Wetland taxation

What wetlands are exempt from tax?

Wetlands exempt from tax are identified in Minnesota Statutes, section 272.02, subdivision 11. Exempt wetlands include:

  1. land described in section 103G.005, subdivision 15a

    These are wetlands inventoried as Public Waters Wetlands and shown on Public Waters Inventory (PWI) maps. These maps are available at the county offices of the Soil and Water Conservation District and auditor, and at local DNR offices. The maps may also be viewed on the DNR Web site.

  2. land which is mostly under water, produces little if any income, and has no use except for wildlife or water conservation purposes, provided it is preserved in its natural condition and drainage of it would be legal, feasible and economically practical for the production of livestock, dairy animals, poultry, fruit, vegetables, forage and grains, except wild rice
     
  3. land in a wetland preservation area under sections 103F.612 to 103F.616.

"Wetlands" under items (i) and (ii) include adjacent land which is not suitable for agricultural purposes due to the presence of wetlands, but do not include woody swamps containing shrubs or trees, wet meadows, meandered water, streams, rivers, and floodplains or river bottoms. Exemption of wetlands from taxation pursuant to this section shall not grant the public any additional or greater right of access to the wetlands or diminish any right of ownership to the wetlands.

How are areas exempt from tax?

The county assessor is to identify and exempt qualifying areas identified in items (i) and (ii) above. No landowner application is required by statute for these exemptions. Land in a wetland preservation area requires a landowner application and county action. More information is available from the Board of Water and Soil Resources.

How can I determine if wetland acreage I own is exempt from tax?

You will not be able to determine from your real estate tax statement how the acreage in a specific land parcel is identified for tax purposes. For this determination, you should contact the county assessor's office and ask how the acreage is identified. Lots within a registered subdivision will generally be ineligible for the wetland tax exemption program, but larger acreage may be eligible. Wooded or shrubby wetlands are not eligible for the first and second wetland tax exemption categories, but may be eligible in a wetland preservation area.

What about wetlands previously enrolled in the wetland tax credit program?

The wetland tax credit program was eliminated in 1987, but wetlands previously subject to a wetland tax credit should continue to be exempt from tax, provided they remain in a natural wetland condition. The elimination of the wetland tax credit program did impact the wetland tax exemption program for wetlands identified in Minnesota Statutes, section 272.02, subdivision 11, items (i) and (ii) as the law change also removed the reimbursement procedure language that reimbursed the counties for tax revenue foregone for both the tax credit and tax exemption programs. This change made it less likely for the counties to expand the use of the wetland tax exemption as the tax revenue exempted would have to be made up from the upland areas of the county.

What happens when parcels containing exempt wetlands change owners?

The exemption should remain in effect as long as the wetland meets the requirements set forth in the statute. No application by the new landowner is required.

Can new requests for wetland tax exemption be processed?

Landowners may request exemption, at any time, for parcels they feel meet the requirements set forth in the statute. Landowners are encouraged to view or determine the tax record information for the parcels in question before contemplating the review procedures available through the County Board of Review.

If you feel that you have a qualifying wetland that is not identified in the county tax records, you should take in some photos of the wetland(s), and preferably obtain a copy of the aerial photo of land that you should be able to obtain from the Soil and Water Conservation District office or Farm Service Agency office serving that area. These offices are usually located in the same community as the county courthouse. A copy of this photo annotated with an outline of property boundary, an outline of what may be qualifying wetland and some points and arrows showing where accompanying on-the-ground photos are taken from is very useful information to help determine whether the wetlands qualify for possible tax exemption.

This information should be discussed at the county tax assessor office, preferably in person. Depending on what adjustments, if any, that take place, the landowner also has the opportunity to bring this information to their local board of adjustment, as noted in the information with the tax statement. To apply for tax exemption through the Wetland Preservation Area Program, see the information in How are areas exempt from tax?

How are restored wetlands valued for tax purposes?

Lands formerly in pasture or cropland that have been restored to wetlands are to be valued according to Minnesota Statutes, section 273.11, subdivision 11:

Subd. 11. Valuation of restored or preserved wetland. Wetlands restored by the federal, state or local government, or by a nonprofit organization, or preserved under the terms of a temporary or permanent easement by the federal or state government, must be valued by assessors at fair market value. "Wetland value" in this subdivision means the market value of wetlands in any potential use in which the wetland character is not permanently altered. Wetland value shall not reflect potential uses of the wetland that would violate the terms of any existing conservation easement, or any one-time payment received by the wetland owner under the terms of a state or federal conservation easement. Wetland value shall reflect any potential income consistent with a property's wetland character, including but not limited to lease payments for hunting or other recreational uses. The commissioner of revenue shall issue a bulletin advising assessors of the provisions of this section by October 1, 1991.

For purposes of this subdivision, "wetlands" means lands transitional between terrestrial and aquatic systems where the water table is usually at or near the surface of the land is covered by shallow water. For purposes of this definition, wetlands must have the following three attributes:

  1. have a predominance of hydric soils;
  2. are inundated or saturated by surface or ground water at a frequency and duration sufficient to support a prevalence of hydrophytic vegetation typically adapted for life in saturated soil conditions; and
  3. under normal circumstances support a prevalence of such vegetation.