A property receiving a property tax exemption does not pay general property taxes. However, property exempt from the general property tax may be required to pay for special assessments and services or may be required to pay a portion of the income from the property in lieu of the general property tax.
Eligibility requirements
As a general rule, all property in the state of Minnesota is taxable, except tribal lands, unless the property is owned and used for a public purpose, education, or religious or charitable ministration.
The following is a partial list of the types of property that may qualify for a property tax exemption:
- Public burying grounds
- Public schools
- Public hospitals
- Academies, colleges, universities, and seminaries of learning
- Churches, church property, and houses of worship
- Institutions of purely public charity
- Public property used exclusively for public purposes
- Personal property used primarily for the abatement and control of air, water, and land pollution
- Manure pits certified by the State
- Electric power distribution lines
- Transitional housing
- Wind energy conversion systems
- Waste water treatment systems operated by a municipality
For a complete list of properties that may qualify for a property tax exemption, refer to Minnesota Statute 272, Section 02.
Organizations that qualify
The Minnesota Supreme Court established factors that are often cited as guidelines for determining if an organization qualifies as an institution of purely public charity. These six factors are referred to as the Northstar Factors.
They are:
1. Whether the stated purpose of the undertaking is to be helpful to others without immediate expectation of material reward.
2. Whether the entity involved is supported by donations and gifts in whole or in part.
3. Whether the recipients of the “charity” are required to pay for the assistance received in whole or in part.
4. Whether the income received from gifts and donations and charges to users produces a profit to the charitable institution.
5. Whether the beneficiaries of the “charity” are restricted or unrestricted and, if restricted, whether the class of persons to whom the charity is made available is one having a reasonable relationship to the charitable objectives and,
6. Whether the dividends, in form or substance, or assets upon dissolution are available to private interest.
All six requirements should be met, unless the organization is able to provide reasonable justification for failing to meet the second, third, or fifth requirement.
Applying for exemption
All owners applying for a property tax exemption must one of the following forms:
Exempt Application
Exempt Application of Purely Public Charity
Exempt Application for Nursing Homes
You can email completed application to assessing.services@co.dakota.mn.us.
Documents that may be requested include:
- Application for Property Tax Exemption
- Deed(s) to the property
- Articles of Incorporation
- A letter from the Internal Revenue Service granting tax exempt status under Internal Revenue Code 501(c)3
- Income & Expense statements and IRS Form 990
- Leases or other agreements for space used by individuals or other entities
- A detailed written explanation of all current and intended uses of the property
- Other documents and records unique to a specific property
Cost
There is no cost to file for a property tax exemption.
Length of time to get exemption
The length of time needed to process an exempt application depends on the complexity of the issues surrounding the ownership and use of the property. Applications can be approved in as little as a week or as long as three months. Please be patient. Every effort will be made to process your application as quickly as possible.
After getting an exemption
If exemption status is granted, property that is subject to the general property tax on Jan. 2 and is acquired and used for an exempt purpose before July 1 of the same year will qualify for exemption for that assessment year and will not pay a general property tax the following year.
Ending an exemption
Property that is exempt from the general property tax on Jan. 2, and for any reason loses its exemption before July 1 of the same year, will be placed on the assessment roll for that year. Property taxes will be due and payable the following year.
Not all parcels owned by the same entity are exempt
Each parcel must satisfy all of the requirements for exemption. Also, a parcel that is incidental to the operation of the organization may not be eligible for exemption. There must be a necessary, substantial, and continuing use of the parcel for an exempt purpose by the organization in order for the parcel to be considered for exemption.
You will be notified if you are approved or not
Whether your request for an exemption from the general property tax is approved or not, you will be notified. You may also appeal the Assessor’s Office decision to the Minnesota Tax Court.