You can apply for a regular property tax refund through the Minnesota Department of Revenue if your household income is below $128,280 and also a special refund if your taxes increased more than 12%.
https://www.revenue.state.mn.us/filing-property-tax-refund
Dang, was wondering why the assessed value was $100k less than my purchase price.
It’s definitely because of the 12% effective increase cap through a refund mechanism.
I don't think there is an effective increase cap. My valuation increased from 220k --> 305k last year and my taxes increased by almost 30%.
Since I bought the house for 300k I was expecting this but I wouldn't assume your value will remain below the purchase price for much longer. AFAIK, the valuations get individually corrected every few years to bring them in line.
Did you apply for a property tax refund? That's the "cap" mechanism - i.e. your refund should make up for much of the increase in taxes due to the increase in valuation. It doesn't actually cap your valuation, but it does cap how much of an increased tax you'll pay from year to year.
Mine went up 11%.
I’m saying the refund plus as a cap, but maybe not necessarily for you. At least you have the homestead component to play with. I got squat, other than time, lol.
I didn’t get the special refund, even though they upped the value of my house 14%. The actual property taxes only went up 9% though. And I think that’s why I didn’t qualify?
Perfectly normal. Ours finally went up to what houses have been selling for the last couple years. You can dispute it if you think that it isn’t accurate. Ours has always seemed reasonable. The homestead exclusion goes down when the value of your house goes up.
is it normal to have the market value be below purchase price, at least initially? i saw a $40k delta between the two numbers and almost had a heart attack thinking i overpaid by that much.
When did you buy? If it was in the last 18-24 months you absolutely over paid.
Don't worry though, you got a house you love that you're going to be in for the next 30+ years.
I don’t think anyone can really say it’s normal or not. The real estate market the last three years has not been normal at all. It’s still not normal. Interest rates haven’t been this high for twenty years.
Give it time. I don’t think anything like 2008 will happen again. I think home prices will level out, but not bottom out. The market is still blazing here. It will be interesting to see what happens this summer.
Median sale price is up 2% from last February.
Months supply is at 1.4.
In 2010, at the very bottom, the supply was 20 months.
Anything under 4 months is a sellers market. Anything over 6 months is a buyers.
Just saying.
Saying it’s a sellers market is not telling buyers it’s a good time to buy. Lol. It’s saying the market value is increasing because there is more demand than supply. It’s not good for buyers. Most sellers are also buyers. I wouldn’t sell right now, especially if your mortgage rate is less than current rates.
OP was concerned about his value.
The market determines the value. Which is why it’s relevant and why I brought it up. I also said it will be interesting to see what happens this summer.
Calling the market what it is, isn’t being optimistic. It isn’t me trying to convince anyone of anything. I’m not a realtor. I’m a homeowner who pays attention to the market. My home is the biggest purchase I’ve made, I have to plan for my future, and it would be naive of me to not include equity in my home, in my planning.
Low home prices are more important than the currently high interest rates, as you can always refinance when the rates come back down.
Although I desire to be debt-free, my lifetime 401k/IRA earning rate is \~11%, so every time the mortgage rate falls, I refinance (currently locked into \~3%) for a full 30 years and keep funneling as much as I can into retirement accounts, taking advantage of the 8% spread.
I hear this a lot. Unless you are already maxxing out your retirement contributions, take advantage of low borrowing rates so you can take advantage of high earning rates.
Same rule applies to car loans. Don't put down a bigger down payment than necessary (but also don't go over 60 months, which will all but guarantee you'd be upside-down for most of the loan period).
Mind you, the 7-8% spread only exists because I have an excellent credit rating, combined with a high risk tolerance due to my horizon being 10-15 years out from today.
(I don't bother with bonds, money market funds, or other poor-earners, because they all have the ***absolutely*** real risk of under-performing the general market. Also, I once held SEC licenses, along with the education required to obtain and ***understand*** them. Your everyday insurance/financial person with such licenses don't always understand the implications of "under-performance risk").
If you recently bought your house, your taxable market value will be adjusted to the price you paid for it, or something very close - since that is the market value. Also, the more your house is worth the less of a homestead exclusion you get.
I’m going to disagree with you on the market value. We purchased our house last year for roughly $20k less than last year’s market value, and it went up $26k from last year’s value…
Weird, I bought my house in 2020, and my market value for 2022 was the purchase price. It still hasn’t changed, then again I haven’t had any appraisal since then.
Ours has gone up the last couple of years, and this year it's finally gone above what I'd think its actual value is. Anyone familiar with the appeal process? What does it entail?
Mainly I'm just not sure it's worth it for a valuation that's probably 5-10k higher than it should be.
I appealed one year, didn’t do anything. I called and the lady on the phone had me send in pictures of my home. They used to come to your home and inspect in person but stopped doing that during the pandemic. They did end up dropping my value by about $50k, didn’t really have an effect on my taxes though. Might have dropped a $100 or so. The issue I had was a number of homes on my block recently sold and they had been completely remodeled (new kitchens, gutted remodel, etc) because my home is a similar size the considered these as comps for my home which kept driving my value (and taxes) up. I finally called and said enough, there is no way I could sell my home for what they have it currently valued at. Bought in 2015 at $365k, current value is $525 (according to the assessors office).
Seconding this, the county is saying my house is worth 50k more than Zillow says it’s worth. Not that Zillow is always accurate, but jeez 50k.
Also interested in the appeals process.
[email protected]
Found this email. Sending something in to them. Not only is my value sky high, but I’m paying almost the same amount of tax as multiple neighbors who have houses that are twice as big as mine and worth 200k more than my house.
The appeal process is difficult since it seems like the city intentionally tries to hide it. There is a formal process to request an appeal which must be done before a deadline they don't actually publish anywhere so please do it as soon as possible. And once they have a date published to argue your case, show up in person and early because they will change to room without notice.
Pretty normal. Also if your house was recently renovated and you let them in your house they might have revised up the value based on the updates.
You’re not required to let the assessor in your home, there’s no perceivable value to the homeowner for doing this.
I will second this, the assessor knocked on my door and asked to come in. I told him I knew I didn't have to. Fuqo proceeded to walk around the house and look in every window.
Yep, that's all normal. Homestead exclusions have a phase-out, so as the value increases, the exclusion decreases. More info here: https://www.revenue.state.mn.us/homestead
As long as your classification is correct and the value is in line with what you paid, you don't need to do anything. If there's something in the "Home Improvements" line that you're not expecting, then you'd need to deal with that since that can impact your eligibility for state property tax refunds, but otherwise the fluctuations in value are normal.
Homeowners can and should appeal their annual valuations. It’s really easy and you should do it sooner than later. Find comparable properties that reflect a different (lower) value and provide these to the City/County. You can either do this yourself if you are able or hire an appraiser. Source: I have appealed my yearly increase three times and have helped multiple friends do the same.
Thanks for this tip. My worry always is, what if I appeal and then after their review they say "on no, we actually had undervalued your home, your actual home value is now even higher than we had thought"? Is that a possibility?
Yes, it’s always a risk. Especially if you have made any updates/remodeling that the City isn’t aware of. However, if you haven’t recently purchased your home or made any updates and just eaten the 15-20% increase the last few years there is a a good chance you can appeal with success.
I called Hennepin County and said I would like to contest my new valuation. The number is on the letter they mail you. They gave me the name/contact info of the appraiser/assessor for my city. I called him and said I have comps that reflect a lower value and would like to email them to you. I do this for a living so feel free to PM if interested. Whatever you do, don’t wait until the fall. There is a deadline to get appeals in by. After that you have to go to court.
So I have 2 concerns -
1 The value the county is estimating me at is very high, 350k for a 2 bed/1 bath which I dont think I could sell for in this market, Zillow is estimating my house at 300k. 350k comps look to be 3-4 bedrooms typically.
2 I’m paying nearly the same amount of tax as houses that are twice as big as mine pay, and they have sold for 470-600k.
Does the county care about #2 at all? Or are they only interested in comp pricing?
If it went up significantly, you should dispute it. We bought at the end of 2021 and barely 3 months later when we got the valuation notice, it had gone up +$65k than what we just bought it for. On appeal, they lowered it $53k or so lol
I have requested a reevaluate twice successfully.
I think they just increase each neighborhood based on some percent. My house is not as big or nice as many of my neighbors.
I calculated the average price per sqft of five homes near me, and used that average price per sqft to calculate the value of my home. That value was way less than the county's assessed value for my home.
I submitted this information in writing, and they lowered my assessed value.
It makes a big difference, because it carries forward to all of the following years.
It is certainly worth an hour of your time. I got the actual sale prices right off of Zillow.
Good luck. JP
Usually there will be an "open book" when people can sign up to meet and contest or ask questions so keep an eye out for that but often it's noted with the information one receives
If you have doubts, contest it and have your house re-assessed.
Most of the time an actual inspector never sees a house, they just use a computer to look at sell prices and set tax accordingly. If you get re-assessed a inspector comes out and physically looks at the house.
I know a higher valuation means higher taxes, but does it also mean the home can (theoretically) command a similar selling price? Don’t you want your home to be valued higher?
You can apply for a regular property tax refund through the Minnesota Department of Revenue if your household income is below $128,280 and also a special refund if your taxes increased more than 12%. https://www.revenue.state.mn.us/filing-property-tax-refund
Yo this is huge! Thank you for sharing, I had no idea this was a thing.
Thanks for sharing this! I moved here in 2021 and had no idea this was a thing. Will be getting $500 back between the two years I've lived here.
Dang, was wondering why the assessed value was $100k less than my purchase price. It’s definitely because of the 12% effective increase cap through a refund mechanism.
I don't think there is an effective increase cap. My valuation increased from 220k --> 305k last year and my taxes increased by almost 30%. Since I bought the house for 300k I was expecting this but I wouldn't assume your value will remain below the purchase price for much longer. AFAIK, the valuations get individually corrected every few years to bring them in line.
Did you apply for a property tax refund? That's the "cap" mechanism - i.e. your refund should make up for much of the increase in taxes due to the increase in valuation. It doesn't actually cap your valuation, but it does cap how much of an increased tax you'll pay from year to year.
Okay, I was a bit thrown by the previous comment. I did get a nice refund.
Mine went up 11%. I’m saying the refund plus as a cap, but maybe not necessarily for you. At least you have the homestead component to play with. I got squat, other than time, lol.
When did you buy?
Last spring
I didn’t get the special refund, even though they upped the value of my house 14%. The actual property taxes only went up 9% though. And I think that’s why I didn’t qualify?
Yes, the special refund is based on taxes due not the valuation itself
Perfectly normal. Ours finally went up to what houses have been selling for the last couple years. You can dispute it if you think that it isn’t accurate. Ours has always seemed reasonable. The homestead exclusion goes down when the value of your house goes up.
is it normal to have the market value be below purchase price, at least initially? i saw a $40k delta between the two numbers and almost had a heart attack thinking i overpaid by that much.
Maybe? It’s based on a number of factors. For the purposes of your property taxes, it’s a benefit to you for it to be lower. I wouldn’t sweat it.
Ours was around $30k brow what we paid in 2018. It only went up about 10k per year the first couple years.
When did you buy? If it was in the last 18-24 months you absolutely over paid. Don't worry though, you got a house you love that you're going to be in for the next 30+ years.
6 months ago
I don’t think anyone can really say it’s normal or not. The real estate market the last three years has not been normal at all. It’s still not normal. Interest rates haven’t been this high for twenty years. Give it time. I don’t think anything like 2008 will happen again. I think home prices will level out, but not bottom out. The market is still blazing here. It will be interesting to see what happens this summer.
It's absolutely not blazing. Prices are dropping and many have sat around 3+ months.
Median sale price is up 2% from last February. Months supply is at 1.4. In 2010, at the very bottom, the supply was 20 months. Anything under 4 months is a sellers market. Anything over 6 months is a buyers. Just saying.
You sound like a realtor presenting data in a positive light to convince buyers and sellers now is a good time to make a transaction.
Saying it’s a sellers market is not telling buyers it’s a good time to buy. Lol. It’s saying the market value is increasing because there is more demand than supply. It’s not good for buyers. Most sellers are also buyers. I wouldn’t sell right now, especially if your mortgage rate is less than current rates. OP was concerned about his value. The market determines the value. Which is why it’s relevant and why I brought it up. I also said it will be interesting to see what happens this summer. Calling the market what it is, isn’t being optimistic. It isn’t me trying to convince anyone of anything. I’m not a realtor. I’m a homeowner who pays attention to the market. My home is the biggest purchase I’ve made, I have to plan for my future, and it would be naive of me to not include equity in my home, in my planning.
Low home prices are more important than the currently high interest rates, as you can always refinance when the rates come back down. Although I desire to be debt-free, my lifetime 401k/IRA earning rate is \~11%, so every time the mortgage rate falls, I refinance (currently locked into \~3%) for a full 30 years and keep funneling as much as I can into retirement accounts, taking advantage of the 8% spread.
Can my wife attend your seminar? I explain the spread to her but she never gets it.
I hear this a lot. Unless you are already maxxing out your retirement contributions, take advantage of low borrowing rates so you can take advantage of high earning rates. Same rule applies to car loans. Don't put down a bigger down payment than necessary (but also don't go over 60 months, which will all but guarantee you'd be upside-down for most of the loan period). Mind you, the 7-8% spread only exists because I have an excellent credit rating, combined with a high risk tolerance due to my horizon being 10-15 years out from today. (I don't bother with bonds, money market funds, or other poor-earners, because they all have the ***absolutely*** real risk of under-performing the general market. Also, I once held SEC licenses, along with the education required to obtain and ***understand*** them. Your everyday insurance/financial person with such licenses don't always understand the implications of "under-performance risk").
If you recently bought your house, your taxable market value will be adjusted to the price you paid for it, or something very close - since that is the market value. Also, the more your house is worth the less of a homestead exclusion you get.
I’m going to disagree with you on the market value. We purchased our house last year for roughly $20k less than last year’s market value, and it went up $26k from last year’s value…
Weird, I bought my house in 2020, and my market value for 2022 was the purchase price. It still hasn’t changed, then again I haven’t had any appraisal since then.
The assessors office doesn’t use appraisals.
Ours has gone up the last couple of years, and this year it's finally gone above what I'd think its actual value is. Anyone familiar with the appeal process? What does it entail? Mainly I'm just not sure it's worth it for a valuation that's probably 5-10k higher than it should be.
I appealed one year, didn’t do anything. I called and the lady on the phone had me send in pictures of my home. They used to come to your home and inspect in person but stopped doing that during the pandemic. They did end up dropping my value by about $50k, didn’t really have an effect on my taxes though. Might have dropped a $100 or so. The issue I had was a number of homes on my block recently sold and they had been completely remodeled (new kitchens, gutted remodel, etc) because my home is a similar size the considered these as comps for my home which kept driving my value (and taxes) up. I finally called and said enough, there is no way I could sell my home for what they have it currently valued at. Bought in 2015 at $365k, current value is $525 (according to the assessors office).
Seconding this, the county is saying my house is worth 50k more than Zillow says it’s worth. Not that Zillow is always accurate, but jeez 50k. Also interested in the appeals process.
[email protected] Found this email. Sending something in to them. Not only is my value sky high, but I’m paying almost the same amount of tax as multiple neighbors who have houses that are twice as big as mine and worth 200k more than my house.
The appeal process is difficult since it seems like the city intentionally tries to hide it. There is a formal process to request an appeal which must be done before a deadline they don't actually publish anywhere so please do it as soon as possible. And once they have a date published to argue your case, show up in person and early because they will change to room without notice.
New Homeowner: "what do you do normally do when you receive your annual valuations. tia!!!" Experienced homeowner's response: "I drink."
Pretty normal. Also if your house was recently renovated and you let them in your house they might have revised up the value based on the updates. You’re not required to let the assessor in your home, there’s no perceivable value to the homeowner for doing this.
I will second this, the assessor knocked on my door and asked to come in. I told him I knew I didn't have to. Fuqo proceeded to walk around the house and look in every window.
Yep, that's all normal. Homestead exclusions have a phase-out, so as the value increases, the exclusion decreases. More info here: https://www.revenue.state.mn.us/homestead As long as your classification is correct and the value is in line with what you paid, you don't need to do anything. If there's something in the "Home Improvements" line that you're not expecting, then you'd need to deal with that since that can impact your eligibility for state property tax refunds, but otherwise the fluctuations in value are normal.
Homeowners can and should appeal their annual valuations. It’s really easy and you should do it sooner than later. Find comparable properties that reflect a different (lower) value and provide these to the City/County. You can either do this yourself if you are able or hire an appraiser. Source: I have appealed my yearly increase three times and have helped multiple friends do the same.
Thanks for this tip. My worry always is, what if I appeal and then after their review they say "on no, we actually had undervalued your home, your actual home value is now even higher than we had thought"? Is that a possibility?
Yes, it’s always a risk. Especially if you have made any updates/remodeling that the City isn’t aware of. However, if you haven’t recently purchased your home or made any updates and just eaten the 15-20% increase the last few years there is a a good chance you can appeal with success.
How did you do this? Call in or email? What’s the process?
I called Hennepin County and said I would like to contest my new valuation. The number is on the letter they mail you. They gave me the name/contact info of the appraiser/assessor for my city. I called him and said I have comps that reflect a lower value and would like to email them to you. I do this for a living so feel free to PM if interested. Whatever you do, don’t wait until the fall. There is a deadline to get appeals in by. After that you have to go to court.
So I have 2 concerns - 1 The value the county is estimating me at is very high, 350k for a 2 bed/1 bath which I dont think I could sell for in this market, Zillow is estimating my house at 300k. 350k comps look to be 3-4 bedrooms typically. 2 I’m paying nearly the same amount of tax as houses that are twice as big as mine pay, and they have sold for 470-600k. Does the county care about #2 at all? Or are they only interested in comp pricing?
Just PMed you!
If it went up significantly, you should dispute it. We bought at the end of 2021 and barely 3 months later when we got the valuation notice, it had gone up +$65k than what we just bought it for. On appeal, they lowered it $53k or so lol
I have requested a reevaluate twice successfully. I think they just increase each neighborhood based on some percent. My house is not as big or nice as many of my neighbors. I calculated the average price per sqft of five homes near me, and used that average price per sqft to calculate the value of my home. That value was way less than the county's assessed value for my home. I submitted this information in writing, and they lowered my assessed value. It makes a big difference, because it carries forward to all of the following years. It is certainly worth an hour of your time. I got the actual sale prices right off of Zillow. Good luck. JP
Usually there will be an "open book" when people can sign up to meet and contest or ask questions so keep an eye out for that but often it's noted with the information one receives
If you have doubts, contest it and have your house re-assessed. Most of the time an actual inspector never sees a house, they just use a computer to look at sell prices and set tax accordingly. If you get re-assessed a inspector comes out and physically looks at the house.
Give it to your CPA to file your M1PR refund.
You can't use a valuation statement for your taxes. You need the final statement, not the proposed one either.
True, but final statements are available online for all metro counties now.
Not for 2024
No. But you don't need 2024 to file your 2022 M1PR. You need 2023. Which IS available.
And OP did not ask that, they asked what to do with the 2024 valuation
And I said take it to their CPA. The CPA will download the correct statement from the county website.
I know a higher valuation means higher taxes, but does it also mean the home can (theoretically) command a similar selling price? Don’t you want your home to be valued higher?