How does the Assessor determine your property value? It’s property tax assessment letter season. And, this year, many homeowners in our area are surprised to see a spike in their property values — again. Median property values in our area have increased significantly in the last year due to low inventory and low interest rates.
Why is my property worth more money?
First: Congratulations! You and many other property across Minnesota have seen the market value of your home increase from last year.
Assessors estimate the market value of your house/property by looking at the sale prices of homes similar to yours in your area. They also look at building permits filed for your home to account for renovations, additions or other things that would increase its value. This year, the standout factor driving up property values is rock-bottom amount of properties available for sale. There just aren’t a lot of homes for sale — and that drives up prices. In our local area our inventory for properties available for sale is down over 50%.
Doesn’t this mean your taxes are going to go up? Not necessarily.
But are my taxes going to go up?
Maybe.
Unlike income taxes, which rise as your income rises, property taxes aren’t directly related to the market value of your property.
How much you have to pay for all those services corresponds with what portion of the city, county, school district, hospital district, etc., you own. Think of your community as a big pie: The size of your slice determines how much pie you have to pay for. Sometimes your slice gets bigger, but so does the entire pie, so the proportion of the pie you’re responsible for stays the same. You can see this happening across the state: Property values are going up pretty much everywhere. It’s only when the size of your slice grows faster than anyone else’s that the amount of the entire pie you have to pay for goes up.
Homeowners in areas where values are rising the fastest are more likely to see their taxes increase, but that depends on lots of other factors, such as how much money is budgeted for the year and if there are any special levies.
There are also discounts given if you live on your property — it’s called a homestead credit — plus discounts for veterans, people who’ve had severe damage to their homes, and others. All those factors affect how much of the pie you’re responsible for.
For more information, here check out the Fact Sheet produced by the MN Department Revenue on how the Accessor determines your market value:
