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Know why my assessed value can change without an inspection
The State of Minnesota requires that all taxable parcels be inspected by the assessor once every five years.
However, the level of assessment within the city is subject to a mandated audit and correction annually. The Department of Revenue (D.O.R.) performs the audit, measuring the quality of the city’s assessment with the median assessment to sale price ratio for various categories of real estate during a twelve month period. For the City of Duluth, the three categories that normally have enough sales to perform the audit are (1) land improved with residential and seasonal homes, (2) land improved with apartments, and (3) land improved with commercial and industrial buildings.
In each category, the D.O.R. takes each valid sale and divides the sale price by the assessed value. For instance, a home assessed at $150,000 and sold for $167,000 has an assessment that is 89.8% of the sale price. All the sales in the category are arrayed from high to low assessment to sale price ratio, and the median ratio is identified and declared to be a sign of the quality of the assessment.
The D.O.R. defines an acceptable assessment as having a median assessment to sale price ratio that falls within the range of 90% to 105%. If the median ratio is below 90%, the assessor must apply a percentage increase to most or all of the like properties in the city to get the ratio back up to the acceptable range. If the median ratio is above 105%, the assessor must apply a percentage decrease.
If the assessor does not act to cause his assessment to meet D.O.R. standards, the State Board of Equalization meets in early June and would order the necessary increase/decrease. When the assessor applies the change, taxpayers get notified of the new value and can appeal to local and county appeal boards. When the State orders the change, no notification is sent and by the time the taxpayer gets his tax bill with the new value, the only appeal avenue left is a petition before the Tax Court.