CHAPTER 290B. Senior citizens' property tax deferral

     290B.01 Purpose. 

    Minnesota's system of ad valorem property taxation does not 
 adequately recognize the unique financial circumstances of 
 homestead property owned and occupied by low-income senior 
 citizens.  It is therefore declared to be in the public interest 
 of this state to stabilize tax burdens on homestead property 
 owned by qualifying low-income senior citizens through a 
 deferral of certain property taxes. 

    HIST: 1997 c 231 art 14 s 4 

     290B.02 Citation. 

    This program shall be named the "senior citizens' property 
 tax deferral program." 

    HIST: 1997 c 231 art 14 s 5 

     290B.03 Deferral of property taxes. 

    Subdivision 1.    Program qualifications.  The 
 qualifications for the senior citizens' property tax deferral 
 program are as follows: 

    (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 of the spouses must be at least 65 years old at the 
 time the first property tax deferral is granted, regardless of 
 whether the property is titled in the name of one spouse or both 
 spouses, or titled in another way that permits the property to 
 have homestead status; 

    (2) the total household income of the qualifying 
 homeowners, as defined in section 290A.03, subdivision 5, for 
 the calendar year preceding the year of the initial application 
 may not exceed $30,000; 

    (3) the homestead must have been owned and occupied as the 
 homestead of at least one of the qualifying homeowners for at 
 least 15 years prior to the year the initial application is 
 filed; 

    (4) there are no delinquent property taxes, penalties, or 
 interest on the homesteaded property; 

    (5) there are no delinquent special assessments on the 
 homesteaded property; 

    (6) there are no state or federal tax liens or judgment 
 liens on the homesteaded property; 

    (7) there are no mortgages or other liens on the property 
 that secure future advances, except for those subject to credit 
 limits that result in compliance with clause (8); and 

    (8) the total unpaid balances of debts secured by mortgages 
 and other liens on the property, including unpaid special 
 assessments, but not including property taxes payable during the 
 year, does not exceed 30 percent of the assessor's estimated 
 market value for the year. 

    Subd. 2.    Qualifying homestead; defined.  Qualifying 
 homestead property is defined as the dwelling occupied as the 
 homeowner's principal residence and so much of the land 
 surrounding it, not exceeding one acre, as is reasonably 
 necessary for use of the dwelling as a home and any other 
 property used for purposes of a homestead as defined in section 
 273.13, subdivisions 22 and 23.  The homestead may be part of a 
 multidwelling building and the land on which it is built. 

    HIST: 1997 c 231 art 14 s 6 

     290B.04 Application for deferral. 

    Subdivision 1.    Initial application.  A taxpayer 
 meeting the program qualifications under section 290B.03 may 
 apply to the commissioner of revenue for the deferral of taxes.  
 Applications are due on or before July 1 for deferral of any of 
 the following year's property taxes.  A taxpayer may apply in 
 the year in which the taxpayer becomes 65 years old, provided 
 that no deferral of property taxes will be made until the 
 calendar year after the taxpayer becomes 65 years old.  The 
 application, which shall be prescribed by the commissioner of 
 revenue, shall include the following items and any other 
 information which the commissioner deems necessary: 

    (1) the name, address, and social security number of the 
 owner or owners; 

    (2) a copy of the property tax statement for the current 
 payable year for the homesteaded property; 

    (3) the initial year of ownership and occupancy as a 
 homestead; 

    (4) the owner's household income for the previous calendar 
 year; and 

    (5) information on any mortgage loans or other amounts 
 secured by mortgages or other liens against the property, for 
 which purpose the commissioner may require the applicant to 
 provide a copy of the mortgage note, the mortgage, or a 
 statement of the balance owing on the mortgage loan provided by 
 the mortgage holder.  The commissioner may require the 
 appropriate documents in connection with obtaining and 
 confirming information on unpaid amounts secured by other liens. 

    The application must state that program participation is 
 voluntary.  The application must also state that the deferred 
 amount depends directly on the applicant's household income, and 
 that program participation includes authorization for the 
 deferred amount for each year and the cumulative deferral and 
 interest to appear on each year's property tax statement as 
 public data. 

    Subd. 2.    Approval; recording.  The commissioner shall 
 approve all initial applications that qualify under this chapter 
 and shall notify qualifying homeowners on or before December 1.  
 The commissioner may investigate the facts or require 
 confirmation in regard to an application.  The commissioner 
 shall record or file a notice of qualification for deferral, 
 including the names of the qualifying homeowners and a legal 
 description of the property, in the office of the county 
 recorder, or registrar of titles, whichever is applicable, in 
 the county where the qualifying property is located.  The notice 
 must state that it serves as a notice of lien and that it 
 includes deferrals under this section for future years.  The 
 homeowner shall pay the recording or filing fees. 

    Subd. 3.    Annual certification by taxpayer.  Annually 
 on or before July 1, a taxpayer whose initial application has 
 been approved under subdivision 2, shall complete the 
 certification form and return it to the commissioner of 
 revenue.  The certification must state whether or not the 
 taxpayer wishes to have property taxes deferred for the 
 following year provided the taxes exceed the maximum property 
 tax amount under section 290B.05.  If the taxpayer does wish to 
 have property taxes deferred, the certification must state the 
 homeowner's total household income for the previous calendar 
 year and any other information which the commissioner deems 
 necessary.  

    HIST: 1997 c 231 art 14 s 7 

     290B.05 Maximum property tax amount and deferred 
  property tax amount. 

    Subdivision 1.    Determination by commissioner.  The 
 commissioner shall annually determine the qualifying homeowner's 
 "maximum property tax amount" and "maximum allowable deferral."  
 The maximum property tax amount calculated for taxes payable in 
 the following year is equal to five percent of the homeowner's 
 total household income for the previous calendar year.  No tax 
 may be deferred for any homeowner whose total household income 
 for the previous year exceeds $30,000.  No tax shall be deferred 
 in any year in which the homeowner does not meet the program 
 qualifications in section 290B.03.  The maximum allowable total 
 deferral is equal to 75 percent of the assessor's estimated 
 market value for the year, less (1) the balance of any mortgage 
 loans and other amounts secured by liens against the property at 
 the time of application, including any unpaid special 
 assessments but not including property taxes payable during the 
 year; and (2) any outstanding deferral and interest.  

    Subd. 2.    Certification by commissioner.  On or before 
 December 1, the commissioner shall certify to the county auditor 
 of the county in which the qualifying homestead is located (1) 
 the maximum property tax amount; (2) the maximum allowable 
 deferral for the year; and (3) the cumulative deferral and 
 interest for all years preceding the next taxes payable year. 

    Subd. 3.    Calculation of deferred property tax amount. 
  When final property tax amounts for the following year have 
 been determined, the county auditor shall calculate the 
 "deferred property tax amount."  The deferred property tax 
 amount is equal to the lesser of (1) the maximum allowable 
 deferral for the year; or (2) the difference between the total 
 amount of property taxes levied upon the qualifying homestead by 
 all taxing jurisdictions and the maximum property tax amount.  
 Any special assessments levied by any local unit of government 
 must not be included in the total tax used to calculate the 
 deferred tax amount.  No deferral of the current year's property 
 taxes is allowed if there are any delinquent property taxes or 
 delinquent special assessments for any previous year.  Any tax 
 attributable to new improvements made to the property after the 
 initial application has been approved under section 290B.04, 
 subdivision 2, must be excluded when determining any subsequent 
 deferred property tax amount.  The county auditor shall 
 annually, on or before April 15, certify to the commissioner of 
 revenue the property tax deferral amounts determined under this 
 subdivision by property and by owner.  

    Subd. 4.    Limitation on total amount of deferred taxes. 
  On or before September 1 of each year, the commissioner shall 
 request, and each county or city assessor shall provide, the 
 current year's estimated market value of each property on the 
 list supplied by the commissioner that may be eligible for 
 deferral under this section for taxes payable in the following 
 year.  The total amount of deferred taxes and interest on a 
 property, when added to (1) the balance owing on any mortgages 
 on the property at the time of initial application; and (2) 
 other amounts secured by liens on the property at the time of 
 the initial application, may not exceed 75 percent of the 
 assessor's current estimated market value of the property. 

    HIST: 1997 c 231 art 14 s 8 

     290B.06 Property tax refunds. 

    For purposes of qualifying for the regular property tax 
 refund or the special refund for homeowners under chapter 290A, 
 the qualifying tax is the full amount of taxes, including the 
 deferred portion of the tax.  In any year in which a program 
 participant chooses to have property taxes deferred under this 
 section, any regular or special property tax refund awarded 
 based upon those property taxes must be taken first as a 
 deduction from the amount of the deferred tax for that year, and 
 second as a deduction against any outstanding deferral from 
 previous years, rather than as a cash payment to the homeowner.  
 The commissioner shall cancel any current year's deferral or 
 previous years' deferral and interest that is offset by the 
 property tax refunds.  If the total of the regular and the 
 special property tax refund amounts exceeds the sum of the 
 deferred tax for the current year and cumulative deferred tax 
 and interest for previous years, the commissioner shall then 
 remit the excess amount to the homeowner.  On or before the date 
 on which the commissioner issues property tax refunds, the 
 commissioner shall notify program participants of any reduction 
 in the deferred amount for the current and previous years 
 resulting from property tax refunds. 

    HIST: 1997 c 231 art 14 s 9 

     290B.07 Lien; deferred portion. 

    Payment by the state to the county treasurer of taxes 
 deferred under this section is deemed a loan from the state to 
 the program participant.  The commissioner must compute the 
 interest as provided in section 270.75, subdivision 5, but not 
 to exceed five percent, and maintain records of the total 
 deferred amount and interest for each participant.  Interest 
 shall accrue beginning September 1 of the payable year for which 
 the taxes are deferred.  The lien created under section 272.31 
 continues to secure payment by the taxpayer, or by the 
 taxpayer's successors or assigns, of the amount deferred, 
 including interest, with respect to all years for which amounts 
 are deferred.  The lien for deferred taxes and interest has the 
 same priority as any other lien under section 272.31, except 
 that liens, including mortgages, recorded or filed prior to the 
 recording or filing of the notice under section 290B.04, 
 subdivision 2, have priority over the lien for deferred taxes 
 and interest.  A seller's interest in a contract for deed, in 
 which a qualifying homeowner is the purchaser or an assignee of 
 the purchaser, has priority over deferred taxes and interest on 
 deferred taxes, regardless of whether the contract for deed is 
 recorded or filed.  The lien for deferred taxes and interest for 
 future years has the same priority as the lien for deferred 
 taxes and interest for the first year, which is always higher in 
 priority than any mortgages or other liens filed, recorded, or 
 created after the notice recorded or filed under section 
 290B.04, subdivision 2.  The county treasurer or auditor shall 
 maintain records of the deferred portion and shall list the 
 amount of deferred taxes for the year and the cumulative 
 deferral and interest for all previous years as a lien against 
 the property on the property tax statement.  In any 
 certification of unpaid taxes for a tax parcel, the county 
 auditor shall clearly distinguish between taxes payable in the 
 current year, deferred taxes and interest, and delinquent 
 taxes.  Payment of the deferred portion becomes due and owing at 
 the time specified in section 290B.08.  Upon receipt of the 
 payment, the commissioner shall issue a receipt for it to the 
 person making the payment upon request and shall notify the 
 auditor of the county in which the parcel is located, within ten 
 days, identifying the parcel to which the payment applies.  Upon 
 receipt by the commissioner of revenue of collected funds in the 
 amount of the deferral, the state's loan to the program 
 participant is deemed paid in full. 

    HIST: 1997 c 231 art 14 s 10 

     290B.08 Termination of deferral; payment of deferred 
  taxes. 

    Subdivision 1.    Termination.  (a) The deferral of 
 taxes granted under this chapter terminates when one of the 
 following occurs: 

    (1) the property is sold or transferred; 

    (2) the death of the qualifying homeowner(s); 

    (3) the homeowner notifies the commissioner in writing that 
 the homeowner desires to discontinue the deferral; or 

    (4) the property no longer qualifies as a homestead. 

    (b) A property is not terminated from the program because 
 no deferred property tax amount is determined on the homestead 
 for any given year after the homestead's initial enrollment into 
 the program. 

    Subd. 2.    Payment upon termination.  Upon the 
 termination of the deferral under subdivision 1, the amount of 
 deferred taxes and interest plus the recording or filing fees 
 under both section 290B.04, subdivision 2, and this subdivision 
 becomes due and payable to the commissioner within 90 days of 
 termination of the deferral.  No additional interest is due on 
 the deferral if timely paid.  On receipt of payment, the 
 commissioner shall within ten days notify the auditor of the 
 county in which the parcel is located, identifying the parcel to 
 which the payment applies and shall remit the recording or 
 filing fees under section 290B.04, subdivision 2, and this 
 subdivision to the auditor.  A notice of termination of 
 deferral, containing the legal description and the recording or 
 filing data for the notice of qualification for deferral under 
 section 290B.04, subdivision 2, shall be prepared and recorded 
 or filed by the county auditor in the same office in which the 
 notice of qualification for deferral under section 290B.04, 
 subdivision 2, was recorded or filed, and the county auditor 
 shall mail a copy of the notice of termination to the property 
 owner.  The property owner shall pay the recording or filing 
 fees.  Upon recording or filing of the notice of termination of 
 deferral, the notice of qualification for deferral under section 
 290B.04, subdivision 2, and the lien created by it are 
 discharged.  If the deferral is not timely paid, the penalty, 
 interest, lien, forfeiture, and other rules for the collection 
 of ad valorem property taxes apply. 

    HIST: 1997 c 231 art 14 s 11 

     290B.09 State reimbursement. 

    Subdivision 1.    Determination; payment.  The 
 commissioner of revenue shall determine the deferred amount of 
 property tax in each county, basing determinations on a review 
 of abstracts of tax lists submitted by the county auditors under 
 section 275.29.  The commissioner may make changes in the 
 abstracts of tax lists as deemed necessary.  The commissioner of 
 revenue, after such review, shall pay the deferred amount of 
 property tax to each county treasurer on or before August 31.  

    At least once each year, the commissioner shall report to 
 the county auditor the total cumulative amount of deferred taxes 
 and interest that constitute a lien against the property.  

    The county treasurer shall distribute as part of the 
 October settlement the funds received as if they had been 
 collected as a part of the property tax. 

    Subd. 2.    Appropriation.  An amount sufficient to pay 
 the total amount of property tax determined under subdivision 1 
 is annually appropriated from the general fund to the 
 commissioner of revenue. 

    HIST: 1997 c 231 art 14 s 12