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MINNESOTA. REVENUE <br />MEMO <br />Date: July 30, 2012 <br />To. All County Auditors, Treasurers and Assessors <br />From: Property Tax Division <br />Subject: 2011 Law Change: Homestead Market Value Exclusion <br />Attachment: Homestead Market Value Exclusion Calculation Examples <br />Statute <br />2011 1st Special Session, Chapter 7, Article 6, Section 3, as codified in M.S. 273.13, <br />subdivision 35, states that prior to determining a property's net tax capacity, property classified <br />as class la or lb, and the portion of property classified as class 2a consisting of the house, garage <br />and surrounding one acre of land, shall be eligible for a market value exclusion. <br />PLEASE NOTE: This legislation also contained a repeal of the Residential Homestead Market <br />Value Credit, but the Agricultural Homestead Market Value Credit was not changed and should <br />still be administered as in prior years. <br />Calculation <br />Calculation of the homestead market value exclusion closely follows the calculation steps <br />previously used to calculate the homestead market value credit. For a homestead valued at <br />S76,000 or less, the exclusion is 40 percent of market value, yielding a maximum exclusion of <br />S30,400 at S76,000 of market value. For a homestead valued between $76,000 and S413,800, <br />the exclusion is S30,400 minus nine percent of the valuation over S76,000. For a homestead <br />valued at S413,800 or more, there is no valuation exclusion. (For calculation examples, see the <br />attached document.) <br />Taxes on residential net tax capacity from the old law to the new law now generally function as <br />follows, (with the impacts of rate changes being ignored for this illustration): <br />NTC Based Taxes <br />Old Law New Law <br />EMV (Estimated Market Value) <br />- Exclusions <br />TMV (Taxable Market Value) <br />Class Rate <br />NTC (Net Tax Capacity) <br />Gross Tax (NTC x Tax Rate of 104%) <br />Credits <br />141,100 141,100 <br />0 24,541 <br />141,100 116,559 <br />1.00% 1.00% <br />1,411.00 1,165.59 <br />1,467.44 1,212.21 <br />245.41 <br />NET T <br />1,222.03 1,212.21 <br />