Local Minnesota governments collected $11 billion in real estate taxes in 2023. These taxes go toward funding schools, counties, cities, townships, and special districts.
A homeowner tax guide gives an overview of the property tax system. It begins with local property tax assessments to estimate the market value of the home.
Are you a landlord in Minneapolis, MN? Parts of the tax code apply to landlords and homeowners separately. Knowing the specifics can help you at tax time.
Stick around as we offer Minneapolis landlords essential information on calculating, understanding, and managing property taxes effectively in this guide.
The Basics of Property Taxes in Minneapolis
A property tax is an ad-valorem tax that property owners pay annually or semiannually. The amount owed is a percentage of the assessed value of the property.
Property taxes are the chief source of revenue for local governments. The funds are used for schools, police, fire departments, libraries, water and sewer, road construction and repair, and other local services.
Property taxes are calculated by multiplying the property tax rate by the current market value of the real property. Real property includes land, structures, and other fixed buildings.
Property Tax Rates in Minneapolis
Minneapolis is located in Hennepin County, where the median property tax is $2,831 per year. The amount is based on a median home value of $247,900 and a tax rate of 1.14%.
Hennepin County ranks in the top 25% of U.S. counties in terms of property tax collections. Higher taxes in the county are due to the higher property values compared to the state median value of $200,400.
Key Dates for Minneapolis Landlords
When trying to figure out your tax payment strategies, it's important to keep the key dates in mind:
- Assessment date is January 2
- Tax statement mailing is March 31
- Semi-annual payment due dates are May 15 and October 15
Homeowners can visit the Hennepin County Tax Assessor's page to find due dates, property tax records, and the most recent tax assessment. There's also a property tax calculator to estimate your property tax payment.
Factors Affecting Property Taxes for Landlords
There are several factors that affect a landlord's property taxes. Landlords are allowed to depreciate the value of the property over time. As buildings get older, they fall into disrepair, so repairs and upkeep qualify as a business expense.
Classification of a property as a rental property has different implications. Consult your accountant or tax professional to learn the differences.
Local government budgets and levies can change, and that has a direct impact on a homeowner's property tax bill.
Strategies for Managing Property Taxes
If you own a property as a real estate investment, you should employ smart strategies when managing your property taxes. Review yearly assessments for accuracy.
Appeal property valuations to try to lower them in order to reduce your property tax payments. Be sure to budget for tax increases so you are not caught off guard.
Simplifying A Complex Process
As a Minnesota investor, researching the market and property values will help you maximize your profits. Knowing how to stay ahead of and informed about local property tax changes is another way to increase revenue.
Do you know someone who can help you understand your local property taxes? We at PMI Minneapolis St. Paul have a team of professionals with tax and accounting backgrounds to assist you with your investment properties.
Contact us today to set up a consultation by visiting our website or calling 612.895.2700.
