Property Valuation and Classification

The Homestead Classification of a residential property is a benefit that applies to a property owner who:

1. Owns their residential property.
2. Occupies their residential property as their primary residence.
3. Is a Minnesota resident.

By meeting those criteria, the Homestead Classification qualifies the property for:

1. A market value exclusion, which may reduce the property’s taxable market value (Homestead Exclusion).
2. Other programs such as the disabled veteran’s market value exclusion, senior citizens’ property tax deferral, and property tax refunds.

Based on the current 2025 property tax rates, the Homestead Exclusion can be worth up to $517 in savings annually. That maximum savings is reached by a property whose estimated market value is $95,000. Once value reaches $95,000, the exclusion is gradually reduced until being phased out at a value of $517,200.

The Homestead Exclusion can also be applied to a property even if the owner is not occupying the property, but a qualifying relative is (Relative Homestead). Qualifying relatives of the owner or spouse of the owner include:

• Parents
• Grandparents
• Siblings
• Children
• Grandchildren
• Aunts & Uncles
• Nieces & Nephews

Relative Homesteads do qualify for the Homestead Exclusion and reduced classification rate, but do not qualify for the property tax refund, disabled veteran’s market value exclusion, or senior citizen’s property tax deferral programs.

Again, additional savings can still be recognized for those homestead properties valued over $517,200 via the property tax refund (Property Tax Refund | Minnesota Department of Revenue (state.mn.us) disabled veteran’s market value exclusion, and senior citizen’s property tax deferral programs.

For more frequently asked questions and further information, please visit www.MoorheadProperty.org and click on the links on the left-hand side of the page.

The homestead classification applies to properties occupied as primary residences by their owners. Classification as a homestead may qualify the property for a reduced taxable market value (Homestead Exclusion), property tax refund, and/or special program eligibility.

The Homestead Exclusion reduces the taxable market value of a residential property, and is calculated as follows:

1. The exclusion from the total value is calculated first as 40% of the total value up to $95,000, equaling a maximum exclusion of $38,000 if the value of a property is $95,000 ($95,000 x 40% = $38,000).
2. The exclusion is then reduced as the value of the property increases, by 9% of whatever the market value over $95,000 is.
3. The exclusion therefore decreases as the value increases over $95,000, until it eventually is reduced to $0 at a value of $517,200 and beyond.

For example, if a homestead property is estimated at $200,000 in value, the exclusion would be calculated as such:

1. First $96,000 in value = $38,000 maximum exclusion
2. Value over $95,000 = $105,000 x 9% = $9,450 reduction to the maximum exclusion
3. $38,000 - $9,450 = $28,550 Homestead Exclusion
4. Estimated Market Value of $200,000 - $28,550 Homestead Exclusion = $171,450 Taxable Value

Now, let's look at a home with a higher value of $300,000:

1. First $95,000 in value = $38,000 maximum exclusion
2. Value over $95,000 = $205,000 x 9% = $18,450 reduction to the maximum exclusion
3. $38,000 - $18,450 = $19,550 Homestead Exclusion
4. Estimated Market Value of $300,000 - $19,550 Homestead Exclusion = $280,450 Taxable Value

Notice the sizeable difference in the exclusion when the value of a property is $200,000 or $300,000.

Finally, we examine a property with a value of $550,000:

1. First $95,000 in value = $38,000 maximum exclusion
2. Value over $95,000 = $455,000 x 9% = $40,950 reduction to the maximum exclusion
3. $38,000 - $40,950 = -$2,950
4. Since the exclusion would be calculated as less than $0, no exclusion is applied to a property valued at $550,000.

This calculation is set up by the Minnesota Department of Revenue and is the same for every Residential Homestead Property throughout the State. Once a property reaches $95,000 in market value, as value goes up the exclusion goes down.

For more frequently asked questions and further information, please visit www.MoorheadProperty.org and click on the links on the left-hand side of the page.

In Minnesota, values for every property are estimated on January 2nd every year. That value is what is used to determine a property owner's fair share of the property tax burden the following year. Think of the entire tax base (all properties paying property taxes in a taxing district) as a pie. The value and classification of one property is a part of the entire pie within a taxing district (in our case, the City of Moorhead, Clay County, Moorhead Public Schools, Moorhead Economic Development Authority, and the Buffalo Watershed District are the taxing districts). The tax levy (or budget) for each of these taxing districts is then dispersed amongst its tax base according to each property's piece of the pie.

So, to put this in perspective, a 5% increase or decrease in value does not necessarily mean a 5% increase or decrease in taxes. Each taxing district budgets for what they need to operate and provide services each year. That dollar amount is then dispersed according to value. It's possible that a property's value could increase and the property tax bill decrease or vice versa.

To put it another way: If every property's value were to be reduced by 50%, but each taxing district's budget remained the same; the amount of tax each property owner would pay would remain relatively the same. If every property's value doubled, but each taxing district's budget remained the same; the amount of tax each property owner would pay would remain relatively the same as well.

For more frequently asked questions and further information, please visit www.MoorheadProperty.org and click on the links on the left-hand side of the page.

There are a couple of reasons a property's value may increase or decrease from one year to the next.

In order to create uniformity across jurisdictional lines, the State of Minnesota requires assessed values to be set at 100% of market value (the most likely selling price in an open market transaction) across the board. Based on that requirement, the State allows a range of sale ratios (assessed value divided by sale price) between 90% and 105% in order to achieve compliance every year. Each year a sales study is conducted within the city of Moorhead by the Department of Revenue to determine compliance, and the City Assessor's office is given the opportunity to adjust values to meet that compliance.

Values may also increase due to data corrections or improvements made to a property based on the contributory value those improvements add. For example: building a deck, installing new siding and windows, finishing the basement, and remodeling the interior of a home are a few of the many improvements that can be made that add value to a property.

The Assessor's Office conducts an in-depth sales analysis of Moorhead properties every year to determine value trends in various segments of the market in either direction, and then applies increases or decreases to values as necessary to meet compliance with the state requirements.

In an increasing market, assessed values will likely increase to maintain compliance with the Minnesota Department of Revenue as a 100% market value state.

The State of Minnesota is a 100% Market Value state, meaning assessed values are required to be estimated as close to 100% of full market value as possible.

Every year, the Minnesota Department of Revenue conducts a sales study to ensure every jurisdiction (township, city, and county) maintains compliance with this requirement. The overall Estimated Market Values for each class of property (Residential, Commercial, Industrial, Apartments, and Agricultural) should be within 90% to 105% of actual sale prices. Otherwise, the Department of Revenue may order the assessor to adjust property values across the board in a jurisdiction. This standard is held so no property owner pays more or less than their fair share of the property tax burden in their township, city, school district, county, and state.

In the grand scheme, whether all properties are assessed 10% below or 10% above their full market value, the resulting property taxes payable for each property would change very little. The City, County, Schools, EDA, and Watershed District all levy the dollar amounts necessary for operation each year. Those dollar amounts are then dispersed amongst the taxable value throughout each taxing district.

In theory, assessed values could be estimated at half of their full market value across the board and it would change taxes payable for each property very little. Taxing districts set their budgets independently of any value assumptions. In this scenario, the budgeted amounts for each taxing district would not change, so in order to collect these funds, the tax rate would double to achieve the levied dollar amount.

For more frequently asked questions and further information, please visit www.MoorheadProperty.org and click on the links on the left-hand side of the page.

Typically, the estimated market value of a residential property can increase (or decrease) for two reasons:

1. New construction, remodeling, or the changing physical condition of a property.
2. Change in market conditions ("I haven't done anything to my house").

Although there are times and reasons why a property can decrease in value, real estate in the Fargo/Moorhead area generally appreciates in value over time. This is the case even if "nothing has changed" with the physical structure.

The City of Moorhead Assessor's Office conducts many sales studies every year to identify neighborhoods, types of homes, styles of homes, ages of homes, etc., which have appreciated or depreciated in value that year. This statistical analysis is based on a study of every arms-length¹ residential sale within city limits every year and sometimes over the course of multiple years.

Segments of the market, either by location or physical characteristics, are then studied to determine market conditions within the larger market. The Minnesota Department of Revenue dictates that properties be assessed between 90% and 105% of selling prices in a jurisdiction, and as a result, values are adjusted annually to reflect the changing market conditions. This can mean an increase or decrease in value of a property, even when nothing has changed with the physical structures.

¹An arms-length sale is defined as a transaction between a typically motivated knowledgeable buyer and seller under no undue duress, between unrelated parties, each acting prudently, using typical financing (cash-equivalent), in a competitive and open market.

For more frequently asked questions and further information, please visit www.MoorheadProperty.org and click on the links on the left-hand side of the page.

Estimated Market Values (assessed values) are a direct result of actual sales that occur in Moorhead. The Minnesota Department of Revenue (DOR), in order to create uniformity in taxation across the State, requires that assessed values be estimated at 100% of market value based on sales in Moorhead every year. Within that requirement, the DOR allows for the median sales ratio (assessed value divided by sale price of an individual property) to fall between 90% and 105%. If the level of assessment in the City is not set within that range, the DOR will make the adjustments necessary to push a jurisdiction's (Moorhead's) values into that range.

So, value increases will continue as long as sale prices in Moorhead increase in order for Moorhead's level of assessment to remain in compliance on an annual basis. As sale prices level off, values will level off. If sale prices were to decline, values would decline as well. The goal of the assessor is to estimate market value for every property annually as accurately and fairly as possible, all based on the current sales activity of properties in Moorhead. This way, no property owner will pay more or less than their fair share of the property tax burden.

For more frequently asked questions and further information, please visit www.MoorheadProperty.org and click on the links on the left-hand side of the page.

In Minnesota, property values are estimated annually as of January 2nd. Due to the large amount of sales activity for residential properties in Moorhead and the highly automated assessment systems, it is likely for residential property values to change every year. With large amounts of sales, segments of the market can be adequately adjusted annually to reflect the most current sales activity.

These values are estimated as of January 2nd every year and reported on the Valuation Notice insert included with the annual property tax statement mailed to property owners around April 1st.

For more frequently asked questions and further information, please visit www.MoorheadProperty.org and click on the links on the left-hand side of the page.

Each property in Moorhead is unique. Neighboring properties often share a similar location and many of the same physical characteristics. Quite often, however, there are minor differences between two properties that appear to be identical on the surface.

It is possible through sales studies to identify a segment of the housing market whose value needs to be adjusted.

For example, let's say there are two very similar neighboring homes. One has a fully finished basement, while the other has only half of its basement finished. In studying residential sales, a trend is identified showing basement finish is being undervalued. The value of basement finish could be adjusted to help estimated market values throughout the city mirror the recent sales in this segment. In this case, one home (with the finished basement) will realize a larger increase in value than its neighbor (with the half-finished basement).

There are other more obvious reasons values of neighboring properties could change at different rates as well. Construction, renovation, and destruction to one property and not the other will cause a unique change in value. Differences in style, age, size, quality, condition, amenities, and location are some of the many characteristics that are studied every year, with values being adjusted accordingly throughout the city.

For more frequently asked questions and further information, please visit www.MoorheadProperty.org and click on the links on the left-hand side of the page.

In general, there are two reasons why an assessor would come to your house and request an inspection. By statute in Minnesota the Assessor's Office is required to view every property at least once every five years. The Assessor's Office will typically view approximately 20% of the properties every year to achieve this requirement (referred to as "mass appraisal"). Additionally, if a property owner applies for a building permit to remodel, build or demolish a structure, the assessor will typically follow up with an inspection toward the end of the year or beginning of the following year in order to determine the value added or subtracted due to the project.

If the property owner is not home at the time the assessor visits to request an inspection, a sticky note is left on the front door notifying the property owner that an assessor was there to inspect the property. It gives instructions on whom to call to schedule an appointment.

If the property owner chooses not to call and schedule an appointment, reasonable assumptions are made by the assessor as to the quality and condition of the structures. These assumptions are typically based on the quality and condition of the exterior, what is typical for the neighborhood, what is typical for the style and age of home, past building permits, past inspection records and sales data if there was a recent sale of the subject property.

A property owner may also refuse to allow interior access to the assessor upon the request of an inspection. Upon the refusal of access by a property owner, the assessor would again make reasonable assumptions to estimate the quality and condition of the property. A verbal or written refusal of access would also eliminate the ability of the Local Board of Appeal and Equalization to grant any reduction in value upon appeal by the property owner until that access is allowed.

In either situation, no penalty is applied where the value would be treated any differently than that of a home that was inspected. The only downfall is the potential for some inaccuracies in either direction due to the assumptions made by the assessor.

For more frequently asked questions and further information, please visit www.MoorheadProperty.org and click on the links on the left-hand side of the page.

Not necessarily. Each sale that occurs in Moorhead becomes part of an annual sales study which is used to set values each year. One residential sale alone will not be the only indicator of Moorhead's housing market, especially if there are other comparable sales of similar properties.

That one sale will surely be used in conjunction with other comparable properties to set values for a segment of the market. A house that sells for 10% more than its assessed value does not necessarily mean its value will automatically increase 10% the next year. In the same regard, a house that sells for 10% less than its assessed value does not necessarily mean its value will automatically decrease 10% the next year. If a house and many other comparable homes are consistently selling for more or less than the assessed values, it's likely that those types of homes' values will trend in the direction of the sale prices.

For more frequently asked questions and further information, please visit www.MoorheadProperty.org and click on the links on the left-hand side of the page.

There are multiple opportunities to appeal if a property owner does not agree with the assessed value.

Each April, Clay County mails out property tax statements to property owners for taxes payable that year. In that same envelope is a green sheet titled "Valuation Notice". This notifies the property owner of the current estimated market value which will be used to calculate taxes payable the following year.

At that time, if a property owner does not agree with the current estimated market value, they should:

1. Contact the assessor's office in order to:
   1. Verify information about the property, such as dimensions, age, and condition of its structures.
   2. Schedule an inspection to verify the physical characteristics of the property.
   3. Provide supporting documentation, such as a recent appraisal or recent sales of comparable properties.
   4. Be provided supporting documentation from the assessor in the form of comparable sales or other market analysis.
      1. Most issues and concerns can be resolved at this level, especially if the property owner has done their research prior to contacting the assessor.
2. If the property owner and assessor are unable to agree on the property valuation, the next step for the property owner is to formally appeal, either in writing or in person, to the Local Board of Appeal and Equalization (LBAE).
   1. The LBAE typically meets the 3rd week of April at Moorhead City Hall to hear and make decisions on any formal appeals of value or classification of property.
   2. The LBAE is typically made up of Council Members, Realtors, Appraisers, Lenders, or other citizens with real estate expertise.
3. If the property owner wishes to appeal further, they can appeal to the County Board of Appeal and Equalization (CBAE).
   1. The CBAE meets in June at the Clay County Courthouse to hear and make decisions on any formal appeals of value or classification of property.
   2. The CBAE is typically made up of the current Clay County Commissioners.
   3. A property owner must first formally appeal to the LBAE in April to gain the right to appeal further to the CBAE.

For more frequently asked questions and further information, please visit www.MoorheadProperty.org and click on the links on the left-hand side of the page.

• January 2
  • This is the assessment date on which property values are estimated every year. This mainly comes into play for new construction which is in progress from one year to the next. Value of the partial construction as of January 2nd will be estimated and used to calculate taxes payable the following year.
• Late March/Early April
  • Clay County Auditor's Office mails out Property Tax Statements to property owners. The Property Tax Statement also includes the current Valuation Notice which is used to calculate taxes payable the following year.
• Mid-April
  • Formal appeals must be submitted in writing to the City Assessor’s Office located at City Hall in Moorhead, or in person to the Local Board of Appeal and Equalization (LBAE). The LBAE meets at the Hjemkomst Center in Moorhead on the date and time listed on the Valuation Notice. The LBAE meets to hear and make decisions on formal appeals of the current valuation or classification of property.
• May 15
  • The first half of property taxes are due for most real estate.
• May 29
  • Deadline for owners of manufactured homes assessed as personal property (typically located in manufactured home parks) to establish and apply for a Homestead Exclusion.
• Mid-June
  • The County Board of Appeal and Equalization (CBAE) meets to hear and make decisions on formal appeals of valuation or classification. The CBAE meets at the Clay County Courthouse on the date and time listed on the Valuation Notice. In order to appeal to the CBAE, the property owner must have first formally appealed to the LBAE in April.
• July 1
  • Taxable real property can become exempt for this year’s assessment (taxes payable the following year) if acquired by certain government, church, or educational entities by this date.
  • Real property that was exempt loses its exemption due to sale or other reasons prior to July 1 and becomes taxable for this year’s assessment (taxes payable the following year).
• July 15
  • Property tax statements must be mailed to owners of manufactured homes assessed as personal property.
• August 15
  • Due date for filing for Property Tax Refund
    • Property Tax Refund | Minnesota Department of Revenue (state.mn.us)
• August 31
  • The first half of property taxes for manufactured homes assessed as personal property are due.
• October 1
  • Deadline to apply for Blind/Disabled Homestead for this year’s assessment (taxes payable the following year).
• October 15
  • The second half of property taxes are due for most real estate.
• November 1
  • Deadline for senior citizens to file for property tax deferment for taxes payable the following year.
• November 15
  • The second half of property taxes for manufactured homes assessed as personal property are due.
  • The second half of property taxes are due for class 2a (Agricultural), and 2b (Rural Vacant Land).
• Late November
  • Truth in Taxation notices are mailed to property owners. This notice calculates an estimate for property taxes due the following year.
• December 31
  • Owners of real property must occupy their home by this date in order to qualify for the Homestead Exclusion for this year’s assessment (taxes payable the following year).
  • Deadline to file a homestead application for this year’s assessment (taxes payable the following year).
  • Deadline for disabled veterans with qualifying homesteads to apply for the Disabled Veterans Homestead Exclusion for this year’s assessment (taxes payable the following year).