What is the property tax rate in Minnesota?
The property tax rate in Minnesota averages 1.00% of market value for owner-occupied homes (Tax Foundation 2026, using the 2024 American Community Survey). That puts Minnesota among the higher-tax states, though still well below Illinois or New Jersey.
For an apartment owner, that headline number understates the bill. Minnesota taxes property by class, and a rental building is taxed at a 1.25% class rate on its full estimated market value, with none of the treatment reserved for owner-occupied homesteads. The House Research Department’s March 2026 simulation puts the effective tax rate on regular apartments at 1.62% of market value for taxes payable in 2025 and 1.69% for taxes payable in 2026, statewide.
How Minnesota property tax is calculated
A Minnesota tax bill starts with the assessor’s estimated market value, converts it to net tax capacity with a class rate, and then applies the local tax rate. The class rates are set in state law, Minn. Stat. 273.13. Local governments set their levies, and the tax rate is whatever it takes to raise those levies from the tax base.
- Estimated market value: set by the county or city assessor as of January 2 each year.
- Net tax capacity: market value times the class rate. For class 4a apartments (four or more units), the class rate is 1.25%, so a $2,000,000 building has $25,000 of net tax capacity.
- Local tax rate: stated as a percentage of net tax capacity. The statewide total local rate was 96.76% for taxes payable in 2026 in the House Research simulation.
- Referendum market value levies: voter-approved school and other levies charged on market value rather than tax capacity, which is part of why apartment effective rates run higher than tax capacity times the local rate.
Minnesota class rates for rental property
Minnesota taxes most rental housing at a 1.25% class rate, and qualifying low-income units at 0.25%. The table shows the classes an apartment owner deals with.
| Class | What it covers | Class rate |
|---|---|---|
| 4a | Residential rental with four or more units | 1.25% |
| 4b | Residential rental with fewer than four units | 1.25% |
| 4bb | Nonhomestead single-unit residential | Same as class 1a homestead rates |
| 4d(1) | Qualifying low-income rental units certified by Minnesota Housing | 0.25% |
Does a sale trigger reassessment in Minnesota?
No. Minnesota has no rule that resets value when a building sells, because every property is already valued at estimated market value each year. Each parcel must also be physically reappraised at least once every five years under Minn. Stat. 273.01.
That means the sale itself does not change the tax, but the price can. Assessors build their market values from sales, and a building that sells well above its estimated market value tells the assessor something about that building and its comparables. A buyer should assume the next January 2 value will move toward the price paid, especially if the current value lags the market.
Is there a cap on property tax increases in Minnesota?
No. Minnesota has no limit on how fast an apartment building’s taxable value can rise. Limited market value, which once slowed increases for residential property, was phased out, and all property has been valued at full estimated market value since assessment year 2009, according to the House Research Department.
Bills can also rise when local levies go up even if your value is flat. In the House Research simulation, the statewide total local tax rate rose from 93.65% of net tax capacity for taxes payable in 2025 to 96.76% for 2026, and in the metro from 104.40% to 108.91%. A higher rate on the same tax capacity means a higher bill.
Minnesota apartment property tax rates by region
Apartment effective rates are a little higher in the Twin Cities metro than in Greater Minnesota, and the gap widened for taxes payable in 2026. The figures below are from the House Research Department’s simulation 26A1, dated March 31, 2026.
Rates inside each region vary widely by city and school district, so a Minneapolis building and one in an outer-ring suburb can carry different bills at the same value. County-by-county apartment rates were not available from an official source for this page; your county’s tax statement and the assessor’s office are the best place to get your own figure.
| Area | Apartment effective rate, payable 2025 | Apartment effective rate, payable 2026 | Total local tax rate, payable 2026 |
|---|---|---|---|
| Statewide | 1.62% | 1.69% | 96.76% of net tax capacity |
| Twin Cities metro | 1.62% | 1.70% | 108.91% of net tax capacity |
| Greater Minnesota | 1.60% | 1.63% | 84.19% of net tax capacity |
How to appeal your property value in Minnesota
Start with the assessor, then the local and county boards, and you have until April 30 of the following year to go to the Minnesota Tax Court. Your valuation notice shows the value and class that will be used for the next year’s taxes and lists local meeting dates.
- Informal review: call the county assessor. The Department of Revenue says most questions are resolved this way.
- Local Board of Appeal and Equalization: meetings between April 1 and May 31. Some cities and towns transfer this role to the county and hold open book meetings instead.
- County Board of Appeal and Equalization: meetings in June. You generally must go through the local board first.
- Minnesota Tax Court: you can file directly or after the county board, but you must appeal by April 30 of the following year.
Property tax exemptions for Minnesota apartments
The main tax break for apartments is class 4d(1), which cuts the class rate on qualifying low-income units to 0.25% from 1.25%. That is an 80% reduction in net tax capacity on those units.
To qualify under Minn. Stat. 273.128, at least 20% of a building’s units must be covered by Section 8 contracts, housing tax credits, USDA rental assistance or recorded rent and income limits at 60% of the greater of area or state median income. The owner applies to Minnesota Housing by March 31 of the levy year and must use the tax savings for maintenance, security, improvements, rent stabilization or reserves. Since assessment year 2024, a building new to the program generally needs a resolution from its city or town first.
Ask the assessor whether a 4d(1) classification will carry over to a buyer, and make sure the annual recertification is current before closing.
Effective rate or your own bill: which to use
Use your own tax statement for your building, and the 1.00% Tax Foundation figure only to compare Minnesota with other states. The Tax Foundation number divides median taxes paid by median home value for owner-occupied homes, so it says nothing about a 1.25% class rate rental. Even the House Research apartment figure of 1.69% is an average across very different cities and school districts.
Two buildings with the same rent roll can carry different bills in Minnesota for ordinary reasons: one sits in a school district with a large voter-approved market value levy, the other has some units certified as 4d(1), or the assessor simply has one valued closer to market than the other. A buyer will read your statement line by line, so you should too.
What to check on your statement before you sell
Your valuation notice and tax statement already answer most of what a buyer will ask.
- Estimated market value and taxable market value for the current and prior year.
- The classification of each part of the building, including any 4d(1) units and when they were certified.
- Referendum market value levies, which can change when voters approve new school levies.
- Special assessments for streets, sewer or other local projects, and whether any are still being paid off.
- Any pending appeal at the county board or the Tax Court, and the April 30 deadline for the current year.
Worked example: property tax on a $2M Minnesota apartment building
These figures illustrate the method using statewide averages.
Take a 24-unit building with an estimated market value of $2,000,000. At the House Research statewide apartment effective rate of 1.69% for 2026, the yearly tax is about $33,800. In the Twin Cities metro at 1.70% it is about $34,000, and in Greater Minnesota at 1.63% about $32,600. Most of that comes from $25,000 of net tax capacity (1.25% of $2,000,000) at the 96.76% statewide local rate, about $24,190, with the rest from market value levies.
Now the sale. Suppose the assessor had the building at $1,800,000, for a tax of about $30,420, and it sells for $2,000,000. If the next valuation moves to the price, the buyer’s tax rises by about $3,380 a year. At an illustrative 6% cap rate, that much extra expense takes about $56,333 off what a buyer can pay.
If 20% of the units qualified for 4d(1) and that classification applied to those units, their share of net tax capacity would fall by four-fifths. Ask the county how it splits a mixed building before you count on the savings.
| Scenario | Market value | Yearly tax |
|---|---|---|
| Statewide apartment rate, 1.69% | $2,000,000 | $33,800 |
| Twin Cities metro, 1.70% | $2,000,000 | $34,000 |
| Greater Minnesota, 1.63% | $2,000,000 | $32,600 |
| Before sale, valued below price | $1,800,000 | $30,420 |
| After value moves to price | $2,000,000 | $33,800 |
Selling an apartment building in Minnesota
Skyline buys apartment buildings with five or more units in Minnesota, including buildings in Hennepin and Ramsey counties and across Greater Minnesota. We buy directly, close on your timeline, and can work inside 1031 deadlines. We underwrite from your actual tax statements and valuation notices, so a 4d(1) classification or a recent successful appeal shows up in what we can pay.
For the tax on the sale itself, see Minnesota capital gains tax on real estate. For St. Paul’s rent cap and the rules a buyer inherits with your tenants, see Minnesota landlord-tenant law for apartment owners.
