Property Assessments
September 2000
Property assessments are carried out annually by counties, cities, and townships within the parameters of a system designed by the State Legislature and monitored by the Minnesota Department of Revenue. By law, assessors are required to update the assessments of all properties every year as of January 2nd. These assessments comprise the tax base that determines who will pay what share of property taxes based on the budgets of local government units in the following year.
What is a property assessment?
A property assessment is an evaluation of land and/or building(s) performed by a state-licensed assessor, whose duties are to list, classify, and value all assigned taxable real and personal property in both an equitable and uniform manner. It entails an on-going process of inspections, reviews, and market studies utilizing mass appraisal techniques. Thus, a property assessment does not involve either the issuance or collection of taxes.
What is mass appraisal and what techniques are applied?
Mass appraisal is the science and process of valuing a defined geographic area using maps, market data, statistical data, and other comparative information. It is the practice of appraising a large number of properties in a reasonably short period of time and for a relatively small cost per property.
Assessors apply a systems approach to mass appraisal. This approach emphasizes the use of specialized procedures and well-defined work activities to promote speed and efficiency in completing property assessments. It utilizes statistics to facilitate the analysis of data and standardized forms and coding schemes to expedite data processing. Furthermore, this approach features the application of computers to store and manage data and to assist assessors in the valuation process.
Why are property assessments necessary?
State law requires that the level of assessment (the overall sales ratio that compares the assessor’s estimated market value of properties to their adjusted sale prices) be at 90% to 105% for all classes of property each year. The annual property assessment is currently the most equitable way to accomplish this objective because often properties change, the uses of property change, and market values change.
Therefore, to ensure that no property escapes the assessment process and is over-assessed or under-assessed relative to its physical characteristics and market conditions, the assessor is responsible for making periodic inspections, updating values and property classifications, and for preparing and certifying the assessment roll to the county auditor-treasurer.
Will all property values change as a result of the annual property assessment?
Most properties will likely experience a change in property value due to the prevailing market conditions that become the foundation for the upcoming assessment. When sale prices change from one year to the next so does a property’s value for tax purposes.
The assessor does not create this value. People make value by their transactions in the marketplace. The assessor simply has the legal responsibility to study these sales and to appraise all properties accordingly.
In other words, the assessor is like a historian whose job is to report on past events and activities pertinent to the real estate market. As a result, some properties will probably change more than others because of differences attributable to location, physical characteristics, property type, and market conditions.
When do property assessments for the year 2001 begin?
The 2001 assessment for taxes payable in 2002 began during June 2000, immediately after the adjournment of the County Board of Equalization. The county assessor expects to have all property assessments completed by April 2001.
Notices of assessment will be forwarded to all property owners in March, April, and May 2001 with appeals scheduled to be heard at boards of review and equalization during April, May, and June 2001. These assessments will ultimately become the basis for tax bills that will be mailed in March 2002.