Estimating Your Commercial Property Taxes

Here’s how to estimate your commercial property tax, using 2004 tax rates.

• Compute your Tax Capacity by multiplying all property value up to $150,000 times .015, plus any value over $150,000 times .02. ( Property Value x TCR (Tax Capacity Rate) = Tax Capacity (TC) ) (TCR = >$150,000, take X .15; + any value < $150,000 x .02) Minnesota commercial real estate taxes are based upon market value of taxable property as set by the local assessor.
• Compute your taxes owed by multiplying your Tax Capacity times the tax rate (the Minnesota State Property Tax Rate, Payable 2004 is 54.45%). In some localities where voters have approved referendums, an additional referendum tax must be added, calculated by multiplying the referendum tax rate times the total market value of the commercial property. ( [TC x local taxes] + [TC x state taxes] = annual property tax rate)

Example:
Property Value (for a $200,000 property in Baxter) x Tax Capacity Rate (150,000 x .015) = (50,000 x .02) = Tax Capacity (3,250)
Then, take Tax Capacity (3,250) x LR (Local Tax Rate) .9689 = $3,149
AND add to the TC (3,250) x SR (State Tax Rate) .5445 = $1,770

Total Taxes on $200,000 property in Baxter would be $4,919 ($3,149 + $1,770)

Source: League of Minnesota Cities based on Minnesota Department of Revenue tax abstracts.