Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

HF 877

as introduced - 87th Legislature (2011 - 2012) Posted on 03/03/2011 11:59am

KEY: stricken = removed, old language.
underscored = added, new language.
Line numbers 1.1 1.2 1.3 1.4 1.5
1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 1.23 1.24 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20 2.21 2.22 2.23 2.24 2.25 2.26 2.27 2.28 2.29 2.30 2.31 2.32 2.33 2.34 2.35 2.36 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 3.27 3.28
3.29 3.30
3.31 3.32 3.33 3.34 3.35 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 4.30 4.31 4.32 4.33 4.34 4.35 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22 5.23 5.24 5.25 5.26 5.27 5.28 5.29 5.30 5.31 5.32 5.33 5.34 5.35 5.36
6.1 6.2

A bill for an act
relating to taxation; authorizing valuation exclusion for certain improvements to
homestead and commercial-industrial property; amending Minnesota Statutes
2010, section 273.11, subdivision 16, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2010, section 273.11, subdivision 16, is amended to read:


Subd. 16.

Valuation exclusion for certain improvements.

(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 45
years 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 2010new 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, 2012, and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2010, section 273.11, is amended by adding a subdivision to
read:


new text begin Subd. 24. new text end

new text begin Value exclusion for certain improvements. 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 45 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,
2011, 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, 2012, and thereafter.
new text end