Homestead market value exclusion modified.

A bill for an act

relating to taxes; property; modifying the homestead market value exclusion;

amending Minnesota Statutes 2024, section 273.13, subdivision 35.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 273.13, subdivision 35, is amended to read:

Subd. 35.

Homestead market value exclusion.

(a) Prior to determining a property's

net tax capacity under this section, property classified as 4d(2) under subdivision 25,

paragraph (e), clause (2), class 1a, or 1b under subdivision 22, and the portion of property

classified as class 2a under subdivision 23 consisting of the house, garage, and surrounding

one acre of land, shall be eligible for a market value exclusion as determined under paragraph

(b).

(b) For a homestead valued at $95,000 or less, the exclusion is 40 percent of market

value. For a homestead valued between $95,000 and $517,200, the exclusion is $38,000

minus nine percent of the valuation over $95,000. For a homestead valued at $517,200 or

more, there is no valuation exclusion. The valuation exclusion shall be rounded to the nearest

whole dollar, and may not be less than zero.

(c) Any valuation exclusions or adjustments under section
273.11
shall be applied prior

to determining the amount of the valuation exclusion under this subdivision.

(d) In the case of a property that is classified as part homestead and part nonhomestead,

(i) the exclusion shall apply only to the homestead portion of the property, but (ii) if a portion

of a property is classified as nonhomestead solely because not all the owners occupy the

property, not all the owners have qualifying relatives occupying the property, or solely

because not all the spouses of owners occupy the property, the exclusion amount shall be

initially computed as if that nonhomestead portion were also in the homestead class and

then prorated to the owner-occupant's percentage of ownership. For the purpose of this

section, when an owner-occupant's spouse does not occupy the property, the percentage of

ownership for the owner-occupant spouse is one-half of the couple's ownership percentage.

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(e) In the following cases, the value of an accessory dwelling unit must be excluded

when calculating the value of the exclusion under paragraph (b):

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(1) property classified as class 1a or 1b under subdivision 22;

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(2) the portion of property classified as class 2a under subdivision 23 consisting of the

house, garage, and surrounding one acre of land; or

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(3) property classified as class 4d(2) under subdivision 25, paragraph (e), clause (2).

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(f) For the purpose of this subdivision, "accessory dwelling unit" means a secondary

dwelling unit to a principal homestead dwelling that is within or attached to the principal

homestead dwelling or in a detached accessory building on the same parcel.

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EFFECTIVE DATE.

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This section is effective beginning with assessment year 2027.

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