Big property tax hikes are looming for some cabin owners in Minnesota, as a law change kicks in and raises their properties’ taxable value.
Minnesota Public Radio found one cabin owner looking at a $2,700 — or 44 percent — increase next year.
That owner, and thousands of others, had benefitted for years from limited market value, which has now been phased out by the Legislature, MPR said.
The idea was to limit property tax increases when property values increased rapidly. There was a cap on how much of that increase could be taxed, so in many cases the gap between market value and taxable value grew wider over the years. In many areas, lake cabins will be hit hard because their value increased more rapidly than other real estate.
They quote Jeff Forester, executive director of the Minnesota Seasonal Recreational Property Owners Association, saying the increases are hard on retired folks living on a fixed income.
“There’s no connection between ability to pay a property tax and the property tax,” Forester said. “Because my property is worth more doesn’t mean I have more income.”
But on the other hand, they note that “those seasonal property owners have been getting a break at the expense of other homeowners.”
Otter Tail County has hundreds of lakes and thousands of seasonal residents. County Assessor Robert Moe said some lake residents may see property tax increases of 30 percent or more.
Since cabin owners will be paying more, many residents who live in town will see their taxes stay the same or go down. Moe said most of those homeowners didn’t see their property values spike in recent years, so they did not benefit from the limited market value cap. Moe said they paid taxes on the full value of their property.
“You could basically say they were subsidizing the people who were getting limited market value,” Moe said. “They were paying more taxes because someone else was not paying on their full amount of value. It’s shifted back now to where there’s probably a little more even playing field.”