Minnesota property tax refunds go to homeowners and renters who paid more than they owed, or who meet income limits for specific relief programs

Minnesota has two main paths to a property tax refund. The first is the Property Tax Refund, which goes to homeowners and renters whose property taxes or rent exceeded a percentage of their household income. The second is the Homestead Property Tax Credit, a separate program for lower-income homeowners. You cannot receive both in the same year, so you will need to determine which one benefits you more.

Both programs are administered by the Minnesota Department of Revenue. You claim them on your state income tax return, not through a separate application. If you do not file taxes, you can still claim these refunds by filing a return even if you have no income to report.

Key Takeaways

  • The Property Tax Refund is available to homeowners and renters in Minnesota whose property taxes or rent exceeded a set percentage of household income, with no income limit.
  • The Homestead Property Tax Credit is for homeowners only, requires a household income below a certain threshold (which changes yearly), and provides a larger benefit for lower-income households.
  • Both programs are claimed on your Minnesota state income tax return, not through a separate application process.
  • You must have lived in Minnesota for the entire year and owned or rented your home for at least four months of that year to be may be able to access for either program.
  • If you do not file taxes normally, you can still file a return to claim these refunds even if you have no income.

Property Tax Refund: income-based relief for homeowners and renters

The Property Tax Refund is available to both homeowners and renters. For homeowners, the refund applies when your property taxes exceed 1.1 percent of your household income. For renters, it applies when your rent exceeds 0.86 percent of your household income (the program assumes 20 percent of rent goes toward property taxes).

There is no income limit for this program. A household earning $200,000 per year can receive a refund if their property taxes or rent exceed the threshold. The refund amount depends on how much your taxes or rent exceeded the percentage, and it is calculated on your state income tax return.

You must have owned or rented your home for at least four months during the year you are claiming the refund. If you moved mid-year, you can still claim based on the months you lived there. You also must have been a Minnesota resident for the entire year.

Homestead Property Tax Credit: for lower-income homeowners only

The Homestead Property Tax Credit is a separate program available only to homeowners, not renters. It provides a larger benefit than the Property Tax Refund for households below a certain income threshold. The income limit changes each year; for 2023 tax year returns, the limit was approximately $48,000 for a single person and higher for families.

To receive this credit, you must own and occupy your home as your primary residence. You cannot claim it if you own rental property or a second home. Like the Property Tax Refund, you must have owned your home for at least four months of the year and been a Minnesota resident for the entire year.

The credit amount is based on your household income and your property tax amount. Lower-income households receive a larger credit. You cannot claim both the Property Tax Refund and the Homestead Property Tax Credit in the same year, so compare the two on your return to see which gives you more money back.

How to claim your refund on your Minnesota tax return

Both refunds are claimed on your Minnesota state income tax return using Form M1-PR (Property Tax Refund) or Form M1-HC (Homestead Property Tax Credit). You do not submit a separate application to the Department of Revenue.

If you file your return electronically, the forms are included in tax software. If you file by paper, you can download the forms from the Minnesota Department of Revenue website or request them by mail. You will need your property tax statement (for homeowners) or lease and rent receipts (for renters), plus your household income information.

File your return by the normal tax deadline, typically April 15. The Department of Revenue will process your return and send any refund to you by mail or direct deposit, depending on how you filed. Processing times vary, but most refunds are issued within a few weeks to a few months after your return is received and processed.

What counts as household income for these programs

Household income includes wages, self-employment income, Social Security benefits, unemployment benefits, pension income, and most other sources of income. It does not include certain items like some disability payments or workers' compensation in specific situations.

If you are married and file jointly, both spouses' income counts toward the household total. If you have dependents, their income also counts if they are required to file a return. The exact definition of household income is detailed in the instructions that come with the forms.

If you do not normally file taxes

You can still claim a property tax refund or homestead credit even if you have no income or do not normally file taxes. You will need to file a Minnesota state income tax return to claim the refund, even if your only income is Social Security or other non-taxable sources.

File the return by the normal deadline. If you have questions about whether you need to file, contact the Minnesota Department of Revenue at 651-296-3781 or visit their website. They can tell you whether filing will result in a refund for you.

Frequently Asked Questions

Can I claim a property tax refund if I own my home with someone else?

Yes. If you own the home jointly with a spouse, you file one return together and claim the refund based on your combined household income and property taxes. If you own it with someone who is not your spouse, you each file separately and claim based on your individual income and your share of the property taxes.

What if I moved to Minnesota partway through the year?

You must have been a Minnesota resident for the entire year to claim either refund. If you moved to Minnesota in June, you cannot claim a refund for that year, but you can claim one the following year if you meet all other requirements.

Do I need to report the refund as income next year?

No. Property tax refunds and homestead credits are not taxable income. You do not report them on your federal or state return the following year.

What if I paid property taxes to a different state but now live in Minnesota?

You can only claim the Minnesota refund on property taxes paid to Minnesota on your Minnesota home. If you own property in another state, you would need to look into that state's property tax relief programs separately.

Can I claim a refund for a year I already filed?

Yes. If you filed a return without claiming the refund, you can file an amended return (Form M1-X) within three years to claim it. Contact the Department of Revenue for help with the amended return process.