In Minnesota law, taxation is the rule and exemption is the exception. Exemption laws are to be strictly (not broadly) construed. Whenever property is removed from the tax rolls, the other taxpayers of that jurisdiction pay a higher share of the tax burden. The burden of proof is on the one seeking exemption to prove to the assessor that they are entitled to the exemption. The assessor has an extremely important responsibility in extending exemptions only to properties that meet the qualifications under law.
Ownership, use, and necessity of ownership are the three key elements in determining exemption. Absence of any of the three elements would likely disqualify a property from exemption unless specifically allowed by law. For example, a property may be owned by a church (an exempt institution), but if it is not used for church purposes, exemption should be denied.
Minnesota Law provides for the exemption from property taxes of certain properties owned and used for public purpose, education, or religious or charitable ministration. In order to obtain tax-exempt status, a property owner must make application with the assessor and show that the property qualifies. Generally, an exemption requires:
- Ownership by a qualifying entity
- A qualifying exempt use of the property
- necessity of ownership by the qualifying entity
A property owner filing for a property tax exemption must make available to the assessor all necessary books and records relating to the ownership and use of the property, which will be used to verify whether or not the property qualifies for exemption. Documents helpful in making this determination are:
- State Application for Property Tax Exemption Form; this form is available on this page and is required for exemption
- Copies of:
- Articles of Incorporation
- IRS determination letter indicating tax-exempt status under section 501(c)(3) of the Internal Revenue Code
- IRS Form 990 Return
- Pamphlets, brochures, and/or letters explaining the function of the entity, its mission, and how the property is being used and intended for future use
- Tenant leases, rent rolls, and/or other information relating to occupancy of the property
- Any other documents and records relating to unique or specific properties
A property owner must acquire and use the property for exempt purposes prior to July 1st to qualify for an exempt classification for that same assessed year for general property taxes payable the following year. Conversely, if a property loses its exempt status prior to July 1st, it will be assessed as taxable for the same year for general property taxes payable the following year.
A property which receives a property tax exemption does not pay general property taxes, but may be required to pay for special assessments and services, and, in certain instances, may be required to pay a portion of the income from the property in lieu of the general property tax.
The County Assessor’s office has the authority to approve or deny an applicant’s request for property exemption. The assessor’s decision to deny a property exemption may be appealed to the Minnesota Tax Court. Additionally, if an exemption is granted and subsequently the property or any part thereof is not used for specified purposes, the exemption is to be reviewed, and the ineligible parcel or portion thereof is to be assessed.
Any questions relating to the eligibility of a property for exemption should be directed to the County Assessor’s Office.