Exempt Property
December 2009
All real and personal property in Minnesota is taxable except certain property that is exempt by law. Since taxation is the rule, the assessor has a very important responsibility when granting an exemption for assessment purposes. Each property listed as exempt and any property claiming to be exempt is subject to the assessor’s review and determination. The basis for any exemption is the accomplishment of public purposes, and the burden of proof rests with the individual or group seeking it. The key elements used by the assessor in this review are ownership, use, and necessity. If it is determined that these requisites have been satisfied, then the exemption is approved.
What types of property are eligible for exemption?
There are several types of real and personal property that are exempt from property taxation because they have met the statutory test. Some of these properties are: public property; educational facilities; religious and charitable institutions; and tribal lands. Other properties may be eligible for exemption and require property owners to file an application because they are not automatically exempted. A few of these properties include: transitional housing; ice arenas and baseball parks owned and operated by non-profit corporations; and housing and redevelopment authority properties. A complete listing of all property types is identified in M.S. 272.02.
How does one apply for a property tax exemption?
Property owners claiming an exemption must file an application with the county assessor. The form is called “Application for Property Tax Exemption” or, if the applicant is filing for an exemption as an institution of purely public charity, it is titled “Institution of Purely Public Charity Application for Property Tax Exemption.” These forms are available by contacting the Stearns County Assessor’s Office or by obtaining them on-line from the Assessor Forms Section of the Stearns County Assessor’s website. The requirements for filing an exemption are found in M.S. 272.025.
What types of documents are usually requested by the assessor during the exemption review and determination process?
Property owners are required to furnish all necessary records and information relating to the ownership and use of the property. The types of documents that help the assessor verify whether or not the property qualifies for an exemption include but are not limited to: (1) an IRS letter granting exempt status as a 501(c)(3) corporation; (2) articles of incorporation and bylaws; (3) Federal Form 990 with schedules or certified financial statements showing income and expenses as well as donations or sworn statements from donors; (4) copies of leases or contracts; (5) copies of occupancy, admission, or facility policies; (6) resident or service agreements; and (7) any other details that may be unique or specific to the property.
Is there a property tax exemption filing deadline?
Yes, property owners claiming an exemption must file an initial application with the assessor on or before February 1st of the assessment year. Except for the federal, state, and local units of government; churches and houses of worship; and properties used solely for educational purposes by academies, colleges, universities, or seminaries of learning; most exempt property owners must reapply for the exemption every three years. No matter when the initial filing was made, the subsequent filings are due in 2010, 2013, 2016, 2019, etc. on or before February 1st.
Is there a deadline controlling the conversion to exempt or taxable uses during the assessment year?
Any property that is subject to a tax on January 2nd that is acquired before July 1st of the same year is exempt for that assessment year if the property is used for an exempt purpose and all exempt requirements are met. Conversely, any property that is exempt from taxation on January 2nd but is sold or loses its exemption prior to July 1st of the same year must be placed on the current assessment rolls for that year. The valuation is set with respect to the property’s value as of January 2nd, while the classification is based upon the use to which the property was put to by the purchaser prior to July 1st or its intended use as determined by the assessor if the property was not utilized by the purchaser by July 1st. Additionally, property that forfeits to the state for non-payment of taxes on or before December 31st must be removed from the assessment rolls for that year. If tax-forfeited property is repurchased or sold on or before December 31st, then it should be placed on the assessment rolls for that year.
Who approves or denies the property tax exemption? If denied, is the decision appealable?
The county assessor has the exclusive authority to grant or deny an applicant’s request for the property tax exemption. The decision to deny an exemption can only be appealed to the Minnesota Tax Court.
Do exempt properties pay other taxes or fees?
Properties that qualify for a property tax exemption are still required to pay special assessments levied by local taxing authorities. In some cases, they may also be subject to a Payment In Lieu of Taxes (PILT) with the county or a local municipality.
How is exempt property valued?
The assessor is required to value exempt property in the same manner as real and personal property. It is required to be valued every six years and an exempt abstract must be prepared and submitted to the Department of Revenue for reporting purposes. Exempt property was last assessed in 2004 and will be assessed again in 2010, 2016, and 2022.