State Tax Laws > Property Taxes > Summary > Minnesota
For the complete text of Minnesota statutes please refer to the Minnesota Department of Revenue. for additional property tax information please refer to Minnesota Department of Revenue.
Property Classification:
There are five classes of property in Minnesota containing various subclasses. The property within each subclass is assessed at specified percentages of market value, termed "class rates."
Class 1: Residential
Class 2: Agricultura
lClass 3: Commercial
Class 4: Miscellaneous Real Estate
Class 5: Miscellaneous
Forest land generally falls into one of the following categories:
Class 2a property - Class 2a property is agricultural land including any improvements that is homesteaded.
Agricultural land means contiguous acreage of 10 acres or more, used during the preceding year for agricultural purposes. Contiguous acreage on the same parcel, or contiguous acreage on an immediately adjacent parcel under the same ownership, may also qualify as agricultural land, but only if it is pasture, timber, waste, unusable wild land, or land included in state or federal farm programs. Agricultural classification for property shall be determined excluding the house, garage, and immediately surrounding one acre of land, and shall not be based upon the market value of any residential structures on the parcel or contiguous parcels under the same ownership.
Class 2b property is:
(1) real estate, rural in character and used exclusively for growing trees for timber, lumber, and wood and wood products;
(2) real estate that is not improved with a structure and is used exclusively for growing trees for timber, lumber, and wood and wood products, if the owner has participated or is participating in a cost-sharing program for afforestation, reforestation, or timber stand improvement on that particular property, administered or coordinated by the commissioner of natural resources;
(3) real estate that is nonhomestead agricultural land; or
(4) a landing area or public access area of a privately owned public use airport.
All Class 2b property has a net class rate of 1.0 percent of market value.
Sustainable Forest Incentive Act (SFIA): (Sec. 290C.01)
Minnesota's Sustainable Forest Incentive Act: A Landowners Guide (Michael A. Kilgore)
Property is eligible for enrollment in the sustainable forest incentive program if:
(1) the property consists of at least 20 contiguous acres and at least 50% of the land is forest land during the time that the land is enrolled in the program;
(2) a forest management plan for the property has been prepared by an approved plan writer and is implemented during the period in which the land is enrolled;
(3) timber harvesting and forest management guidelines are used in conjunction with any timber harvesting or forest management activities conducted on the land during the period in which the land is enrolled;
(4) the property will be enrolled for a period of at least eight years;
(5) there are no delinquent property taxes on the property; and
(6) claimants enrolling more than 1,920 contiguous acres must allow year-round, non-motorized access to fish and wildlife resources on enrolled land, except within one-fourth mile of a permanent dwelling or during periods of high fire hazard (however, such claimants do not extent any assurance that the land is safe for any purpose, confer upon the person the legal status of an invitee or licensee to whom a duty of care is owed, or assume responsibility for or incur liability for any injury to the person or property.
Forest land - "Forest land" means land containing a minimum of 20 contiguous acres for which the owner has implemented a forest management plan that was prepared or updated within the past ten years by an approved plan writer. For purposes of this subdivision, acres are considered to be contiguous even if they are separated by a road, waterway, railroad track, or other similar intervening property. At least 50 percent of the contiguous acreage must meet the definition of forest land in section 88.01, subdivision 7. For the purposes of sections 290C.01 to 209C.11, forest land does not include (i) land used for residential or agricultural purposes, (ii) land enrolled in the reinvest in Minnesota program, a state or federal conservation reserve or easement reserve program under sections 103F.501 to 103F.531, the Minnesota agricultural property tax law under section 273.111, or land subject to agricultural land preservation controls or restrictions as defined in section 40A.02 or under the Metropolitan Agricultural Preserves Act under chapter 473H, or (iii) land improved with a structure, pavement, sewer, campsite, or any road, other than a township road, used for purposes not prescribed in the forest management plan.
Forest management plan - "Forest management plan" means a written document providing a framework for site-specific healthy, productive, and sustainable forest resources. A forest management plan must include at least the following: (i) owner-specific forest management goals for the property; (ii) a reliable field inventory of the individual forest cover types, their age, and density; (iii) a description of the soil type and quality; (iv) an aerial photo and/or map of the vegetation and other natural features of the property clearly indicating the boundaries of the property and of the forest land; (v) the proposed future conditions of the property; (vi) prescriptions to meet proposed future conditions of the property; (vii) a recommended timetable for implementing the prescribed activities; and (viii) a legal description of the parcels encompassing the parcels included in the plan. All management activities prescribed in a plan must be in accordance with the recommended timber harvesting and forest management guidelines. The commissioner of natural resources shall provide a framework for plan content and updating and revising plans.
Application - Applicants must submit an application to the Department of Natural Resources by September 30 in order for the land to be eligible for enrollment beginning in the next year. The Commissioner of Natural Resources will notify the applicant within 90 days after receipt of a completed application whether the land has been approved for enrollment.
Incentive Payment - An approved claimant under the sustainable forest incentive program is eligible to receive an annual payment. The payment is equal to the greater of:
(1) the difference between the property tax that would be paid on the property using the previous year's statewide average total township tax rate and the class rate for Class 2b timberland if the property were valued at (i) the average statewide timberland market value per acre and (ii) the average statewide timberland current use value per acre;
(2) two-thirds of the property tax amount determined by using the previous year's statewide average total township tax rate, the estimated market value per acre, and the class rate for Class 2b timberland; or
(3) $1.50 per acre for each acre enrolled in the sustainable forest incentive program.
Withdrawal Procedures -The minimum period of enrollment in the SFIA is eight years. Lands have to be enrolled in the SFIA at least four years before the landowner can indicate the intent to withdraw from enrollment. A landowner who wants to take land out of the SFIA must notify the DOR of this intent four years before withdrawal takes place. Once a landowner files a notice with the DOR to withdraw land from the SFIA, the land is removed from the program at the beginning of the year following expiration of the four-year waiting period. Once withdrawn, the land is no longer eligible for SFIA incentive payments, and the landowner must wait three years before applying to re-enroll any of the properties removed.
Involuntary Termination - If the DOR determines that forest land violates the conditions of enrollment, it can remove the forest land from the SFIA program. Reasons for removing land from SFIA status include not having or following the forest management plan, not using timber harvesting/forest management guidelines when conducting land management activities, having delinquent property taxes on any lands enrolled, not allowing nonmotorized public access if required to do so, allowing land uses inconsistent with the act, and not completing and returning the annual certification form attesting to the DOR that the requirements and conditions for enrollment are being met. If enrollment is terminated, the landowner must pay back to the state all SFIA incentive payments received over the past four years on all properties enrolled, plus interest. It is important to note that in the case of involuntary termination, ALL of the landowner’s property will be removed from the SFIA, not just the land found to be in violation. Landowners do have the right to appeal to the tax court the DOR’s decision to remove the property from SFIA status.
Auxiliary Forest:
No new contracts have been accepted under the Auxiliary Forest Tax since June 30, 1974, however existing contracts are still honored. When an Auxiliary Forest contract expires, the land automatically qualifies for enrollment in the SFIA. Once enrolled the landowner must meet all SFIA requirements and conditions in order to keep the land enrolled in the SFIA.
An owner of forest land with an unexpired Auxiliary Forest contract can apply for enrollment in the SFIA. If accepted, the Auxiliary Forest contract will be canceled and enrollment the SFIA will begin, provided the landowner pays a conversion fee to the county where the Auxiliary Forest is located. This fee is equal to the difference in taxes that would have been paid if the land had been enrolled in the Tree Growth Tax Law and the SFIA during the life of the Auxiliary Forest contract, less any taxes already paid while in the Auxiliary Forest contract.
Tree growth tax:
Effective January 2002, all forest land enrolled in the Tree Growth Tax Law was converted to taxation under the state's normal (ad valorem) property tax system. This means that 2002 will be the last year landowners will pay property taxes based on Tree Growth tax rates. Beginning in 2003, Tree Growth forest landowners will pay ad valorem-based property taxes. Owners of Tree Growth properties can enroll in the SFIA, enrollment is not automatic.