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Know about the law that limits how much the assessor can raise my value
There are two state laws regarding market value for property tax purposes that at first glance seem to be contradictory.
Minnesota Statute 273.11 directs that “all property shall be valued at its market value.” Assessors are to value property at 100% of what they determine the market value to be.
However, in the early 1990s, as described in M.S. 273.11 subdivision 1a, the legislature enacted the “Limited Market Value” (LMV) law, which restricted how much of any value increase could be taxed in the years that followed the increase. The increase had to exceed a certain size, measured as a percentage, for the LMV law to kick in. If the LMV law did kick in, then the increase had to be phased in over several years based on a formula. The law applied to farms, homes, cabins, and timber land only.
So the two laws do not really contradict. The first instructs the assessor to value property at full market value.
The result of all this is that during the time period of the early 1990s through approximately 2005, the real estate market was strong enough to keep the LMV law in effect (sunsets were extended over and over) and thousands and thousands of parcels statewide periodically had two values on the books: the full estimated market value (EMV) calculated by the assessor, and the LMV used by the County Auditor to calculate the property tax.
The LMV law was designed to protect taxpayers from large property tax increases during periods of substantial real estate appreciation over short periods of time. (The LMV concept had been used before the 1990s as well.)
The current sunset date for the LMV law is the January 2, 2008 assessment date for taxes payable in 2009. As the market has cooled in near historic fashion since 2005, the legislature has not seen the need for the law and has not extended its life. It will expire after the 2008 assessment and with a few minor exceptions, all properties will be taxed at their full market value beginning with taxes payable in 2010.