Dakota County Has Lowest Property Taxes in the Twin Cities

by Bill Wallace on December 3, 2010

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We are right in the middle of the annual property tax public hearing timeframe where counties, cities and school districts must publicly disclose their proposed tax rates for the coming year.  The good news for local taxpayers is that Dakota County property taxes remain the lowest in the Twin Cities.  In comparison to some other counties by a very wide margin.

Comparing Counties

As you can see from the chart above, Dakota County continues to edge out Washington County for the title of lowest county property taxes.  This is actually the lowest tax rate of all 87 county’s in Minnesota.   Having a lower rate than the non-metro counties is made easier because we have both higher property values and a more diverse commercial property base to tax. 

Compared to the other 5 metro counties, Dakota County’s tax rate is lower by the following percentages -

  • Scott County – 16.6%
  • Anoka County – 26.4%
  • Carver County – 28.8%
  • Hennepin County – 35.8%
  • Ramsey County – 45.6%

Hundreds of dollars a year in less expensive property taxes adds up if you are going to purchase a home and are deciding between different counties.

Not the Whole Story

While it looks great that the average Dakota County tax bill is declining that doesn’t exactly tell the whole story for your individual home.  As you can read in the box in the top left, the average market value for a home in Dakota County for taxes payable in 2010 were $222,400 while the average home value for 2011 is $206,100.  In other words, the county is projecting that property values dropped 7.3%

Whether or not your taxes will decline is totally dependent on whether your homes tax value fell as much as the average.  In other words, if your home value (according to the County) only dropped 5% then it is likely that your taxes will actually increase!

Many people have a hard time understanding this as they think that if their property value drops it means that their taxes should drop as well.  In reality, the counties all need just as much tax revenue as they always received so they tax at a higher rate when property taxes fall.  Therefore, whether your taxes fall has more to do with how your property is valued compared with all other properties. 

Tax Valuation Changes By City

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How much your valuation dropped is heavily influenced by the city you live in.  The assessors look at actual real estate market data to judge what is happening to values at a city level.  As you can see, places like South St. Paul and Farmington saw the largest drops in average assessed value.  This is directly related to the fact that those 2 cities have had the largest percentages of bank owned and short sale transactions.

Therefore, counties portion of property taxes will be falling faster in those cities since their value is dropping further than the overall Dakota County average.  That may not be reflected directly on their final tax bill because the county’s portion of your tax bill is only about 25% and the other 75% is affected by the tax rates of each city and school district. 

Conclusion

Property taxes are a point of contention for many homeowners.  While it may not seem like it sometimes, homeowners in Dakota County have the lowest property taxes in the state of Minnesota.  Because of our vibrant and diverse tax base we are able to maintain a good level of services while keeping more money for ourselves.

This coming spring I will expand more on the processes you need to know in order to take control of your property tax assessment process and how you can analyze and challenge the data used by the county to set your properties value.

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