City of Newport, MN

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City of Newport
596 7th Avenue
Newport, MN 55055
Phone: (651) 459-5677
Fax: (651) 459-9883

2012 Property Tax Law Change

Homestead Property: Value Exclusion Replaces Credit

The 2011 Legislature repealed the Homestead Credit and replaced it with a new Homestead Market Value Exclusion.  The last year of the credit is for taxes paid in 2011 and the exclusion begins for taxes payable in 2012.  Although the benefit only applies to homestead property, the change may impact taxes on all types of property.

Your Proposed Tax Statement:

You will note that your proposed tax statement includes both taxes payable in 2011 and taxes payable in 2012. The taxable value for 2012 taxes showing on your statement has been reduced by the new market value exclusion if your property has homestead classification and previously qualified for the homestead credit. This exclusion is for property tax calculation purposes only. Your total Estimated Market Value, which you received notice of in March 2011 and is the basis for your 2012 property taxes as adjusted by the new Market Value Exclusion to yield your Taxable Market Value, is not affected. Your Estimated Market Value for taxes payable in 2012 can be obtained from Washington County Assessor.

Final 2012 property tax statements will be mailed in March 2012. These statements will clearly identify total estimated market value, as well as any exclusions and the taxable market value on which property taxes are calculated.

For additional information

The League of Minnesota Cities has created and collected a variety of resources to help cities understand the new homestead market value exclusion (HMVE) program and how it differs from the discontinued market value homestead credit (MVHC) program.

For your information, MPR put together a video explaining the Market Value Homestead Credit and the new Market Value Homestead Exclusion.

About the Market Value Homestead Exclusion created in 2011

2011 legislation changed the Market Value Homestead Credit to Homestead Market Value Exclusion.

Under the former system, a homestead property received a property tax credit on their tax statement as a deduction from the amount due. The maximum amount of the credit was $304, and phased down to $0 when home value exceeded $413,700. The total amount of the credit for all homestead property in the City was to be reimbursed each year from the State. However, the State, while crediting the homesteaded residential properties, did not reimburse a number of cities due to State budget cuts.

The new 2011 legislation provides for a portion of each home's market value to be excluded for property tax calculations. The amount excluded is directly proportional to the amount of the credit under the old program. This exclusion shifts tax burden from homestead residential to commercial, industrial, apartments, non-homestead residential and any home valued greater than $414,000, in order to provide the tax relief to homeowners who had previously received a homestead credit. The resulting property tax for a homestead property in the new program will essentially be a "wash" with the old system.