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Minnesota Legislature

Office of the Revisor of Statutes

HF 414

as introduced - 90th Legislature (2017 - 2018) Posted on 05/01/2017 02:32pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to taxation; property; authorizing valuation exclusion for certain
improvements to homestead and commercial-industrial property; amending
Minnesota Statutes 2016, section 273.11, subdivision 16, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2016, section 273.11, subdivision 16, is amended to read:


Subd. 16.

Valuation exclusion for certain improvementsnew text begin; homestead propertynew text end.

(a)
Improvements to homestead property deleted text beginmade before January 2, 2003,deleted text end shall be fully or partially
excluded from the value of the property for assessment purposes provided that (1) the house
is at least deleted text begin45deleted text end new text begin30 new text endyears old at the time of the improvement and (2) the assessor's estimated
market value of the house on January 2 of the current year is equal to or less than $400,000.

(b) For purposes of determining this eligibility, "house" means land and buildings.

(c) The age of a residence is the number of years since the original year of its construction.
In the case of a residence that is relocated, the relocation must be from a location within
the state and the only improvements eligible for exclusion under this subdivision are (1)
those for which building permits were issued to the homeowner after the residence was
relocated to its present site, and (2) those undertaken during or after the year the residence
is initially occupied by the homeowner, excluding any market value increase relating to
basic improvements that are necessary to install the residence on its foundation and connect
it to utilities at its present site. In the case of an owner-occupied duplex or triplex, the
improvement is eligible regardless of which portion of the property was improved.

(d) If the property lies in a jurisdiction which is subject to a building permit process, a
building permit must have been issued prior to commencement of the improvement. The
improvements for a single project or in any one year must add at least $5,000 to the value
of the property to be eligible for exclusion under this subdivision. Only improvements to
the structure which is the residence of the qualifying homesteader or construction of or
improvements to no more than one two-car garage per residence qualify for the provisions
of this subdivision. deleted text beginIf an improvement was begun between January 2, 1992, and January 2,
1993, any value added from that improvement for the January 1994 and subsequent
assessments shall qualify for exclusion under this subdivision provided that a building permit
was obtained for the improvement between January 2, 1992, and January 2, 1993.
deleted text end Whenever
a building permit is issued for property currently classified as homestead, the issuing
jurisdiction shall notify the property owner of the possibility of valuation exclusion under
this subdivision. The assessor shall require an application, including documentation of the
age of the house from the owner, if unknown by the assessor. The application may be filed
subsequent to the date of the building permit provided that the application must be filed
within three years of the date the building permit was issued for the improvement. If the
property lies in a jurisdiction which is not subject to a building permit process, the application
must be filed within three years of the date the improvement was made. The assessor may
require proof from the taxpayer of the date the improvement was made. Applications must
be received prior to July 1 of any year in order to be effective for taxes payable in the
following year.

No exclusion for an improvement may be granted by a local board of review or county
board of equalization, and no abatement of the taxes for qualifying improvements may be
granted by the county board unless (1) a building permit was issued prior to the
commencement of the improvement if the jurisdiction requires a building permit, and (2)
an application was completed.

(e) The assessor shall note the qualifying value of each improvement on the property's
record, and the sum of those amounts shall be subtracted from the value of the property in
each year for ten years after the improvement has been made. After ten years the amount
of the qualifying value shall be added back as follows:

(1) 50 percent in the two subsequent assessment years if the qualifying value is equal
to or less than $10,000 market value; or

(2) 20 percent in the five subsequent assessment years if the qualifying value is greater
than $10,000 market value.

(f) If an application is filed after the first assessment date at which an improvement could
have been subject to the valuation exclusion under this subdivision, the ten-year period
during which the value is subject to exclusion is reduced by the number of years that have
elapsed since the property would have qualified initially. The valuation exclusion shall
terminate whenever (1) the property is sold, or (2) the property is reclassified to a class
which does not qualify for treatment under this subdivision. Improvements made by an
occupant who is the purchaser of the property under a conditional purchase contract do not
qualify under this subdivision unless the seller of the property is a governmental entity. The
qualifying value of the property shall be computed based upon the increase from that
structure's market value as of January 2 preceding the acquisition of the property by the
governmental entity.

(g) The total qualifying value for a homestead may not exceed $50,000. The total
qualifying value for a homestead with a house that is less than 70 years old may not exceed
$25,000. The term "qualifying value" means the increase in estimated market value resulting
from the improvement if the improvement occurs when the house is at least 70 years old,
or one-half of the increase in estimated market value resulting from the improvement
otherwise. The $25,000 and $50,000 maximum qualifying value under this subdivision may
result from multiple improvements to the homestead.

(h) If 50 percent or more of the square footage of a structure is voluntarily razed or
removed, the valuation increase attributable to any subsequent improvements to the remaining
structure does not qualify for the exclusion under this subdivision. If a structure is
unintentionally or accidentally destroyed by a natural disaster, the property is eligible for
an exclusion under this subdivision provided that the structure was not completely destroyed.
The qualifying value on property destroyed by a natural disaster shall be computed based
upon the increase from that structure's market value as determined on January 2 of the year
in which the disaster occurred. A property receiving benefits under the homestead disaster
provisions under sections 273.1231 to 273.1235 is not disqualified from receiving an
exclusion under this subdivision. If any combination of improvements made to a structure
after January 1, deleted text begin1993deleted text endnew text begin 2016new text end, increases the size of the structure by 100 percent or more, the
valuation increase attributable to the portion of the improvement that causes the structure's
size to exceed 100 percent does not qualify for exclusion under this subdivision.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for improvements initially subject to
assessment on January 2, 2018, and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2016, section 273.11, is amended by adding a subdivision to
read:


new text begin Subd. 24. new text end

new text begin Valuation exclusion for certain improvements; commercial or industrial
property.
new text end

new text begin (a) Improvements to commercial or industrial property, not including utility
property, shall be fully or partially excluded from the value of the property for assessment
purposes provided that (1) the building is at least 30 years old at the time of the improvement,
and (2) the assessor's estimated market value of the property on January 2 of the current
year is equal to or less than $2,000,000.
new text end

new text begin (b) For purposes of determining this eligibility, "property" means land and buildings.
new text end

new text begin (c) The age of a building is the number of years since the original year of its construction.
In the case of a building that is relocated, the relocation must be from a location within the
state and the only improvements eligible for exclusion under this subdivision are (1) those
for which building permits were issued to the property owner after the building was relocated
to its present site, and (2) those undertaken during or after the year the building is initially
occupied by the property owner, excluding any market value increase relating to basic
improvements that are necessary to install the building on its foundation and connect it to
utilities at its present site.
new text end

new text begin (d) If the property is located in a jurisdiction that is subject to a building permit process,
a building permit must have been issued prior to commencement of the improvement. The
improvements for a single project or in any one year must add at least 12 percent to the
market value of the property to be eligible for exclusion under this subdivision. Whenever
a building permit is issued for property currently classified as commercial-industrial, the
issuing jurisdiction shall notify the property owner of the possibility of valuation exclusion
under this subdivision. The assessor shall require an application and may require proof from
the taxpayer of the date the improvement was made and the age of the building. The
application may be filed after the date of the building permit, provided that the application
must be filed within three years of the date the building permit was issued for the
improvement. If the property is located in a jurisdiction that is not subject to a building
permit process, the application must be filed within three years of the date the improvement
was made. Applications must be received before July 1 of any year in order to be effective
for taxes payable in the following year.
new text end

new text begin No exclusion for an improvement may be granted by a local board of review or county
board of equalization, and no abatement of the taxes for qualifying improvements may be
granted by the county board unless (1) a building permit was issued before the
commencement of the improvement if the jurisdiction requires a building permit, and (2)
an application was completed.
new text end

new text begin (e) The assessor shall note the qualifying value of each improvement on the property's
record, and the sum of those amounts shall be subtracted from the value of the property in
each year for ten years after the improvement has been made. After ten years the amount
of the qualifying value shall be added back as follows:
new text end

new text begin (1) 50 percent in the two subsequent assessment years if the qualifying value is equal
to or less than $40,000 market value; or
new text end

new text begin (2) 20 percent in the five subsequent assessment years if the qualifying value is greater
than $40,000 market value.
new text end

new text begin (f) If an application is filed after the first assessment date at which an improvement could
have been subject to the valuation exclusion under this subdivision, the ten-year period
during which the value is subject to exclusion is reduced by the number of years that have
elapsed since the property would have qualified initially. The valuation exclusion terminates
when (1) the property is sold, or (2) the property is reclassified to a class that does not
qualify for treatment under this subdivision. Improvements made by an occupant who is
the purchaser of the property under a conditional purchase contract do not qualify under
this subdivision unless the seller of the property is a governmental entity. The qualifying
value of the property shall be computed based upon the increase from that structure's market
value as of January 2 preceding the acquisition of the property by the governmental entity.
new text end

new text begin (g) The total qualifying value for a property under this subdivision may not exceed
$250,000. The total qualifying value for a commercial or industrial property with a building
that is less than 70 years old may not exceed $125,000. The term "qualifying value" means
the increase in estimated market value resulting from the improvement if the improvement
occurs when the building is at least 70 years old, or one-half of the increase in estimated
market value resulting from the improvement otherwise. The $125,000 and $250,000
maximum qualifying value under this subdivision may result from multiple improvements
to the building.
new text end

new text begin (h) If 50 percent or more of the square footage of a structure is voluntarily razed or
removed, the valuation increase attributable to any subsequent improvements to the remaining
structure does not qualify for the exclusion under this subdivision. If a structure is
unintentionally or accidentally destroyed by a natural disaster, the property is eligible for
an exclusion under this subdivision provided that the structure was not completely destroyed.
The qualifying value of a property destroyed by a natural disaster shall be computed based
upon the increase from that structure's market value as determined on January 2 of the year
in which the disaster occurred. A property receiving benefits under sections 273.1231 to
273.1235 is not disqualified from receiving an exclusion under this subdivision. If any
combination of improvements made to a structure after January 1, 2017, increases the size
of the structure by 100 percent or more, the valuation increase attributable to the portion of
the improvement that causes the structure's size to exceed 100 percent does not qualify for
exclusion under this subdivision.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for improvements initially subject to
assessment on January 2, 2018, and thereafter.
new text end