The Minnesota Homestead Market Value Credit will be replaced by the Homestead Market Value Exclusion in 2012.
Where the credit was a reduction in the amount of local taxes due on the homeowner's primary residence and the difference was paid by the state, the exclusion is a reduction in the amount of value subject to tax.
Under the new law state money is no longer reducing total taxes, resulting in increased tax rates to make up the difference. The new market value exclusion will shift the tax burden so homes with higher property values and other property types will pay a larger share of the tax.
How it is calculated...
- Under the old credit system, the credit amount would rapidly increase as a home value approached $76,000 with the maximum credit amount of $304
- After $76,000 the credit would decrease until it was completely phased out with a home value of over $414,000.
- The new exclusion mimics this same scale as homes approaching $76,000 would have a rapidly increasing exclusion of value, with a home valued at $76,000 receiving a maximum exclusion of 40% of their home value from property tax calculations
- The percentage then decreases and is phased out at homes valued over $414,000
