Minnesota Cabin and VRBO Owners May See Property Reclassification

Minnesota Cabin and VRBO Owners May See Property Reclassification Click to Enlarge

Some Minnesota cabin and vacation property owners will receive letters this month posing questions that could carry substantial tax ramifications, which could bump their land into a pricier commercial classification. Assessors in Becker and Otter Tail Counties are required to mail out surveys to property owners.

Under penalty of law for making erroneous statements, property owners are asked to list the number of days they personally stay at a property and the number of nights other people rent it for brief getaways.

Revenue Commissioner Cynthia Bauerly said the memo was not an order, but was intended to provide stability across the state. Bauerly noted local assessors classify individual parcels for property tax purposes.

Otter Tail County officials have sent out a survey and have cautioned that failure to respond by year’s end would result in a commercial classification.

The state's tax agency's guidance is response to queries the Department of Revenue has received amid the flourish of lodging services such as VRBO, Airbnb and others. The agency has advised assessors on methods to classify properties considered short-term rentals — those that are rented for less than 30 straight days.

The Minnesota Association of Assessing Officers expects state legislators to take up the issue in 2020.

Statewide, there are about 111,000 parcels valued at $10,000 or more that are classified as seasonal recreational. Bauerly believes a small fraction face classification changes, but notes it is too soon to conclude.

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