Property Taxes. Property Taxes. Property Taxes: From Levy Certification to Individual Tax Statement

Transcription

1 : From Levy Certification to Individual Tax Statement Shelby McQuay Ehlers Andrea Uhl Ehlers May 11, Overview District officials are sometimes expected to explain property taxes in detail: At school board meetings At Truth in Taxation hearings In phone calls with excited taxpayers Public expects simple answers, but. it s not simple 2 Overview Today s session will focus on: Property tax basics Computing individual parcel values Calculating school taxes Breaking down various taxing decisions on property owners & school district revenues 3 1

2 Minnesota School District - Key Steps in the Process & Who Does What 4 Minnesota School District - Key Steps in the Process & When January 1, 2017 March/April Summer 2017 September 2017 Nov/Dec 2017 December 28, 2017 May 2018 October 2018 Assessment Date Taxpayers receive valuation notices for Pay 2018 Levy Setting Process District adopts proposed 2017 Pay 2018 Levy & Certifies it to Auditor Counties send TNT Notices TNT Hearings Held Final property tax levy adopted by board & certified to home county auditor 1 st Half Due 2 nd Half Due 5 Four Measures of Property Value Estimated Market Value (EMV) Taxable Market Value (TMV) Referendum Market Value (RMV) Net Tax Capacity (NTC & ANTC) 6 2

3 Measures of Property Value Estimated Market Value (EMV) Starting point for other measures of property value Assessor s estimate of true market value Taxable Market Value (TMV) Value used to calculate taxes May be less than EMV due to various limitations and exclusions 7 Measures of Property Value Taxable Market Value Limitations and Exclusions Market Value Exclusion Green Acres This Old House This Old Business Platted Vacant Land Exclusion Border City Development Zone Exception 8 Computation of Taxable Market Value Residential Homestead Property 4 Examples A. Estimated Market Value (EMV) 1. Value up to $76,000 50,000 76,000 76,000 76, Value in Excess of $76, , , , Total (1 + 2) 50, , , ,800 B. Computation of Homestead Exclusion 1. Exclusion on Value up to $76,000 (A.1 * 40%) 20,000 30,400 30,400 30, Reduction Base on Value > $76,000 (Lessor of $30,400 or (A.2 * 9%)) 0 2,160 11,160 30, Homestead Exclusion (Greater of 0 or (1-2)) 20,000 28,240 19,240 0 C. Taxable Market Value (B.1 - B.2) 30,000 71, , ,

4 Measures of Property Value Net Tax Capacity (NTC) Basis for calculating most taxes NTC TMV Class Rate Adjusted Net Tax Capacity (ANTC) Basis for calculating aid ANTC NTC Sales Ratio 10 Class Rate Table for Minnesota Payable in 2017 NTC Subject to Subject to Class Description Class RMV Tax State Tax 1a Residential Homestead First $500, % Yes No Over $500, % Yes No 1b Blind/Disabled Homestead Agricultural or nonagricultural First $50, % Yes, at 45% of TMV No 1c Commercial Seasonal Residential Recreational used less than 250 days a First $600, % Yes,at 50% of TMV No $600,001 - $2,300, % Yes No Over $2,300, % Yes Yes 2a Agricultural Homestead House, Garage, One Acre First $500, % Yes No Over $500, % Yes No Remainder of Farm First $2,050, % No No Over $2,050, % No No 2b Non-homestead Agricultural Land 1.00% No No 2c Managed Forest Land 0.65% No No 11 Class Rate Table for Minnesota Payable in 2017, continued 3a Commercial-Industrial and Public Utility First $150, % Yes Yes Over $150, % Yes Yes 4a Rental Housing Four or more units 1.25% Yes No 4b(1) Residential Non-homestead 1 to 3 units that does not qualify for class 4bb 1.25% Yes No 4b(3) Agricultural Non-homestead containing more than one residence but fewer than four along with the acre(s) and garage(s) 1.25% Yes No 4bb Residential Non-homestead - Single unit or Single House, Garage and First Acre on agricultural non-homestead land First $500, % Yes No Over $500, % Yes No 4c(1) Seasonal Residential Recreational Commercial First $500, % Yes Yes Over $500, % Yes Yes 4c(12) Seasonal Residential Recreational Non-Commercial First $76, % No Yes-40% $76, , % No Yes Over $500, % No Yes 4d Qualifying Low Income Rental Housing 0.75% Yes, at 75% of TMV No 12 4

5 Measures of Property Value Referendum Market Value (RMV) Used to spread referendum, equity and transition levies RMV is equal to EMV, except for: Seasonal recreational residential property (cabins) Agricultural property RMV equals the EMV of the house garage, and one acre of land; RMV of other land and buildings is 0 13 Example Calculations of Tax Capacity Residential Homestead Property A. Estimated Market Value (EMV) 1. Value up to $76,000 76, Value in Excess of $76,000 24, Total (1 + 2) 100,000 B. Computation of Homestead Exclusion 1. Exclusion on Value up to $76,000 (A.1 * 40%) 30, Reduction Base on Value > $76,000 (Lessor of $30,400 or (A.2 * 9%)) 2, Homestead Exclusion (Greater of 0 or (1-2)) 28,240 C. Taxable Market Value (B.1 - B.2) 71,760 76, , ,000 30,400 30, ,000 D. Computation of Tax Capacity 1. Value up to $500,000 (1.00%) Value in Excess of $500,000 (1.25%) 0 3. Total (1 + 2) 718 5,000 3,125 8, Example Calculations of Tax Capacity Commercial-Industrial Property A. Estimated Market Value (EMV) 100,000 B. Computation of Homestead Exclusion 0 C. Taxable Market Value (TMV = EMV) 100,000 D. Computation of Tax Capacity 1. Value up to $150,000 (1.5%) 1, Value in Excess of $150,000 (2.00%) 0 3. Total (1 + 2) 1, , ,000 2,250 12,000 14,

6 Example Calculations of Tax Capacity Agricultural Homestead Land & HGA Buldings 2,500,000 A. Estimated Market Value (EMV) 1. Value up to $76,000 76, Value in Excess of $76,000 24, Total (1 + 2) 100,000 2,500,000 B. Computation of Homestead Exclusion 1. Exclusion on Value up to $76,000 (A.1 * 40%) 30, Reduction Base on Value > $76,000 (Lessor of $30,400 or (A.2 * 9%)) 2, Homestead Exclusion (Greater of 0 or (1-2)) 28,240 C. Taxable Market Value 71,760 2,500,000 D. Computation of Tax Capacity 1. Value up to $500,000 (1.0%) Value in Excess of $500,000 (1.25%) Total (1 + 2) Total Tax Capacity 15,468 E. Computation of Agricultural Tax Capacity 1. Value up to $2,050,000 (0.5%) 10, Value in Excess of $2,050,000 (1.0%) 4, Total (1 + 2) 14, Example Calculations of Tax Capacity Agricultural Non - Homestead A. Estimated Market Value (EMV) 100, ,000 B. Computation of Homestead Exclusion 0 0 C. Taxable Market Value (TMV = EMV) 100, ,000 D. Computation of Tax Capacity (1.0%) 1,000 7,

7 Tax Rate Determination Value Also called taxable net tax capacity TRDV n x=1 properties Power line tax capacity Fiscal Disparities Contribution Captured portion of TIF 19 Fiscal Disparities Applied to commercial-industrial (C-I) property in the 7 county metro area since 1971 Separate fiscal disparities program for the Iron Range that works the same way Designed to share the tax benefits of new C-I property throughout a larger area A highly complex program the makes property taxes in affected area much harder to explain 20 Tax Increment Financing (TIF) TIF is an economic development tool used by Cities and other local authorities Complex rules and restrictions City or county creates TIF district and adopts TIF plan During term of plan: Captured Tax Capacity Current Tax Capacity Original Tax Capacity 21 7

8 Tax Increment Financing (Cont.) Captured tax capacity not included in aggregate total of NTC or TRDV School districts do collect referendum levies (and other RMV levies) for property in TIF district TIF has no impact on school district revenues other than the Capital Projects Levy 22 District Total Net Tax Capacity NTC TRDV Fiscal Disparities Distribution For school districts outside the 7 county metro area and the Iron Range, this is the same as Tax Rate Determination Value 23 Computation of Initial Tax Rates NTC Tax Rates Certified NTC Levies FD Distribution NTC Tax Rate = TRDV RMV Tax Rates RMV Tax Rate = Certified RMV Levies FD Distribution RMV 24 8

9 Computation of Gross Tax Gross School Tax Taxable Net Tax Capacity NTC Rate Total Referendum Market Value RMV Rate

10 28 Market Value Credits Agricultural Homestead Market Value Credit Credit equal to 0.3% of the first $115,000 of taxable market value excluding the HGA Plus 0.1% of TMV in excess of $115,000 Maximum credit of $ Tax bases vary by district, most notably in Greater MN Source: Willette, Rural Legislative Forum, Mankato

11 Various property types have been growing at different rates Source: Willette, Rural Legislative Forum, Mankato More farms can mean more tax base per pupil Source: Willette, Rural Legislative Forum, Mankato School Building Bond Credit (Ag2School Credit) Proposed credit to farmers on school debt levies Paid for with state dollars, not shifted to other properties Currently in conference committee 40% 50% 40% 33 11

12 Example: Agricultural Area District Agricultural land is not included in the RMV tax base (except HGA) Agricultural land can be a major portion of NTC Residential Homestead can be much bigger portion of RMV than NTC Not many voters per acre 34 Example: Agricultural Area District Market Value Percent of Total Referendum Market Value Percent of Total Net Tax Capacity* Percent of Total Total 460,083,215 65,304,175 3,797,587 Residential Homestead 25,546, % 25,380, % 194, % Other Residential 4,702, % 4,702, % 50, % Commercial / Industrial 22,025, % 22,025, % 433, % Agricultural 407,430, % 13,196, % 3,116, % Seasonal Recreational 378, % - 0.0% 3, % *Totals do not include TIF and Fiscal Disparities adjustments 35 Description Reduce Referendum by $1,500 Bond Issue Net per Pupil Unit $ Million Change Estimated Tax Rates for Proposed Questions NTC Tax Rate: 58.05% 58.05% RMV Tax Rate: % % Type of Property Estimated Market Value Estimated Change in Taxes* 50, Residential 70, Homestead 80, , ,000-1,111 1, Commercial/ 50, Industrial 100, Agricultural 600, ,868 1,312 Homestead 800, ,448 1,892 1,000, ,029 2,473 Agricultural 2, Non-Homestead 2, (dollars per acre) 3,

13 Minnesota Homestead Credit Circuit Breaker Refund Existed since 1970s Available to all owners of homestead property both residential and agricultural (refund on agricultural homestead property is based on taxes paid only on HGA) For 2016 taxes, annual household income must be less than $108,660 for homeowners and $58,880 for renters (income limit is higher if you have dependents) Refund is sliding scale, based on total property taxes and income Maximum refund is $2,660 for homeowners and $2,060 for renters Especially helpful to those with lower incomes Fill out state tax form M1PR 37 Special Property Tax Refund Available for all homestead property, both residential and agricultural (refund on agricultural homestead property is based on taxes paid only on HGA) with a gross tax increase of at least 12% and $100 over prior year Refund is 60% of amount by which tax increase exceeds greater of 12% or $100, up to a maximum of $1,000 No income limits Fill out state tax form M1PR 38 Senior Citizen Property Tax Deferral Allows people 65 years of age or older with household income of $60,000 or less to defer a portion of property taxes on their home Taxes paid in any year limited to 3% of household income for year before entering deferral program; this amount does not change in future years Additional taxes deferred, not forgiven State charges interest up to 5% per year on deferred taxes and attaches a lien to property Deferred property taxes plus accrued interest must be paid when home is sold or homeowner(s) dies 39 13

14 Andrea Uhl Financial Specialist (651) Shelby McQuay Municipal Advisor (651)