Deferrals

SPECIAL ASSESSMENT DEFERRALS

What is a special assessment deferral?
As the name implies, it is a deferral of the special assessment amount that must be paid, with compounded interest, at some time in the future. It is not an exemption, exclusion, or forgiveness of any amount due.

Who authorizes the deferral of special assessments?
Minnesota Statues, Sections 435.193 through 435.195 authorizes cities to defer the payments of special assessments. On Sept. 6, 2005, by Resolution No. 2005-78, the City of Edina Council established the criteria by which special assessments may be deferred.

What assessments are eligible for the deferment?
Only special assessments for permanent improvements are eligible. Current and/or delinquent service charges are not eligible. Service charges include, but are not limited to water and sewer service, tree removal, weed removal, storm drainage charges, street maintenance, administrative citations and the clean up of grossly unsanitary dwellings.

How do I qualify for the special assessment deferment?
To qualify for the special assessment deferment, all of the following are required:

• The applicants must be 65 years of age or older, or retired by virtue of a permanent and total disability. A permanent and total disability is defined as a condition which is permanent by nature and which totally incapacitates the person from working at an occupation that affords the person an income.

• The applicant must be the fee simple owner of the property or must be a contract vendee for fee simple ownership, and

• The property for which deferment is requested must be classified and taxed as homestead property by the City Assessor as of the date the application for deferment is made, and the first year’s installment of the proposed special assessment must, either alone or in the aggregate  with installments of other special assessments due against the property and payable in the first year of the proposed assessment, total more than 2 percent of the applicant’s total household income as defined by Minnesota Statues, Chapter 290A.

How do I apply for the special assessment deferment?
Contact the City of Edina Assessor’s Office at 4801 W 50th Street, Edina, MN 55424 or call 952-826-0365 for application forms and additional instructions. Applications for deferment of special assessments for a given year of payment must be submitted to the City of Edina Assessor’s Office before Nov. 15 of the preceding year.

When will the deferment end?
The deferment will automatically terminate if:

• The owner dies and the spouse is not otherwise eligible for the deferment, or

• the parcel or any part thereof is sold, transferred, or subdivided, or

•  the parcel loses it’s homestead status, or

  • the City determines the owner or the owner's spouse no longer qualifies for the hardship requirement, or

  • the owner terminates the deferment.

Upon termination of the deferment, payment shall be made of such portion of the deferred special assessments as would have then been due and payable had there been no deferment, together with any accumulated interest. Any remaining amounts shall be thereafter due and payable in accordance with the schedule under the original special assessment roll.

What can I do if my application is denied?
The City Assessor reviews the applications for consistency with and conformance to the standards and guidelines prescribed in the ordinance and will either grant or deny the application. You may appeal this determination to the City Council.

SENIOR CITIZEN PROPERTY TAX DEFERRALS

The Senior Citizen Property Tax Deferral Program was established to help senior citizens who were having difficulty paying their property taxes. This deferral program has two primary advantages for senior citizens.

1. It limits the maximum amount of property tax paid to 3 percent of  your total household income, and

2. It provides predictability. The amount of tax you pay will not change for as long as you participate in this program.

What is it?
The Senior Citizens Property Tax Deferral program allows people 65 years of age or older, whose household incomes are $60,000 or less to defer a portion of their property tax on their homes.

How does it work?
This is not a tax forgiveness program—it is a low interest loan from the state. The deferred tax is paid by the state to your county. Interest will be charged on this loan. The interest rate will be adjusted annually, but will never exceed five percent. A lien will attach to your property.

The amount of tax you pay is determined the year you enter the program. Your annual income for the year preceding the year you enter the program serves as the basis for how much you will pay.

FOR EXAMPLE:  Assume your household income was $15,000 the year before you entered the program; 3 percent of that amount is $450. The maximum annual property tax you would be responsible for paying would be $450 for each year you participate in the program. If your property tax for the year was $1,450, you would pay $450 and the $1,000 remaining would be deferred. If your total property tax ever fell below your maximum tax amount, you would pay the lesser amount.

As part of your initial application, you will need to provide at your expense one of the following reports detailing any mortgages, liens, judgments or unpaid property taxes on your property. The report must be dated within 30 days of your application. Depending on the type of property you own, your report will be one of the following:

1. If you have “Abstract” property, a licensed abstracter must prepare a report showing the last deed recorded and any unsatisfied liens or judgments. Such a report is also called an “Owners and Encumbrances” report. These reports cost approximately $50.

2. If you have “Torrens” property, you will need to obtain a copy of the “Original Certificate of Title,” sometimes called a “Condition of Register,” from the county recorder. This certificate costs $10.

If you are unsure what type of property you have, contact your County Recorder.

What about my refunds or rebates?
When you apply for property tax refunds or rebates based on the qualifying amount on your property tax statement, you will not receive  the refunds or rebates as cash payments. They will be applied to your deferred property tax total.

Your Minnesota income tax refunds, political contribution refunds or lottery winnings of any type will also be applied to your deferred property tax.

What if my income changes?
Once enrolled in the program you will not need to reapply. However, if your income goes above $60,000 in a calendar year, it is your responsibility to notify the Department of Revenue, in writing. You will not be allowed to defer any further taxes until your income again falls below $60,000.  If this happens it will be your responsibility to reapply for deferral. Stopping deferral because of excess income is not the same thing as being terminated from the program. If you fail to notify the state of excess income, penalties will apply.

Who may be eligible?
In order to qualify for this program, all of the following conditions must be met:

1. The property must be owned and occupied as a homestead by a person 65 years of age or older. In the case of a married couple, both must be at least 65 when the first deferral is granted. (The homestead can be classified as residential or agricultural, or it may be part of a multi-unit building.)

2. The total household income may not exceed $60,000 for the calendar year preceding the year of initial application.

3. The home must have been owned and occupied as the homestead of at least one of the homeowners for at least 15 years prior to the year of initial application.

4. There can be no state or federal tax liens or judgment liens on the property.

5. The total of unpaid debts secured by mortgages and other liens against the property cannot exceed 75 percent of the assessors’ estimated market value of the property.

How do I apply?
Applications are available in your County Auditor’s office. Applications must be made by July 1 to defer a portion of the following year’s tax. You may apply in the year in which you become 65 years old, but no deferral will be allowed until the following year.

What else should I know?
If you meet the requirements of this program, the state will file a notice of lien with your county. If there are fees associated with this filing, they will be added to your deferred tax. Deferral of taxes will terminate when any one of the following occurs:

1. The property is sold or transferred.

2. All qualifying homeowners die.

3. The homeowner notifies the Commissioner of Revenue, in writing, that he/she wishes to discontinue the program.

4. The property no longer qualifies as a homestead.

Upon termination of the deferral, the deferred property taxes, any special assessments that may have been deferred, penalties, plus any recording or filing fees will become payable  to the state. If the property is sold or the homeowner dies, payment is due within 90 days for termination. If the homeowner voluntarily leaves the program or the property ceases to qualify as a homestead, the total deferred amount will become due within one year of termination. No additional interest will be due if timely paid. If the deferral is not timely paid, penalty, interest, lien, forfeiture and other rules for the collection of property taxes will apply.

What if I have questions?
This is only a summary of the Senior Citizens Property Tax Deferral program. For more information or answers to specific questions, call the Property Tax Division of the Minnesota Department of Revenue at 651-556-6088.