Classification

Classification Explained

Classification of property is one of the primary responsibilities of the Assessor’s Office. The classification is based on a property’s use and different classifications result in different tax amounts. There are five basic classifications in Minnesota, but there are over 50 different subclasses. The appraisers determine the classification as of January 2 of each year.

Appraisers look at how each property is used when completing the assessment review. For instance, property may be residential homestead (owner-occupied), residential non-homestead, apartment, agricultural, or commercial. The most common classification is the residential homestead, which has an application requirement as well as ownership and occupancy requirements.

If there is no use that is apparent on the assessment date, the appraisers look to a property’s most probable, highest, and best use. In some cases this may include looking at past use of the property or they may look to potential uses or current uses of neighboring property. 

A property’s classification may be appealed. Visit our Appeals page to learn more about the process.

Tax Rates

Each classification is taxed at a different percentage of market value. These tax rate percentages, referred to as “class rates”, are set by the Minnesota Legislature. These rates are uniform throughout the state. The classification rate has implications in the overall taxes associated with a property. These rates determine a property’s net tax capacity, which is the basis for most property taxes.

Calculating Tax Capacity

Tax capacity is generally calculated using the following formula: 

                                                      Taxable Market Value x Class Rate = Tax Capacity 

The tax capacity is then multiplied by the local tax rate to calculate a portion of a property’s taxes.