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GlossaryProperty taxesMinnesota law

Homestead market value exclusion

2 min read
Short answer
The homestead market value exclusion reduces the taxable market value of a qualifying Minnesota homestead. For homes valued at $95,000 or less it is 40 percent of value, a maximum of $38,000. Above that it falls by 9 percent of the value over $95,000, and it reaches zero at $517,200.

The homestead market value exclusion reduces the taxable market value of a qualifying Minnesota homestead, which reduces the tax. It sits in Minn. Stat. 273.13 subdivision 35, and it replaced the older state-paid homestead credit in 2012.

The formula#

For a homestead valued at $95,000 or less: the exclusion is 40 percent of market value, so a maximum of $38,000.

For a homestead valued between $95,000 and $517,200: the exclusion is $38,000 minus 9 percent of the value above $95,000.

At $517,200 or more: no exclusion.

Worked through, using the Department of Revenue's own examples:

A $280,000 home has $185,000 of value above the threshold. Nine percent of that is $16,650. The exclusion is $38,000 − $16,650 = $21,350, taking the taxable value to $258,650.

A $350,000 home has $255,000 above. Nine percent is $22,950. The exclusion is $15,050, taking the taxable value to $334,950.

The thresholds moved#

Worth knowing because older material is now wrong.

Before the increase, the maximum exclusion was $30,400 at homes valued $76,000 or less, phasing out at $413,800.

That was the first change since the programme was created in 2012, so a great deal of published guidance still quotes the older figures.

Which classes qualify#

1a residential homestead.

1b homestead of persons who are blind or disabled.

The house, garage and surrounding one acre portion of a 2a agricultural homestead.

Partial homesteads — where only one of two owners occupies the property — receive a reduced exclusion.

You do not apply for the exclusion#

You apply for homestead classification, by December 31, to the county assessor. The exclusion follows from it.

Which means the exclusion is lost in exactly the situations homestead classification is lost: a buyer who assumed the closing handled it, an eCRV that was never filed, or a title change that reset the classification without anyone reapplying.

The shape of it#

The exclusion is largest, in percentage terms, on the least valuable homes, and disappears entirely above $517,200.

That is a deliberate design choice and it is contested. It concentrates relief on lower-value property, and it means the benefit tapers across exactly the range where most Minnesota homes sit — with the tapering itself acting as an additional increment of tax as values rise.

The disabled veterans homestead exclusion under subdivision 34 is substantially larger — $150,000 of value for a 70 percent or greater service-connected disability, and $300,000 for 100 percent permanent and total, with transfer provisions for surviving spouses.

It requires its own application and documentation, and it goes unclaimed more often than it should.

Common questions

How much is the exclusion worth?
Up to $38,000 of value excluded, at homes valued $95,000 or less. Above that it reduces by 9 percent of the value over $95,000 — so a $280,000 home has an exclusion of $21,350, and a $350,000 home has $15,050. There is no exclusion at $517,200 or above.
Do I have to apply for it?
You apply for homestead classification, and the exclusion follows automatically from that. The application goes to the county assessor by December 31, and it does not happen at closing.
Which properties qualify?
Class 1a residential homestead, class 1b homestead of persons who are blind or disabled, and the house, garage and surrounding acre portion of a class 2a agricultural homestead. Partial homesteads, where only one of two owners lives there, receive a reduced exclusion.
Keep reading
Homestead classification
The Minnesota property tax classification for an owner-occupied primary residence, which lowers the tax bill and must be applied for by December 31.
Taxable market value
The Minnesota property value actually used to calculate the tax bill, after exclusions and deferrals are subtracted from estimated market value.
Assessment appeal
Challenging a county assessor's estimated market value or classification, through informal review, local and county boards, or the Minnesota Tax Court.