If you own a home in Hennepin County, the start of the holiday season is heralded by the arrival of your proposed property tax statement for taxes due in the coming year. After three decades of being a Minneapolis home owner, I know I need to steel myself to open this envelope. The Hennepin County Treasurer has never brought me good news. This year was no different. But for the first time, I am planning on doing more than having a quiet moan about my increased property taxes.
First some definitions, as provided by the City Assessor’s Office:
*Estimated Market Value – The value the assessor estimates your property would likely sell for on the open market.
*Homestead Market Value Exclusion – This applies to residential homesteads (if you are living in your home, rather than renting it out). The exclusion is a maximum of $30,400 at $76,000 of market value, and then decreases by nine percent for value over $76,000. The exclusion phases out for properties at $413,800 or more.
*Taxable Market Value – The value that your property taxes are actually based on, after all reductions, exclusions, exemptions and deferrals (such as the Homestead Market Value Exclusion described above).
*New Improvements – The assessor’s estimate of the value of new or previously unassessed improvements you have made to the property.
*Disabled Veterans Homestead Market Value – A market value exclusion that qualifying disabled veterans may be eligible for on their homestead property (minimum 70 percent disability is required).
Deciding to appeal
So here is what led to my decision to appeal the market value of my Folwell home, and what I have learned so far about the appeals process.
It started in March of this year when my City assessor wrote and asked if he might stop by to inspect my home shortly after I moved into the neighborhood. As I prepared for his visit, I noticed that the estimated market value of my home documented on the newly-arrived Valuation Notice from the City was greater than the price I paid for it. (Remember that the definition of “market value,” per the City Assessor’s Office, is what the assessor estimates your property would likely sell for on the open market). And my house had literally just sold!
Then some of my new neighbors told me that they had looked at my house when they were home shopping … and had passed on it because it was in such poor repair! My lovely 1925 bungalow has great bones but there isn’t a wall or ceiling that doesn’t need patching and paint. The bathroom and kitchen are painfully dreadful and would require a small lottery win to make right. The basement is far removed from being the “family room” that my original assessor wanted to label it, although my two cats don’t mind being down there.
So, I started doing some research. I have now visited a number of the homes in my immediate block and seen their condition first hand. I have found what appear to be glaring disparities in market values among these homes. Even homes that have identical floor plans to mine, were built in the same year and by the same builder, have the same or larger plot size, and which (very critically) sold in the past year. In some instances, these homes sold for upwards of $25,000 more than I paid. Yet my sad house inexplicably exceeds, or at best matches, in market value. Which means I am paying higher property taxes for a property that the open market, as demonstrated through my purchase, deemed to be worth less than the assessed value.
There was another inescapable pattern that emerged as I performed my research. Homes that have not changed hands recently, regardless of their condition, size and number of improvements, frequently have strikingly lower market values than homes that have sold recently. Yet, logically, if they were to be put on the market today, they would fetch at least as much as the homes that have sold in the same area over the past year.
Who determines the value of your home?
The City Assessor’s Office is responsible for estimating the market value and determining the classification of all real estate property in the City for property tax purposes. Minneapolis requires an inspection of all properties at least once every five years, or if there is new construction or improvements made to the property. A property’s market value may be adjusted according to sales activity in the local market, even if the property is not inspected in that year.
Note: Home owners do not have to give an assessor access to their property. As a result, many homes are only inspected (assessed) from the outside. One assessor acknowledged to me that they are aware there are homes which may not be accurately valued due to this constraint.
However, as stated on the City website, it is their goal to “value all property in a uniform and equitable manner.” To this end, if you disagree with the valuation of your property, there is an appeals process which allows home owners more than one opportunity to make their voice heard.
Researching the valuation of your property
Be prepared to do some homework. If you have already decided to appeal your home’s market valuation, now is a great time to pull together supporting facts and documentation that will help bolster your case so you are ready to act in the new year when the appeals process opens up. And you may find that this process alone will satisfy you that the market value of your home is actually in line with other homes in your area.
*Review records to determine the market value and other details of yours and similar properties in your neighborhood. You can get an enormous amount of information from the City of Minneapolis website (minneapolismn.gov/propertyinfo/propertyinfo_index) and the Hennepin County property tax pages (hennepin.us/residents/property/property-taxes) including: present and past home values; plot size; land value; structure value; number of bedrooms and bathrooms; and home improvement permits that have been pulled for the property.
*Take photos of your property and other homes in the area that help support your argument.
*Review actual and pending sales data to find out what a similar property is selling for in your area.
*If you do not have a recent appraisal, consider having one done. Depending upon the results, this may lead to you deciding not to appeal, or, conversely, it could be a valuable piece of evidence that will support your case.
Know the appeals process deadlines
You will receive a Valuation Notice from the City by March of each year. This triggers the beginning of the appeals process. Do not delay! You will need to act promptly to meet the various deadlines. The Assessor’s Office page on the City website (minneapolismn.gov/assessor/marketvalues/assessor_appeal-flowchart) contains in-depth information on the appeals process. You will also find details, including deadlines and contact information, on the back of your Valuation Notice. Pay close attention to the dates.
Contact your assessor before you appeal
But first, call the City Assessor’s Office to discuss your concerns. Explain why you believe your property value is less than that indicated on the statement. Your assessor’s phone number appears on the City Valuation Notice, or call their main number at 612-673-3000.
I have had first-hand dealings with three City assessors since I bought my home. In all cases I found the staff to be responsive, highly knowledgeable and happy to spend considerable time answering my many questions. You may find that a conversation with your assessor will satisfy your concerns.
When the assessor visits your home, be prepared to demonstrate to the assessor the areas that detract from its stated value. If things go well, your assessor may agree that your home is over-valued and downward adjustments will be made. You would then not need to take further action except to follow up to ensure the agreed upon changes have been made.
But if you are not satisfied with the outcome of the home visit, be ready to quickly move ahead to the formal appeals process to ensure you do not miss any of the deadlines.
The appeals process
There are two formal appeal options. The options and the current year hearing dates, process and contact information will be listed on the reverse side of your Valuation Notice and on the City website.
Option 1 (Step 1) – Minneapolis Board of Appeal and Equalization
You may appear before the Board in person, through a letter or through an authorized representative. You must have supporting documentation to support your appeal. Applications will typically need to be submitted in March, with hearings in April.
Option 1 (Step 2) – Hennepin County Board of Appeal and Equalization
If the Minneapolis Board of Appeal and Equalization does not resolve your concerns, you may bring your case to the Hennepin County Board of Appeal and Equalization. Note: You must have first appealed to the Minneapolis Board of Appeal and Equalization before taking this step. Applications will typically need to be submitted in May, with hearings in June.
Option 2 – Minnesota Tax Court
Depending on the type of the appeal and the valuation of your property, you may take your case to either the Small Claims Division or the Regular Division of Tax Court. You have until April 30 of the year in which taxes are payable to file an appeal in this manner. You can also choose to go directly to the Tax Court, bypassing the two steps in Option 1 above.
Verify that your home is classified as homesteaded
Even if you are comfortable with the current valuation of your home, be sure to review the Proposed Levies & Taxes statement you received in November from Hennepin County to ensure your classification is “Homestead.” If it says “RES NHTD” (meaning non-homestead), and assuming you are living in your home, it will not reflect the all-important Homestead Market Value Exclusion. The homestead classification can currently reduce the taxes on a residential property up to $304 per year.
This important detail can be surprisingly easy to miss, especially if you are a first-time home owner and unaccustomed to reviewing property tax notices. Call your assessor or the Assessor’s office at 612-673-3000 if you have concerns or questions.
Homestead credit (property tax) refund
Finally, don’t leave money on the table! Property tax refund applications are due in August and are relatively simple to complete. Visit the property tax page on the Minnesota Department of Revenue website to learn more (revenue.state.mn.us/Pages/default.aspx).