The Homestead Classification
September 2003
The property tax in Minnesota is influenced through a variety of measures. One of the more common methods that has an effect on the amount and share of the property tax paid is the homestead classification. This designation adds to the complexity of the property tax, but its purpose is to provide tax relief for most residential and agricultural property owners who meet specific requirements. Properties receiving the homestead classification generally have a lower tax burden when compared to other types or classes of property. This favorable tax treatment is attributable to a state paid market value tax credit that is applied to homesteaded residential and agricultural properties and because of lower tax classification rates extended against the taxable market value of land and outbuildings associated with an agricultural homestead.
What is meant by the concept, "homestead"?
A homestead is considered to be either real or personal property that is occupied and used as a person's place of residence. This home usually includes a house, outbuildings, land, and/or agricultural land.
What is the homestead classification as it relates to the taxation of properties?
It is a property tax classification that is based on a fact situation. To be eligible to receive a homestead, the property owner or qualified relative must: (1) be a Minnesota resident, (2) own the property or be related to the owner as to the extent prescribed in property tax law, and (3) occupy the property as the primary place of residence.
What constitutes a primary place of residence?
There is not a clear answer to this question because it is sometimes hard to prove or disprove when a residence becomes a home. In fact, there is no set number of days a property must be occupied to qualify as a primary residence. However, there are several indicators that may provide strong clues to the answer:
- where the taxpayer is registered to vote,
- where the taxpayer's mail is delivered,
- the address on the taxpayer's driver's license,
- whether the taxpayer has lived in the home continuously,
- whether the taxpayer continuously maintains the premises,
- whether the taxpayer has any other residence in Minnesota that he/she can or does claim homestead,
- whether the taxpayer applied for or received any Minnesota rent credits,
- the address on the taxpayer's motor vehicle registration,
- where the taxpayer's children, if any, attend school in Minnesota,
- the address of the taxpayer's income tax return,
- the address on the taxpayer's hunting or fishing license, and
- the location of the taxpayer's place of work, if applicable.
Information about some or all of these factors may help an assessor determine when a home is a primary residence. Yet, the responsibility to prove that a home is a primary residence ultimately rests with the taxpayer.
Does it matter when a property is occupied when determining the eligibility for homestead?
Depending upon the time of year when the property is occupied, the property may be classified as either a full-year homestead or a mid-year homestead. The full-year homestead classification is granted when a property is occupied by its owner or qualified relative on January 2nd of the assessment year. The mid-year homestead classification is extended to a property when its owner or qualified relative occupies it by December 1st of the assessment year and an application is submitted to the county assessor by December 15th. Regardless of the two types of homestead, the resulting payable tax is calculated in the same manner.
Can a property owner receive benefits of the homestead classification in more than one place?
No, a person may have only one homestead and that must be his/her primary place of residence on January 2nd. However, there are two exceptions to this rule: (1) when a person qualifies for a mid-year homestead on a sale property or on a property that has a newly constructed home resulting in a new primary place of residence, and (2) in certain spousal situations when one property is occupied by a married owner and another property is occupied by the owner's spouse because of the following reasons: (a) marriage dissolution proceedings are pending, (b) the spouses are legally separated, (c) the spouse's employment or self-employment location requires the spouse to have a separate homestead---the distance between the places of employment or self-employment must be at least 50 miles and this distance between homesteads must be at least 50 miles, and (d) other personal circumstances causing the spouses to live separately, not including the intent to obtain two homestead classifications.
How does one apply for the homestead classification?
To apply for the homestead classification, a person must complete a homestead application and submit it to the county assessor in a timely manner. This form may be requested by writing, e-mailing, calling, visiting the county assessor's office or using the link above . Once an application has been filed and approved, the property owner is not required to file a new application every year. Still, the assessor may at any time require a new application to verify the homestead status of a property.