Although it offers excellent schools, numerous recreational amenities, and an overall great quality of life, Minnesota is generally thought of as a high tax state in which residents hand over a significant percent of their income every year. There is some truth to this stereotype, but many transplants are pleasantly surprised by just how affordable their property taxes can be. Minneapolis offers one of the biggest surprises, for while the Minneapolis property tax rate is higher than that of numerous other metro areas, it is actually quite a bit lower than the tax rates of certain Twin Cities suburbs. Additionally, Minneapolis residents have a far smaller tax burden than homeowners in Chicago and Detroit.
What Goes into Minneapolis Property Tax Notices?
Many Minneapolis residents experience a great deal of confusion upon seeing their proposed property tax notices, as these notices feature multiple taxing authorities. These include Hennepin County, the city of Minneapolis, and the Minneapolis Public Schools. Rates can change significantly after the proposed property tax notices are sent out, as taxpayers have the opportunity to have their voices heard during truth-in-taxation hearings. Ultimately, the final tax rate for the year is determined after all tax levies and budgets have been officially approved. The final figure is mailed to Hennepin County residents in March.
How Does Minneapolis Compare to Other Minnesota Cities?
In Hennepin County, the average tax rate between 2007 and 2011 was $2,925. Ramsey County residents, by comparison, paid an average of $2,456. Property taxes vary considerably not only from one county to the next, but also within each county. In Hennepin County, Minneapolis residents pay more than those living in St. Louis Park and Edina, but less than Brooklyn Center residents. In 2015, the average Minneapolis resident with a home valued at $200,000 paid $3,058 in property taxes, compared to $2,662 in Minnetonka, $2,827 in St. Louis Park, and a whopping $3,420 in Brooklyn Center. These differences are quickly magnified in more expensive homes with minimal access to exemptions and reductions; in 2015, Minneapolis residents living in $800,000 homes paid $14,413 in property taxes, compared to $11,476 in Edina and $16,180 in Brooklyn Center.
Minneapolis may have a relatively affordable property tax rate compared to certain Twin Cities suburbs, but homeowners in the big city certainly pay more than those living away from the Twin Cities area. Minneapolis residents with homes valued at $200,000 pay $258 more in annual property taxes than those living in Duluth and nearly $500 more than Rochester residents.
How Do Minneapolis Property Tax Rates Compare to Metropolitan Areas in Other States?
Property taxes in Minneapolis may be more expensive than those in other Minnesota cities, but they are actually quite affordable compared to rates attached to real estate on the East Coast and even in other large Midwestern cities. Between 2007 and 2011, property taxes in Hennepin County were 1.2 percent of home price. In Cook County (where much of the Chicago metropolitan area is located), this figure was 1.5 percent. Detroit residents paid an even higher 2.29 percent, with Milwaukee topping out the Upper Midwest metropolitan scene at 2.31 percent. Interestingly enough, property taxes as a percent of home price also tend to be higher in the neighboring states of North and South Dakota, with Cass County residents paying an average 1.84 percent of home value.
How Can Minneapolis Residents Reduce Their Property Taxes?
Many Hennepin County residents are able to achieve significant reductions in property taxes. Disabled and blind residents are eligible for 1b classification, which is marked by a class rate of just 0.45 percent for the the initial $50,000 in market value. From there, up to $500,000 market value has a class rate of 1.00 percent.
Temporary property tax reductions are also available to those with property that has experienced significant damage due to accidents or intentional vandalism caused by others. To qualify, a minimum of 50 percent of the property must be damaged.
Those lacking eligibility for 1b classification and property damage tax reductions may be able to take advantage of the Homestead Market Value Exclusion, which significantly reduces the value subject to taxation. This program is only available to those with homes valued at less than $413,000.
What’s the Role of Special Assessments in Minneapolis Property Taxes?
Although Minneapolis residents often pay more in property taxes than their counterparts in other metropolitan areas, housing expenses tend to even out when factors such as special assessments are taken into account. Special assessment rates and purposes vary significantly from one county to the next, but in general, these levies are used to fund projects such as water system improvements, road construction, building demolition, and the installation of various public utilities. As of 2009, the Minnesota State Auditor reported that Minneapolis residents paid just $54 per year in special assessments, compared to an average of $123 in St. Paul.
Minneapolis is by no means the most affordable city in terms of property tax rates, but Minneapolis homeowners often experience a smaller property tax burden than they anticipate, especially compared to other large cities in the Upper Midwest. Many residents would argue that the quality of life in Minneapolis makes the increased property taxes worth paying.
2 Point Highlight
1. Property taxes in Minneapolis may be more expensive than those in other cities, but they are actually quite affordable compared to those attached to real estate on the East Coast and even in other large Midwestern cities.
2. Although Minneapolis residents often pay more in property taxes than their counterparts in other metropolitan areas, housing expenses tend to even out when factors such as special assessments are taken into account.
