How the Senior Citizen Property Tax Deferral works

The MN Senior Citizen Property Tax Deferral allows you to always pay the same reduced amount toward your property taxes each year.  The amount that you are responsible for paying is equal to 3 percent of your income the year before you enter the program.  The remaining amount is deferred as a loan against your home.

Your annual MN property tax refund and MN income tax refund are applied directly to your loan, reducing your total loan balance.  Just like any other loan, interest is charged on the balance of the loan; however the annual interest rate will never exceed 5 percent.

Example

To illustrate how the program works, let’s suppose that John has a property tax of $2,500 and an income of $15,000.  Under the Property Tax Deferral Program John would be responsible for paying $450 -- 3 percent.  The remaining tax ($2,050) would be deferred.

John’s income of $15,000 qualifies him to receive a MN Property Tax Refund of $1,540. This amount is applied to the deferred tax and decreases the amount of the loan.

 

Property Tax	$2,500
John pays	$450
Deferred amount	$2,050
John's property tax refund	$1,540
Adjusted Deferred amount*	$510

*Based on 2006 MN Property Tax Refund information; assumes no dependents.
*Does not factor in MN income tax refund, political contribution refunds or lottery winnings.

Because of the application of John’s MN Property Tax Refund to the deferred amount, John’s loan is greatly reduced.

FAQ's

What is the MN Property Tax Refund?

What refunds are used to reduce the total loan balance?

Do I have to make monthly payments towards my total loan balance?

What has been the annual interest rate historically?

Who gives the loan?