually mailed to property owners. The process begins with the assessor collecting data on sales of properties within the market during a specific time period between October of one year and September of the following year (this period is known as a sales study period). Over the next several months and by using mass appraisal techniques, assessors analyze the data in order to estimate each property's market value for the next assessment (January 2). Pursuant to Minnesota Statutes, section 273.11 assessors must estimate the value of property at a value that would represent what the property would sell for in an open -market arm's length transaction on January 2 of each year. The assessor cannot adopt a higher or lower standard of value because the value will be used for the purposes of taxation. Assessors also classify property according to its use on January 2. Between April and June, taxpayers have an opportunity to appeal both the estimated market value and the classification of their property. Values and classifications are generally finalized July 1 of each year. Local units of government then finalize their estimated budgets for the upcoming year. Once the budgets are finalized in December, the market values and classifications are used to divide the overall tax levy among all taxable properties. Tax statements are mailed by the following March 31. For example, sales of properties that occur between October 1, 2008 and September 30, 2009 are used by assessors to estimate a property's market value for the January 2, 2010 assessment. Following an appeal process that occurs between April 1, 2010 and June 30, 2010, the valuations and classifications generally become final on July 1, 2010. Property Tax Division - Mail Station 3340 St. Paul, MN 55146-3340 This lengthy time frame may result in a significant difference between actual sales prices occurring in the current market and assessors' estimated market values for the current year's assessment. Using the final values and the local jurisdictions' proposed budgets, the auditor then estimates each property's proposed taxes payable for 2011. After public budget meetings are held and final budget numbers are adopted, property tax statements are mailed to taxpayers by March 31, 2011. In summary, sales taking place from October 2008 to September 2009 are used to estimate a property's market value as of January 2, 2010 which will in turn be used to calculate property taxes payable in 2011. What is the role of the assessor? Assessors use historical sales in order to estimate each property's market value as of the assessment date (January 2) of each year. The assessor also classifies the property according to its use on January 2 of each year. Assessors also review other quantifiable data such as supply/demand, marketing times, sales concessions, vacancy rates, etc. to help in analyzing whether a market is increasing, stable, or decreasing. During increasing markets, this may benefit some property owners because a buyer may pay a price that is significantly higher than the assessor placed on the property for the last assessment. For example, if a property is valued by the assessor at $180,000 for the 2009 assessment (based on sales that occurred between October 2007 and September 2008), and it sells for $230,000 in August 2009, the new property owner is benefiting from the lower market value for the 2009 assessment which will be used to calculate taxes payable in 2010. The August 2009 sale of the property will be included in the study period of October 2008 to September 2009 which the This fact sheet is intended to help you become more familiar with Minnesota tax laws and your rights and responsibilities under the laws. Nothing in this fact sheet supersedes, alters, or otherwise changes any provisions of the tax law, administrative rules, court decisions, or other revenue notices. Alternative formats available upon request. Revised 07/09 Minnesota Revenue, How the Assessor Estimates Your Market Value t assessor will use to value property for the 2010 assessment for taxes payable in 2011. This same lag time is also present in declining markets. For example, if the assessor places a market value of $200,000 on a property for the 2009 assessment (again using sales that occurred between October 2007 and September 2008), but the property sells for $175,000 in August 2009, does it mean the January 2, 2009 assessed value is incorrect? Not necessarily. It could signal a downturn in the housing market just began to occur between September 2008 and August 2009. The assessor will use the August 2009 sale as well as others occurring in the market to estimate 2010 market values. The assessor does not raise property tax revenues by increasing values. Total property tax revenues are a function of county, school district, and city/town spending as well as state -paid local government aid and other factors. The value and classification of the property are merely a way to divide the total property tax levy among all taxpayers. The total amount of the levy will be collected whether values increase or decrease from one year to the next. An individual's share of the overall tax burden may change from year to year, however. What are sales ratio studies? Sales ratios show the relationship between the assessor's estimated market value on a property and the actual sale price of a property. Each year the assessor performs sales ratio studies on properties that have sold in their jurisdiction. These sales are stratified many different ways including by location and property type (residential, agricultural, commercial, etc.). The sales can also be stratified further such as by home style, subdivision, age of structure, location on or off water frontage, price range, etc. A single sale may not represent the true market activity. Rather, sales of all properties are reviewed to determine market trends. However, even if there are no sales occurring within the sales ratio study period, assessors are still expected to use their professional judgment and knowledge of the local market to annually value properties in their jurisdiction. Whenever any real estate is sold for a consideration in excess of $1,000, a Certificate of Real Estate Value (CRV) is filed. These CRVs are the foundation of all sales ratio studies because they contain important information about each transaction. Assessors then verify the information contained on the CRV in order to determine whether or not the sale represents an open -market arm's length transaction. If the sale does not represent an open -market, arm's length transaction, it may not be used in the sales ratio study. Simply having an extremely high or low sales ratio is not a valid reason to remove a sale from the sales ratio study. Rather, the extreme ratio indicates a need for additional investigation by the assessor. Again, sales ratio study periods are generally October 1 of given year to September 30 of the following year. For example, for the 2010 assessment, assessors use sales that took place between October 1, 2008 and September 30, 2009. This is the reason that assessors' market values may lag a bit behind current market activity. Assessors will use the median sales ratio as the statistical measure of the overall level of assessment. The median ratio is the middle ratio of all the ratios when they are arranged in order from highest to lowest (or vice versa). The median is used because it is not affected by extreme ratios. Department of Revenue guidelines indicate that the median ratio of a sales ratio study should be between 90 and 105 percent. Is it possible for the values of some properties to decrease while others increase? Yes. Each segment of the market is different. Sales prices of certain types of properties can vary widely. Currently, sales of both farmland and recreational properties are strong and show appreciation. However, the sales of residential properties are stable or declining in some areas. Sometimes it can be difficult to estimate the rate at which a market is increasing or declining. Ideally, a property would sell twice within a certain period of time, such as one year, but all other characteristics of the property would remain the same. That way an appraiser or assessor would be able to isolate a time adjustment to indicate whether the market is increasing or decreasing or simply remaining stable. Do all areas increase or decline at the same rate? No. Some areas or neighborhoods are declining at a much faster rate than others that are showing stable values or values that are slightly increasing. Conclusion In conclusion, it is essential that taxpayers understand that there may be a legitimate reason for the assessor's annual market value to be different from current market conditions due to the lag time between sales study periods and sales taking place today. For additional information, please refer to Fact Sheet 12a Understanding Property Taxes and Fact Sheet 12c Understanding Your Assessment and the Appeals Process. Minnesota Revenue, How the Assessor Estimates Your Market Value 2 MINNESOTA• REVENUE Understanding Your Assessment and the Appeals Process Property Tax Fact Sheet 12c www. taxes.state. mn. us This fact sheet is the third in a series of three fact sheets that were designed to assist taxpayers in the understanding of the basic concepts of their annual assessment and property tax administration. Please see Fact Sheets 12a and 12c for additional information. The role of the assessor The assessor has an important role in the property tax process in that it is very important to make sure all property is valued at its market value and classified according to its use so the property tax levy is divided correctly among all taxable properties. The assessor does not determine your property taxes. Likewise, assessors do not raise revenue by increasing market values. This fact sheet discusses estimated market value and classification. The assessor determines these factors each year, and they are shown annually on your Notice of Valuation and Classification. This fact sheet also explains what you can do if you and the assessor disagree about the value or classification of your property. How is my property value estimated? Using a mass appraisal system and historical sales data, the assessor's job is to estimate the market value of all properties on the assessment date of January 2 each year. The assessor will consider the location of your property, the amount of land you own, any improvements to the land, physical characteristics of the improvements (including square footage, decks, porches, etc.), and the quality of construction The assessor will then compare your property to similar properties in your area that have recently sold in order to estimate what your property would sell for in an open -market arm's length transaction. This value is called the estimated market value. Classification and class rates All property is classified by the assessor according to its use. Each class of property (home, apartment, cabin, farm, commercial) has its own classification rate. This class rate is determined by the state legislature. Like market value, the class rate of your property plays a role in how much property tax you pay. Notice of valuation and classification Each spring, the assessor will mail you a Notice of Valuation and Classification informing you of the market value and classification of your property. If you believe the classification or the estimated market value of your property is incorrect, you have several appeal options. What if I disagree with how my property was assessed? If you have a disagreement over valuation or classification of your property, the first step is to contact your assessor. Most issues can be resolved at this level. • Verify information about your property, such as its dimensions, age, and condition of its structures. • Review records to determine the market values of similar properties in your neighborhood. • Review sales data to find out what similar properties in your area are selling for. • Ask the assessor to explain the criteria used for classifying your property. You may also review the classifications of other properties used in the same manner as yours. If your property has not be inspected recently, both interior and exterior, ask the assessor to come out to review your property. If your concern is not resolved after conferring with the assessor, you may attend the annual Local Board of Appeal and Equalization or Open Book meeting identified on your valuation notice. Appealing your assessment There are formal methods of appeal available. Keep in mind that, by law, the Local Board of Appeal and Equalization cannot make a change favoring a taxpayer if the assessor is not allowed to inspect the property. You have the right to appeal your market value estimate and/or property classification if you feel your property is: • Classified improperly. • Valued at an amount higher or lower than you could sell your property for. • Valued at a level different from similar property in your area. Property Tax Division - Mail Station 3340 St Paul, MN 55146-3340 This fact sheet is intended to help you become more familiar with Minnesota tax laws and your rights and responsibilities under the laws. Nothing in this fact sheet supersedes, alters, or otherwise changes any provisions ofthe tax law, administrative rules, court decisions, or other revenue notices. Alternative formats available upon request. Revised 07109 Minnesota Revenue, Understanding Your Assessment and the Appeals Process t Remember, your assessor is not responsible for the dollar amount of taxes that you pay. Tax rates are determined by your local taxing authorities (the city, the county, school, districts, etc.). If you think your taxes are too high, you should make your opinion known to your taxing authorities during the budget meetings in November and December. Local Board of Appeal and Equalization If you choose to appeal to your boards of appeal and equalization, first must fust meet with your Local (city or town) Board of Appeal and Equalization. These are often the same people as your city council or town board. The board meets on a specified day in April or May. The exact date is listed on your Notice of Valuation and Classification. We strongly recommend that you contact your city or town clerk to scheduleyour appearance. Some jurisdictions hold an open book meeting instead of a Local Board of Appeal and Equalization. Please check your Notice of Valuation and Classification for date, time, and place. You may make your appeal in person, by letter, or have someone else appear for you. The assessor will be present to answer questions. You must present your case to the city or town board before going to the County Board ofAppeal and Equalization. Cities and towns have the option of transferring their board powers to the County Board of Appeal and Equalization. If your municipality has elected to do this, your Notice of Valuation and Classification will direct you where to begin your appeal. County Board of Appeal and Equalization If you are not satisfied after your Local Board of Appeal and Equalization or open book meeting, or if your city or town has transferred its powers to the county, you may appeal to the County Board of Appeal and Equalization. This board meets in June. The exact date is listed on your Notice of Valuation and Classification. The members are usually the county board of commissioners or their appointees. We strongly recommend that you contact your county auditor or assessor to schedule your appearance before the board Many counties request that taxpayers make appointments to appear. You may make your appeal in person, by letter, or have someone else appear for you. The assessor will be present to answer questions. If you are not satisfied with the decision of the County Board of Appeal and Equalization, you may appeal to the Minnesota Tax Court. Minnesota Tax Court You have until April 30 of the year the tax becomes payable to appeal your assessment to the Minnesota Tax Court. In other words, you must appeal your 2009 valuation and classification on or before April 30, 2010. The Tax Court has two divisions: The Small Claims Division and the Regular Division. The Small Claims Division only hears appeals involving one of the following situations: • The assessor's estimated market value of your property is less than $300,000. • Your entire parcel is classified as a residential homestead (I a or 1 b) and the parcel contains no more than one dwelling unit. • Your entire property is classified as an agricultural homestead. • You're appealing the denial of a current year application for homestead classification of your property. The proceedings of the Small Claims Division are less formal and many people represent themselves. Decisions made by the small claims division are final and cannot be appealed fiwther. The Regular Division will hear all appeals — including those within the jurisdiction of the small claims division. Decisions made here can be appealed to a higher court. Most people who appeal to the regular division hire an attorney because the hearing is conducted according to the Minnesota Rules of Civil Procedure. You may obtain complete information on Tax Court appeals by writing or calling the court administrator in your county or by contacting: Minnesota Tax Court Minnesota Judicial Center Suite 245 25 Reverend Dr. Martin Luther King, Jr. Boulevard St. Paul, MN 55115 (651)296-2806 www.taxcowl.state.mn.us Conclusion In conclusion, it is essential that taxpayers understand that assessors use historical sales data to estimate a property's market value. 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