For Minnesota veterans, one of the many benefits of serving in the military is the potential for property tax exemptions. These exemptions can significantly reduce the financial burden of owning a home, making it easier for veterans to settle into civilian life.
Whether you are considering buying or selling a home in Minnesota, understanding how property tax exemptions work is crucial. This article will guide you through the various property tax exemptions available to veterans in Minnesota and how they can impact your home buying or selling decisions.
1. Understanding Property Tax Exemptions for Veterans in Minnesota
Minnesota offers property tax exemptions for veterans who meet certain qualifications. These exemptions are designed to reduce the amount of property tax a veteran or their surviving spouse must pay on their homestead, which is the primary residence of the veteran. The two primary exemptions available are:
- Disabled Veteran Homestead Exclusion
- Surviving Spouse Property Tax Exemption
2. Disabled Veteran Homestead Exclusion
The Disabled Veteran Homestead Exclusion is one of the most significant property tax benefits for eligible veterans. This exemption is available to veterans who have a disability rating of at least 70% from the U.S. Department of Veterans Affairs (VA) due to a service-related injury or illness.
How It Works: The amount of the exclusion varies based on the severity of the veteran’s disability and the value of the property. The exclusion reduces the taxable market value of the homestead, which in turn lowers the amount of property tax owed.
For 100% disabled veterans: They may be eligible for a full exclusion of up to $300,000 from the taxable market value of their home, depending on the assessed value.
For veterans with a disability rating between 70% and 99%: The exclusion amount is scaled based on their disability percentage.
Impact on Home Buying:
This exemption can provide substantial savings on property taxes, making homeownership more affordable for veterans. When buying a home, it is important to factor in this potential reduction in property taxes, as it can make homes in certain areas more financially accessible.
Impact on Home Selling:
When selling a home, veterans should note that the exclusion will only apply to the new homeowner if the property is sold to another qualifying veteran. If the home is sold to a non-veteran, the exemption will no longer apply. This could affect the home’s market value and the tax obligations of the new owner.
3. Surviving Spouse Property Tax Exemption
Minnesota also provides a Surviving Spouse Property Tax Exemption for the spouse of a veteran who passed away as a result of a service-connected disability. This exemption helps the surviving spouse continue to benefit from the property tax reduction that was available to the veteran.
How It Works: The surviving spouse must meet certain conditions:
- The spouse must have lived in the home as the primary residence for at least one year prior to the veteran’s death.
- The property must remain the spouse’s primary residence.
- The exemption continues until the spouse remarries or sells the home.
Impact on Home Buying:
For surviving spouses, this exemption can help make purchasing a home more affordable by lowering ongoing property tax costs. This benefit is particularly important for veterans’ families who want to stay in the home they shared with their spouse.
Impact on Home Selling:
If the surviving spouse sells the home, they will no longer qualify for the exemption, and the new owner will be subject to the standard property tax rates. This should be taken into consideration when pricing the home for sale.
4. Eligibility Requirements for Property Tax Exemptions
To qualify for either the Disabled Veteran Homestead Exclusion or the Surviving Spouse Property Tax Exemption, the veteran or their surviving spouse must meet specific eligibility criteria. These criteria include:
Residency Requirements: The property must be the veteran’s primary residence.
Service-Connected Disability: The veteran must have a disability rating from the VA or must have been passed away in action.
Application Process: Veterans must apply for the exemption through their county assessor’s office. The application typically requires documentation of the veteran’s disability status, military service, and other supporting materials.
It is important to note that these exemptions must be renewed annually, and veterans should work closely with their county assessor’s office to ensure they remain eligible.
5. How Property Tax Exemptions Affect the Real Estate Market
Property tax exemptions can have a significant impact on the local real estate market, especially for veterans considering buying or selling their homes in Minnesota.
For Buyers: Veterans can use the knowledge of property tax exemptions to determine which properties offer the best value for their unique financial situation. The savings from property tax reductions can influence the affordability of various homes and neighborhoods.
For Sellers: Sellers should be mindful that if they are veterans with property tax exemptions, the exemption will no longer apply once the home is sold to a non-veteran. This may require adjusting the sale price accordingly. For surviving spouses selling a home, the exemption will also expire, which should be considered when determining the listing price.
Minnesota’s property tax exemptions for veterans offer valuable financial relief, helping to reduce the cost of homeownership for those who have served in the military. Whether you are buying or selling a home, understanding these exemptions is critical for making informed decisions. Veterans and their families can benefit from the financial savings, while sellers should consider how the exemptions may affect their property’s value and marketability.
If you’re a Minnesota veteran or a surviving spouse, it’s highly recommended that you consult with your local assessor’s office or a real estate professional familiar with veteran benefits to ensure you’re maximizing the available property tax exemptions and making the best financial decisions for your home.
Shannon Lindstrom, Realtor®, CDRE®, MILRES, MRP, VCA
RE/MAX Results
7373 Kirkwood Court No, Ste. 300
Maple Grove, MN 55369
Direct: 612-616-9714
[email protected]
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www.ShannonLindstromRealtor.com
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www.ilumniinstitute.com/cdre/shannon-lindstrom
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www.MinnesotaMilitaryVeteranRealEstateAgent.com
