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A look at figuring taxes, market values

Figuring out how much someone should pay in property taxes is kind of like making sausage.

When property owners receive the notice of valuations this month, they will have part of the recipe.

The value of your home is "not tied as closely to taxes as you think," said Diane Swanson, an assessor for Kandiyohi County.

When a person's property values increase County Assessor Tim Falkum said he often hears, "Oh, the county must need more money."

But that's not how it works.

"We don't increase the value to get more money," said Falkum.

Assessors could double the market value of every home and taxes wouldn't increase if government budgets stayed the same.

Each government entity -- school, city, county and township -- sets their budget based on the amount they need to provide services.

Property taxes are calculated from the property's assessed market value, classification rate, local tax rate, tax capacity and the final levy of each taxing district.

The market value is a tool for collecting the taxes, with each property owner responsible for a chunk of the sausage.

Someone who appeals and has their market values lowered may benefit by paying for a smaller piece of the sausage. But Falkum said that means someone else, like your neighbor, will be paying a little more.

Limited market value ends this year

Legislation passed in 1993 that limited the amount a property's market value may grow from one year to the next for purposes of property taxation ends this year.

The phase-out of the "limited market value" means that all property will be valued at its estimated full market value for property tax purposes.

Kandiyohi County Assessor Tim Falkum said he's glad the provision is now gone.

It was passed to "help mitigate rising property taxes resulting from rapidly inflating property values," according to a research statement by the House of Representatives. In most cases, the limited market value could not be greater than 15 percent of the previous year.

Falkum said the legislation was initially introduced to help just one district that was particularly hard hit in the 1990s, but was applied statewide.

It applied to agriculture, residential, seasonal and timberland properties.

In 2001 the Legislature phased out the limited market values over a six-year period, to end in 2007. In 2005 the phase-out was extended to 2009.

Properties affected by the change will see a one-time adjustment this year.

Do your research

The Minnesota Department of Revenue has this advice for people who intend to appeal their estimated market values during the board of appeals and equalization:

* Verify information about your property, such as its dimensions, age and conditions of its structures.

* Review records to determine the market value of similar property in your neighborhood.

* Review sales data to find out what similar property in your area is selling for.

Check real estate ads in your newspaper to get an idea of the asking price of local properties.

* Ask the assessor to explain the criteria used for classifying your property. You may also review the classification of other property used in the same manner as yours.

* Gather supporting evidence such as: recent appraisal of your property, documentation supporting the use of your property, photos of your property and your neighbors' and recent sales of similar property.

* People who are unable to attend a board of appeals and equalization hearing may submit their appeal in writing.

Carolyn Lange

A reporter for more than 30 years, Carolyn Lange covers regional news with the West Central Tribune.

(320) 894-9750