STEELE COUNTY – WEBSITE
TRUTH IN TAXATION INFORMATION
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| 1. |
Q. |
What is changing? |
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A. |
Next year, the homestead market value credit that the state paid to reduce qualifying homeowner’s taxes is going away and is being replaced with a “HOMESTEAD MARKET VALUE EXCLUSION” that will reduce the taxable value of qualifying homesteads. This change will increase the taxes on most properties and is independent of any action taken by local governments. |
| 2. |
Q |
Why did my value decrease so much? |
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The proposed 2012 tax statements home owners are receiving may be confusing. The format of the notice is dictated by the State and cannot be altered by the County.
The 2011 taxable value is as established by the County Assessor (without the homestead exclusion). The taxable value for the proposed 2012 taxes is AFTER deducting the Homestead Market Value Exclusion. The amount of the Homestead Market Value Exclusion does not appear on the proposed tax notice for 2012. The notices may give some taxpayers the idea their home's value has fallen dramatically.
For example, a homestead property in Owatonna has a Taxable Market Value of $155,100 for 2011 taxes and the Taxable Market Value declined due to $150,100 for next years (2012) proposed taxes. But the taxable value for the 2012 proposed statement is $126,400 because of some the home's value was excluded or “shielded” from taxation under the Homestead Market Value “Exclusion”.
The estimated market values for 2012 taxes have not changed since you were notified of the value in March of 2011. You may verify the estimated market value of your home on the Counties web-site under “Tax Information”. In addition, the final tax statements sent in the spring will be more specific about what portion of the value is excluded for each homestead. |
| 3. |
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Why is it changing? |
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A |
By eliminating the homestead market value credit, the state saves approximately $260 million, which helps to balance the state’s budget. Local governments do not have the legal authority to undo this state law change. |
| 4. |
Q |
What was the cost of this to Steele County? |
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A |
Steele County lost $1,216,112 in homestead market value credit and $97,242 of County Program Aid that was paid by the State of Minnesota in 2011. This $1,313,354 represented 6.4% of the $20,559,346 total levy for Steele County in 2011. Due to the state’s change, this will be absorbed by the taxpayers of Steele County, even without any levy increase. |
| 5. |
Q |
How will the change in the market value credit affect different types of properties? |
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The loss of the homestead market value credit and the implementation of the market value exclusion shifted (changed) the amount of the overall tax bill that will be paid by different groups of properties. In addition, general economic shifts in market value between the types of properties also affected this split.
The change in percentage of the overall tax bill absorbed by each type of property is summarized below and illustrated on the following pie charts. |
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| 6. |
Q |
The above table and graphs talk about tax capacity. What is tax capacity? |
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Tax Capacity is determined by multiplying the market value of each property by the statutory class rates for the specific use(s) of the property. Minnesota has many class rates and only the State Legislature can change those rates. The tax capacity rate is the rate needed from each property to collect the amount of dollars needed to operate local governments and schools. |
| 7. |
Q |
How are actual tax dollars currently estimated to change? |
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A |
Average proposed taxes, based on preliminary levies, are expected to change as follows for all local government units combined in Steele County. (Please note that an individual property within a category may be significantly different, either higher or lower, than the average for that type of property, based on a number of factors including location within the county, market value, and other individual property characteristics.) |
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| 8. |
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How will this affect individual property tax payers? |
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The new homestead market value exclusion is applied on a sliding scale from $0 to $30,400, based on a home’s market value. The maximum benefit is achieved at a market value of $76,000. This is illustrated in the graph below. |
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Examples of potential property tax bills, based on property type and market value, are listed below. |
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| 9. |
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What about the state’s property tax refund? Has that gone away also? |
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The state did not change the property tax refund calculations. Affected homeowners with household incomes below $100,780 or whose taxes increase by more than 12% or $100 (whichever is greater) may apply for the state’s property tax refund and, if qualified, will get some of the increase refunded. The form to apply for the state’s property tax refund is the M1PR and is available at: http://taxes.state.mn.us/pages/current_forms.aspx. |
| 10. |
Q |
Where can I get additional information? |
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The State of Minnesota has prepared an information sheet regarding the current changes. This is available at:
http://taxes.state.mn.us/property/Documents/hmve-taxpayers.pdf
Additional information regarding the portion of taxes levied by the City of Owatonna can be found at www.ci.owatonna.mn.us
Information for the state as a whole can also be found at www.mncounties.org (Click on the center area with the multi-colored houses titled “MPR Video: Why are Minn. property taxes going up?”) and at www.lmc.org/page/1/brochuremvhcchanges.jsp (Click on the center area titled “What’s Going on with My Tax Bill?”) |
