The Assessor’s Department follows a clearly defined process to complete its duties.
Assessors estimate property market values, classify properties according to their use, and review valuations on a regular basis to determine if estimated market value adjustments are needed.
Each spring, property valuation notices are mailed to property owners. These annual notices allow owners to review the estimated market value of their property and appeal if they choose.
After appeals are completed, the Assessor totals the estimated market value of all properties and shares those values with the taxing jurisdictions that set tax levies.
The Assessor’s responsibility in the process is with market value and classification, not taxes.
The Assessor’s Department does not:
- Collect taxes,
- Calculate taxes,
- Determine tax rates, or
- Establish property tax laws.
Questions about property tax payments should be directed to the Auditor’s Department.
Classification refers to how a property is used. Classifications — such as homestead, rural vacant land, commercial, and agricultural — describe a property’s primary use and impact the amount of property tax paid.
The Minnesota State Legislature creates and defines class rates, and a property is taxed at the rate corresponding to its class. For example, if neighboring properties are of equal value but one is a classified as agricultural and the other is rural vacant land, they will be taxed at different rates.
New homeowners must contact the Assessor’s Department to apply for homestead classification. Property owners who qualify for tax exempt status must also contact the Assessor to apply.
Market value is the price a willing, knowledgeable buyer would pay for a piece of property if it were offered for sale on the open market. Assessors do not create this value; they interpret what is happening in the marketplace. Thus, values shift with economic conditions and with changes to the property.
To determine market value, assessors inspect properties to record the existence and character of improvements that contribute to the value. Sales information is collected on all types of property, and features such as location, size of the parcel, improvements, and amenities are analyzed to estimate what buyers would pay for the property.
Local sales impact local values. The assessor uses actual sales of similar properties in your neighborhood or similar neighborhoods to estimate what buyers would pay for your property.
Levels of assessment for all areas of Lake of the Woods County are monitored through the use of sales ratio studies. These studies are conducted annually by the Assessor’s Department and the Minnesota Department of Revenue.
Sales ratio studies are based on current real estate transactions. Each transaction is screened by the Assessor to exclude those that do not represent an open market sale between a willing buyer and seller within the study period.
The studies are based on classification. Residential properties are grouped together, as are other classes such as commercial or rural vacant land.
Each open market sale is placed in the appropriate study and sorted according to its sales ratio. A sales ratio for a property is found by dividing the assessor’s market value by the property’s sales price.
EXAMPLE: A property with a sales price of $100,000 and a current market value of $90,000 would have a sales ratio of 90,000/100,000, or 90 percent.
At the end of a study period, the Assessor analyzes all sales included in the study. The individual sales ratios are ordered from lowest to highest, and the median ratio is determined. The median ratio is used to measure the level of assessment for a study area.
In general, the assessment level is deemed acceptable if the median ratio falls between 90 and 105 percent. If the ratio falls outside of this range, and at least six sales occurred during the study period, market values within the study area will be adjusted by the Assessor or the Minnesota Department of Revenue.
If you have a question or concern regarding your property’s value and classification, the first step is to contact your assessor. Almost all issues can be resolved at this level.
After meeting with your assessor to discuss your concerns, three levels of appeal are available. You must complete these in order, unless you choose to go directly to the Regular Division of Minnesota Tax Court.
- If your property is located in the City of Baudette you must first attend their local Board of Appeal and Equalization meeting where they review and rule upon appeals. They have the authority to order changes in your value and classification. The meeting is held in May of every year.
- If you are now satisfied with the local Board of Appeal and Equalization decision, or if your property is not located in the City of Baudette you may appeal to the County Board of Appeal and Equalization, which meets during the last two weeks in June. They also have the authority to order changes in your value and classification.
The Small Claims Division hears appeals concerning:
- Homesteads and farm homesteads of any market value,
- Other types of property of less than $300,000 in market value, and
- Cases where the amount contested does not exceed $5,000, including penalty and interest.
The Regular Division hears all kinds of appeals.
Small Claims Division proceedings are less formal, and people sometimes represent themselves. The proceedings of the Regular Division conform to the Minnesota rules of civil procedure, leading most people to hire an attorney.
Further information is available on the Minnesota Department of Revenue fact sheets titled: