January 25, 2011
To encourage property owners to clean up contaminated property, Minnesota law provides an opportunity to reduce property taxes on those properties for the duration of the clean-up. This is accomplished through the application of a contamination tax. Finally, a tax that you may want to pay!
Property owners who have a cleanup plan approved by the State of Minnesota benefit through a reduction in the assessed market value of the property. The assessed market value is the value used to determine the applicable taxes payable each year. If the market value of the property is reduced due to contamination, the amount of the reduction becomes the “contamination valuation.” The property owner’s tax bill is lower because the assessed market value is decreased by the amount of the contamination valuation. The contamination value remains subject to taxation, but the tax rate applied to the contamination valuation is substantially less than the standard commercial/industrial tax rates.
If a property owner has a an approved cleanup plan and the property owner is the responsible party, the tax rate is 50% of the standard rate. A property owner who has an approved cleanup plan but is not responsible for the contamination pays at a tax rate of 12.5% of the standard rate. For large, highly valued properties, the tax savings may be significant.
Thousands of properties across the state have been affected by contamination and have been cleaned up. However, the Minnesota Department of Revenue concedes that only a few eligible property owners have actually sought property tax relief afforded by the contamination tax.
The contamination valuation cannot exceed the market value of the property and the costs of the approved clean-up plan are considered in the contamination valuation. A formal appraisal may be required to determine the impact of the contamination on the value of the property. Any refund created by the decrease in assessed market value is set off by any tax due under the contamination valuation. As long as cleanup measures are in place, a party may be eligible for tax relief. The information must be provided on an annual basis to the assessor to continue to qualify.
At Hessian & McKasy, our environmental law attorneys are familiar with environmental clean-ups and the liability assurances that are available from the MPCA. Our attorneys in our Real Estate Department have handled appeals of the valuation of all types of properties including commercial, industrial, residential and agricultural land. We offer innovative legal service packages to our clients. To learn more, please visit https://www.enviroattorney.net/sample-price-list.php. For more information on how the contamination tax may apply to property that you own, please contact Hessian & McKasy attorneys Joseph Maternowski at email@example.com or at 612-746-5754
The views contained within this entry and on this website are my own and do not constitute those of Hessian & McKasy, a Professional Association.
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