Our View: Keep Calm and Enjoy the Ride on a Rising Tide – Post Bulletin

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On April 6, 2021, “Saturday Night Live” did a racy mock commercial for Zillow, the website that allows users to anonymously search for information — including estimated market values ​​— on almost any home in the United States.

It was a contemporary skit. People were so bored at the height of the pandemic that they amused themselves by poking around at the values ​​of friends’ and neighbors’ homes. Or, if they were in a hot real estate market, they might have enjoyed watching the value of their own home rise at a staggering rate. A home is a big investment, and it’s fun to get online and say, “Hey, our net worth just went up $20,000!”

However, it is less fun if the increase in value of your home actually appears on your assessment notice from the district.

Minnesota residents received these notices in mid-March, and we suspect many people immediately had severe cases of sticker shock. Across the Southeast region, the appraised market value of homes increased by 20% or more, and in Olmsted County, commercial property values ​​increased by 15%.

Such increases can spook homeowners, who immediately conclude that a 20 percent increase in the value of their home will result in a 20 percent increase in their property taxes. That would mean that a relatively modest home in Rochester with property taxes of $3,000 per year would have a $600 tax increase.

Luckily, those fears are probably overblown, and we’d offer this advice to homeowners: Calm down. Property taxes are complicated, but at the risk of oversimplifying, let’s sum up the current situation by saying that a rising tide lifts all boats.

Detached houses, apartment buildings, commercial real estate and agricultural land have increased significantly in value over the past year. Additionally, Rochester and smaller communities that surround it continue to add new subdivisions, townhomes, high-end apartment buildings and commercial developments – all of which contribute to the total estimated market value of real estate in Olmsted County.

However, this increase in value does not create a tax bonanza for the county, since local government spending is not dependent on how much tax revenue is generated. But on the contrary. Later this fall, the county will estimate the amount of tax revenue it needs to meet its 2023 obligations, and property owners will then be taxed proportionally to the value of their properties to generate the required revenue.

This means that many control scenarios are possible. If the county’s estimated spending for the next year increases by 8% and the estimated market value of your home has increased by the typical 20%, then you’ll likely be facing an increase in your property tax bill of around 8%.

On the other hand, if your home’s value has increased less than a typical home’s, you may not see an increase at all, or even a decrease in your tax bill — especially if the county adds new homes and new homeowners to its property tax rolls.

Still confused? Maybe this will help. If the current housing bubble bursts next year and home prices drop 30% almost overnight (like 2007), you wouldn’t see a 30% cut in your property taxes. The county would still have to plow streets, occupy county parks, pay the sheriff’s deputies, and provide community services. Because of this, there are years when some homeowners see their estimated market value go down, but their tax bill actually goes up. The county has to pay its bills regardless of what the previous year’s real estate values ​​were.

The reality is we won’t know the true meaning of the 2023 assessment notices until the county finalizes its budget for next year and sends out proposed tax notices in November. However, if you think a mistake has been made in the valuation of your property, now is the time to act.

And by now we mean immediately.

The first step is to contact the appraiser, which can be done in Olmsted County by calling 328-7670. If you still have concerns after that initial contact, you need to attend a Local Board of Appeal and Equalization meeting being held in Olmsted County on April 20. The process is outlined on the back of your assessment notice, as are other options you have for appealing an appraisal.

You should also verify that you receive any waivers and waivers to which you may be entitled, including the Homestead Market Value waiver, the Veterans with Disabilities waiver, and several others listed in your evaluation notice. If you have questions about these exclusions, the County Assessor should be able to help.

While no one likes a tax hike — especially at a time when inflation is soaring — it’s worth pointing out that Minnesota consistently ranks high in all quality of life rankings. We like our manicured parks. We want our roads to be cleared within hours of the snow ending. We want our first responders to be well trained and well equipped. We want our students to learn in safe, modern classrooms.

These things don’t come cheaply—but we also caution that while Minnesota’s property tax burden is the 18th highest in the nation, the typical Minnesota homeowner enjoys a lower property tax rate than our neighbors in Iowa, Wisconsin, and South Dakota.

Think about it the next time you browse Zillow for a four-bedroom wanderer in Madison.

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