Tuesday, December 29, 2009

Good News for Banks on Property Taxes

July 7th, 2009
Good News for Banks on Property Taxes

When a developer records a new plat the lot values are phased in over time.
In year 4 on Metro Counties, and year 8 in non-metro counties, the lots are
finally taxes at their full market value.

In 2008, buried in the convoluted Green Aces law, was a provision that when
title is transferred on a platted lot the taxable value of that lot JUMPS up
to the full market value in the following year. Banks taking lots back in
foreclosure, investors buying the lots, had no idea that the property tax
could go up as much as 7 times the following year!

In the 2009 semi fix of the 2008 Green Acres law this "plat law" provision
was addressed by the Minnesota Legislature as follows:

*for plats filed AFTER May 18th, 2008, whenever a lot transfers, or it built
upon, the lot will go to full market value for the next assessment; and

*for plats filed BEFORE May 18th, 2008, the "old" rules still apply. Any lot
that sells or is transferred may continue on the phase-in until it is built
upon or until the end of the phase-in-period, whichever comes first.

In plat law the Estimated Market Value is established when the plat is
recorded. There is a provision in plat law that if the estimated value of
the lot Increases during the phase in period, say $10,000, then that $10,000
is added to the Taxable Market value. What happens, as we are seeing in most
markets, when the Estimated Market Value DECLINES? The Minnesota Revenue
Department responded to this inquiry in a June 26th, 2009 memo. Bottom line:
tough cookies. Your only recourse is when the actual market value falls
below the taxable market value. This is something you need to check every

Confused yet? 2010 Estimated Values are now firmly set. Its not to early to
petition your 2010 values. I offer you a free quick evaluation if a property
tax appeal makes sense for you. Just send me your property location and

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