HF 148

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to property taxation; indexing the valuation limit for the first tier
classification rate on residential homestead property; amending Minnesota
Statutes 2006, sections 273.11, by adding a subdivision; 273.13, subdivision 22.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 273.11, is amended by adding a
subdivision to read:

new text begin Subd. 24. new text end

new text begin First tier valuation limit; residential homestead property. new text end

new text begin (a)
Beginning with assessment year 2007, the commissioner of revenue shall annually certify
the first tier limit for residential homestead property as the product of (i) $500,000, and
(ii) the ratio of the statewide average taxable market value per homestead of residential
homestead property in the preceding assessment year to the statewide average taxable
market value per homestead of residential homestead property for assessment year 2006.
The limit shall be rounded to the nearest $10,000.
new text end

new text begin (b) For the purposes of this subdivision, "residential homestead property" means
class 1a property and that portion of class 2a property consisting of the house and
garage and immediately surrounding one acre of land, as defined under section 273.13,
subdivisions 22 and 23.
new text end

new text begin (c) The commissioner shall certify the limit by January 2 of each assessment year,
except that for assessment year 2007 the commissioner shall certify the limit by June
1, 2007.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2007 and
thereafter, for taxes payable in 2008 and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2006, section 273.13, subdivision 22, is amended to read:

Subd. 22.

Class 1.

(a) Except as provided in subdivision 23 and in paragraphs (b)
and (c), real estate which is residential and used for homestead purposes is class 1a. In the
case of a duplex or triplex in which one of the units is used for homestead purposes, the
entire property is deemed to be used for homestead purposes. The market value of class 1a
property must be determined based upon the value of the house, garage, and land.

The deleted text begin first $500,000 of deleted text end market value of class 1a property new text begin up to the first tier limit
certified under section 273.11, subdivision 23, new text end has a net class rate of one percent of its
market value; and the market value of class 1a property that exceeds deleted text begin $500,000 deleted text end new text begin the first tier
limit new text end has a class rate of 1.25 percent of its market value.

(b) Class 1b property includes homestead real estate or homestead manufactured
homes used for the purposes of a homestead by

(1) any person who is blind as defined in section 256D.35, or the blind person and
the blind person's spouse; or

(2) any person, hereinafter referred to as "veteran," who:

(i) served in the active military or naval service of the United States; and

(ii) is entitled to compensation under the laws and regulations of the United States
for permanent and total service-connected disability due to the loss, or loss of use, by
reason of amputation, ankylosis, progressive muscular dystrophies, or paralysis, of both
lower extremities, such as to preclude motion without the aid of braces, crutches, canes, or
a wheelchair; and

(iii) has acquired a special housing unit with special fixtures or movable facilities
made necessary by the nature of the veteran's disability, or the surviving spouse of the
deceased veteran for as long as the surviving spouse retains the special housing unit
as a homestead; or

(3) any person who is permanently and totally disabled.

Property is classified and assessed under clause (3) only if the government agency or
income-providing source certifies, upon the request of the homestead occupant, that the
homestead occupant satisfies the disability requirements of this paragraph.

Property is classified and assessed pursuant to clause (1) only if the commissioner of
revenue certifies to the assessor that the homestead occupant satisfies the requirements of
this paragraph.

Permanently and totally disabled for the purpose of this subdivision means a
condition which is permanent in nature and totally incapacitates the person from working
at an occupation which brings the person an income. The first $32,000 market value of
class 1b property has a net class rate of .45 percent of its market value. The remaining
market value of class 1b property has a class rate using the rates for class 1a or class 2a
property, whichever is appropriate, of similar market value.

(c) Class 1c property is commercial use real property that abuts a lakeshore line and
is devoted to temporary and seasonal residential occupancy for recreational purposes but
not devoted to commercial purposes for more than 250 days in the year preceding the
year of assessment, and that includes a portion used as a homestead by the owner, which
includes a dwelling occupied as a homestead by a shareholder of a corporation that owns
the resort, a partner in a partnership that owns the resort, or a member of a limited liability
company that owns the resort even if the title to the homestead is held by the corporation,
partnership, or limited liability company. For purposes of this clause, property is devoted
to a commercial purpose on a specific day if any portion of the property, excluding the
portion used exclusively as a homestead, is used for residential occupancy and a fee is
charged for residential occupancy. The portion of the property used as a homestead by the
owner has the same class rates as class 1a property under paragraph (a). The remainder
of the property is classified as follows: the first $500,000 of market value is tier I, the
next $1,700,000 of market value is tier II, and any remaining market value is tier III.
The class rates for class 1c are: tier I, 0.55 percent; tier II, 1.0 percent; and tier III, 1.25
percent. If a class 1c resort property has any market value in tier III, the entire property
must meet the requirements of subdivision 25, paragraph (d), clause (1), to qualify for
class 1c treatment under this paragraph.

(d) Class 1d property includes structures that meet all of the following criteria:

(1) the structure is located on property that is classified as agricultural property under
section 273.13, subdivision 23;

(2) the structure is occupied exclusively by seasonal farm workers during the time
when they work on that farm, and the occupants are not charged rent for the privilege of
occupying the property, provided that use of the structure for storage of farm equipment
and produce does not disqualify the property from classification under this paragraph;

(3) the structure meets all applicable health and safety requirements for the
appropriate season; and

(4) the structure is not salable as residential property because it does not comply
with local ordinances relating to location in relation to streets or roads.

The market value of class 1d property has the same class rates as class 1a property
under paragraph (a).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for assessment year 2007 and
thereafter, for taxes payable in 2008 and thereafter.
new text end