Understanding the Transition to Homestead Market Value Exclusion
The League created and collected a variety of resources to help cities understand the homestead market value exclusion (HMVE) program implemented for taxes payable 2012 and how it differs from the discontinued market value homestead credit (MVHC) program. There are no further changes for payable 2013, so the documents below serve as historical reference. The League's 2013 City Policies (pdf) addresses this issue in policy number FF8.
Two League documents are available to help city officials understand the changes:
Interactive estimating tool
The League developed an interactive tool for cities. The spreadsheet calculates estimated city and total taxes for several hypothetical properties, including homesteads and business properties, under the old MVHC reimbursement system and the HMVE system. Note that underlying data in the calculations is for 2011-2012.
Educating residents
The League produced a brochure to help cities educate their residents about the impact of the state's replacement for the market value homestead credit program. The brochure was designed to better inform residents about what the transition to HMVE means for their local property taxes.
The League also produced a PowerPoint presentation on the changes.
A video produced by Minnesota Public Radio News also helped cities explain the change to residents.
Additional resources
Below are more resources to help cities understand the changes and the impacts on their property tax revenues and their residents.
- League webinar, presented live on Aug. 19
- Department of Revenue document: Understanding Recent Changes in Homestead Benefits (pdf)
- Department of Revenue overview explaining the changes (pdf)
- Department of Revenue memo on conversion (pdf)
- House Research overview of new program (pdf)
- House Research property tax simulation of effects of exclusion
- LMC article: Update on Additional Homestead Market Value Exclusion
Issues (Aug. 26, 2011) - LMC article: More Considerations for the New Homestead Market Value Exclusion (Aug. 24, 2011)
- LMC article: How Changes to MVHC Program Will Affect Cities (July 27, 2011)
Other useful resources
Your LMC Resource
Contact Gary Carlson
IGR Director
(651) 281-1255 or (800) 925-1122
gcarlson@lmc.org
Contact Rachel Walker
Manager, Policy Analysis
(651) 281-1236 or (800) 925-1122
rwalker@lmc.org
HMVE Background
As part of the 2011 omnibus tax bill (First 2011 Special Session Chapter 7), the Legislature repealed the MVHC program and created the new HMVE program. These changes are effective for taxes payable in 2012.
In place of the MVHC program, homeowners will receive an exclusion of a portion of the market value of their house from property taxes. The exclusion is computed in a manner similar to the market value homestead credit.
The impact of the change will vary from community to community, depending on a number of factors, including tax base of the community and the local tax rate.
Reach Minnesota Cities!
