HF 5240

as introduced - 93rd Legislature (2023 - 2024) Posted on 04/02/2024 11:52am

A bill for an act
relating to taxation; property; limiting valuation increases for certain homestead
property; amending Minnesota Statutes 2022, section 273.11, subdivision 1;
proposing coding for new law in Minnesota Statutes, chapter 273.

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

Section 1.

Minnesota Statutes 2022, section 273.11, subdivision 1, is amended to read:

Subdivision 1.

Generally.

Except as provided in this section new text begin , section 273.1113, new text end or section
273.17, subdivision 1, all property shall be valued at its market value. The market value as
determined pursuant to this section shall be stated such that any amount under $100 is
rounded up to $100 and any amount exceeding $100 shall be rounded to the nearest $100.
In estimating and determining such value, the assessor shall not adopt a lower or different
standard of value because the same is to serve as a basis of taxation, nor shall the assessor
adopt as a criterion of value the price for which such property would sell at a forced sale,
or in the aggregate with all the property in the town or district; but the assessor shall value
each article or description of property by itself, and at such sum or price as the assessor
believes the same to be fairly worth in money. The assessor shall take into account the effect
on the market value of property of environmental factors in the vicinity of the property. In
assessing any tract or lot of real property, the value of the land, exclusive of structures and
improvements, shall be determined, and also the value of all structures and improvements
thereon, and the aggregate value of the property, including all structures and improvements,
excluding the value of crops growing upon cultivated land. In valuing real property upon
which there is a mine or quarry, it shall be valued at such price as such property, including
the mine or quarry, would sell for at a fair, voluntary sale, for cash, if the material being
mined or quarried is not subject to taxation under section 298.015 and the mine or quarry
is not exempt from the general property tax under section 298.25. In valuing real property
which is vacant, platted property shall be assessed as provided in subdivisions 14a and 14c.
All property, or the use thereof, which is taxable under section 272.01, subdivision 2, or
273.19, shall be valued at the market value of such property and not at the value of a leasehold
estate in such property, or at some lesser value than its market value.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2025.
new text end

Sec. 2.

new text begin [273.1113] LIMITED VALUATION INCREASES FOR HOMESTEAD
PROPERTY.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Current value" means the market value of a property in the assessment year preceding
the assessment year in which an application is submitted under subdivision 3.
new text end

new text begin (c) "Prior property value" means the market value of a property for the assessment year
in which the valuation treatment under this section expires.
new text end

new text begin (d) "Qualified property" means owner-occupied property classified as (1) class 1a or 1b
under section 273.13, subdivision 22, (2) class 2a under section 273.13, subdivision 23,
except that only the portion of the property consisting of the house, garage, and immediately
surrounding one acre of land qualify, or (3) class 4d(2) under section 273.13, subdivision
25.
new text end

new text begin (e) "Valuation treatment" means the limit on market value increases provided under this
section.
new text end

new text begin Subd. 2. new text end

new text begin Limit on market value increases. new text end

new text begin In the case of qualified property, the assessor
must compare the market value determined in each assessment year with the market value
determined in the previous assessment. The amount of the increase, if any, in the current
assessment must not exceed the lesser of (1) three percent of the market value determined
in the previous assessment year, or (2) the percentage change from the prior year for the
most recent publication of the Consumer Price Index for All Urban Consumers published
by the Bureau of Labor and Statistics. This limitation does not apply to increases in value
due to improvements.
new text end

new text begin Subd. 3. new text end

new text begin Portability. new text end

new text begin (a) If a property owner receiving the valuation treatment under
this section no longer receives homestead treatment on a qualified property but instead
receives homestead treatment on a new qualified property, the valuation of the new qualified
property is subject to valuation under this subdivision in the assessment year in which
homestead treatment is established on the new qualified property, provided that the property
owner submits an application under this subdivision.
new text end

new text begin (b) If the current value of the new qualified property exceeds the prior property value
of the property owner's previous homestead, the value of the new property is equal to the
quotient of (1) the sum of the current value of the new qualified property plus the prior
property value of the property owner's previous homestead, divided by (2) two. For
assessment years thereafter, the property must be valued under this section, until the valuation
treatment expires.
new text end

new text begin (c) If the current value of the new qualified property is less than the prior property value
of the property owner's previous homestead, the increase in value of the new property for
the assessment year in which an application is submitted under this subdivision, if any, must
not exceed the lesser of (1) three percent of the market value determined in the previous
assessment year, or (2) the percentage change from the prior year for the most recent
publication of the Consumer Price Index for All Urban Consumers published by the Bureau
of Labor and Statistics. For assessment years thereafter, the property must be valued under
this section, until the valuation treatment expires.
new text end

new text begin (d) The application under this subdivision for the transfer of the valuation treatment to
a new property must be in the form and manner determined by the commissioner of revenue.
Applications must be made available with the application for homestead treatment under
section 273.124. Applications under this subdivision to transfer the valuation treatment may
be made within three years of the purchase of the new property, and the valuation calculation
under paragraphs (b) and (c) apply beginning with the assessment year in which the
application is made. If no application is made under this subdivision, a qualified property
must be valued pursuant to subdivision 2.
new text end

new text begin Subd. 4. new text end

new text begin Expiration. new text end

new text begin Once a property is valued under this section, the valuation treatment
applies until the valuation treatment expires. The valuation treatment under this section
expires if a property is sold, transferred, or otherwise disposed of, or if the property owner
no longer qualifies for homestead treatment. When the valuation treatment under this section
expires, the property that had been receiving the treatment must be valued pursuant to section
273.11 for the following assessment year, unless the owner of the property in the following
assessment year qualifies for valuation under subdivision 3.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective beginning with assessment year 2025.
new text end