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<br /> <br />LEAGUE OF <br />MINNESOTA <br />CITIES <br /> <br />CONNECfING & INNOVATING <br />SINCE 1913 <br /> <br />Market Value Homestead Credit 101 <br /> <br />This guide i~ intended to describe the bas1ics of the Market Value Homestead Credit (MVHC) program. The <br />program was designed to provide state-paid property tax relief to owners of certain qualifying homestead <br />property. The MVHC program is closely tied to the property tax system, a detailed description of which <br />can be found in the "Property Taxation 101" guide. <br /> <br />Background <br /> <br />In the 2001 legislative session, state <br />lawmakers eliminated the Homestead and <br />Agricultural Credit Aid (HAC A) program, <br />which had provided $200 million in state aid <br />to cities for property tax relief. Of these <br />funds, $140 million were folded into the <br />Local Government Aid (LGA) program. The <br />2001 property tax reform bill eliminated the <br />general education property tax levy, bringing <br />tax relief to all prQperty owners, including <br />homeowners, aDd replaced it with a new state <br />property tax on businesses. The Legislature <br />also created the Market Value Homestead <br />Credit (MVHC) program, giving most <br />homeowners additional tax relief. <br /> <br />How it works for homeowners: <br /> <br />"The cred it" <br /> <br />The MVHC program reduces the property tax <br />owed on a homestead property by 0.4% of <br />the homestead's market value, up to a <br />maximum per property of $304. <br /> <br />Credit = market value x 0.4% <br /> <br />The maximum credit of $304 occurs at a <br />market value of $76,000. For homesteads <br /> <br />145 UNrIVE'RSlTY AVE. WEST <br />ST. PAUL, MN SS103-204:4 <br /> <br />with market values over $76,000, the credit is <br />reduced by 0.09% of the excess market value. <br /> <br />Credit = $304 - ((market value-$76000) x 0.09%) <br /> <br />Homesteads with market value of $413,778 <br />and higher do not receive any credit. The <br />table be,low shows some sample market <br />values and corresponding credit amounts. <br /> <br />Homestead <br />Market Value <br />$50,000 <br />$76,000 <br />$100,000 <br />$200,000 <br />$350,000 <br />$413,778 <br /> <br />Market Value <br />Homestead Credit <br />$200 <br />$304 <br />$282 <br />$192 <br />$57 <br />$0 <br /> <br />On each homeowner's property tax bill, the <br />market value homestead credit is allocated to <br />the local taxing districts (city, county, school, <br />special districts) according to the share of the <br />total tax rate that each taxing district <br />represents. For example, if the city tax rate is <br />30% and the total tax rate is 120%, a fowrth <br />of the market value credit is allocated to the <br />city portion of the homest€ad's property tax <br />bill. <br /> <br />PHONE: (651) 281-1200 fAX: (651) 281-1299 <br />TOLLIJ.EE: (8QO) 9:ilS-l122 Wile WWW,lMC.OIG <br />