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Property Tax 101

Determining Property Taxes

After the Assessor’s Office determines the market value and classification of the properties, Property Taxation & Records computes the property taxes by multiplying the value of the property by the total tax rate. This tax rate changes based on which county, city or township, school districts or special district the property is located in.

They take into account any credits or programs an owner may be enrolled in to lower the property taxes, such as the homestead exclusion for residential property or Green Acres or Agricultural Reserve programs for agricultural property.

Factors that affect property taxes
The following factors change how much you pay in property taxes.

Your property’s market value changes
Each year, the Assessor’s Office studies actual sales of property in each community. Sales in a 12-month time period are reviewed to find out what properties have sold for on the open market. The Assessor’s Office makes sure that market value is similar to like properties.

Also, additions and improvement made to a property generally increases its market value.

Market values of other properties change
Properties change values at different rates. If the market value of a property increases more or less than the average, the taxes on that property will also change.

For example, if your property increases in value more than other properties in your area, your taxes will increase. If your property value increased less than other properties, your taxes will decrease.

Changing tax bases
New construction increases a taxing district’s base. This spreads the need for property taxes between more property owners, which means lower rates.

State property tax changes
The state directly applies a State General Property Tax to commercial/industrial and season/recreational property classes.

City or township levy changes
Cities and townships determine their budget for the year. This includes the levy, or the amount of money needed through property taxes to balance the budget. Budgets and levies increase depending on the needs and wants of the community as well as changes to federal and state aid and mandates.

County levy changes
The County determines their budget for the year. This includes the levy, or the amount of money needed through property taxes to balance the budget. Budgets and levies increase depending on the needs and wants of the community as well as changes to federal and state aid and mandates.

School districts levy changes
Most of school district budgets are funded by the state, school districts are set levies to balance their budget.

Special assessments added
Water lines, curb and gutter, and street improvements that directly benefit your property may be funded, in whole or in part, through a special assessment that is added to your tax bill. 

Special districts levy changes
Special districts such as the Metropolitan Council, hospital districts, watershed districts and drainage districts set levies to balance their budgets.

Voter approved referendums
Local referendums may be held for local government construction projects, excess operating levies for schools or many other purposes.

State changes classification rates
Different classes of property are taxed at different rates. Residential, commercial and agricultural property have different rates. A change in the classification rates from the state requires a change in the tax rate to raise the same amount of money.

Last updated: 1/21/2014 8:34 AM