Understanding your Property Taxes

Living here in Hennepin County has many benefits…We have beautiful parks, thriving cities, successful businesses, farmland, good schools …but supporting all those resources comes with a price, and that’s the property tax.

They’re our oldest form of taxes going back to the formation of the Minnesota Territory. I’m guessing we’ve all asked ourselves, Why are my property taxes going up when the value of my property is going down?

UNDERSTANDING YOUR PROPERTY TAXES

The answer is that unlike nearly all other taxes, the property tax is a tax on the community as a whole, and the value of your property—your piece of that community—is used to determine your share of that tax.

It is your share of the total cost of local government. Here’s how property taxes are formed: the people we elect tax a specific dollar amount on the entire community of taxpayers. This is called a property tax levy. Police and firefighters, road repair, care for the elderly, schools, libraries, sewers— all are supported by that levy.

Your Property Tax Determined By How Much Others In Your Community Are Pay

This tax is then divided among all the tax payers based on their individual property value, in proportion to everyone’s property value.

This means that your property tax depends on how much others in your community are paying, so if all property values are dropping but your property value does not drop as much as the others, your tax will go up because your share of the tax levy increased.

In other words, property value alone does not determine your tax, it just determines your share of the total tax on the community.

Okay, now that you know you’re paying your share of the community’s tax, why does the amount change from year to year?

There are three main factors: first your tax statement is actually 8 to 10 tax bills rolled into one.Each county, city, school and special taxing district has its own budget and determines its own part of your tax—your total tax is the sum of your share of all those separate tax levies.

How Changes in the Market Value of Your Property Affect Your Taxes

In Hennepin County, seven commissioners represent the entire population of 1.1 million people.

Those seven have to weigh the needs of all residents and make the difficult choices about what services to fund and needs are always changing.

The county may have had to plow less snow this winter, so that cost less, but at the same time your school district had to add teachers, because more kids have enrolled, so that cost offset the savings.

The second factor is that your taxes depend on changes in the market value of your property, and the market values of all properties in those districts.

At least every five years, an assessor looks at your property and tries to determine its value by comparing it to sales of similar properties that value may go up or down or stay the same.

However it’s not enough to know that your property value rose or fell to understand the impact of market value change on your tax.

 

Understanding property taxes in Minnesota

You need to know how your property value changed compared to all the other properties in your area.

And third, there are a number of exemptions and other programs provided by state law to make property taxes more fair or equitable.

These programs affect everyone because even if your property doesn’t get a benefit, if some properties are taxed less, the rest of the community pays more to make up for it.

That includes you So you can see there are many factors that are constantly changing and interacting to affect your property tax.

Increases in some parts of your bill offset decreases in others. The most important thing to remember about property taxes is that they’re designed to share the cost of government services.

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