If you’re considering buying land in Minnesota—whether for building a home, investing, or securing a future homestead—there’s good news on the tax front coming soon. Beginning January 1, 2025, Minnesota is increasing its homestead property exclusion, a change that could lower your property tax bill if you qualify.
What Is the Homestead Property Exclusion?
Minnesota’s homestead property exclusion is a tax break designed to reduce the taxable market value of your primary residence (your homestead). Rather than taxing the entire market value of your home, the state allows a portion of that value to be excluded when calculating property taxes—lowering what you owe.
Important Changes Taking Effect in 2025
Starting January 1, 2025, Minnesota will raise the maximum homestead property exclusion by $7,600, bringing the total to $38,000.
Here’s how the exclusion works:
The exclusion applies to homesteads valued at $95,000 or less.
Eligible homeowners can exclude 40% of their property’s market value—up to a maximum of $38,000.
Example:If you purchase or build a home valued at $95,000 or below, 40% of that value (up to $38,000) will be excluded from your taxable market value for property tax purposes. This means more tax savings compared to previous years.
Why This Matters for Land Buyers
Whether you’re buying land to:
Build your primary residence,
Relocate from out of state,
Or invest with future development in mind,
this change can affect your long-term tax planning.
Lower Taxable Value: A higher exclusion means your property’s taxable value will be reduced more than before once your land becomes a homestead.
Improved Affordability: If your land purchase leads to building within the $95,000 threshold, you will benefit from a larger exclusion and potentially lower ongoing property taxes.
Budget Planning: Understanding this change helps you forecast longstanding financial obligations tied to your land purchase.
Who Qualifies?
To take advantage of this exclusion:
The property must be your homestead, meaning your primary residence.
The market value must be $95,000 or less.
You must meet state requirements for homestead classification (typically occupancy and residency tests).
If you’re buying land but planning to build later, keep this in mind as you finalize your timeline and finances.
Final Thoughts
Minnesota’s decision to increase the homestead property exclusion starting in 2025 is welcome news for buyers planning to make the state their home. By allowing up to $38,000 of your property’s market value to be excluded from taxation, Minnesota is making homeownership and land investment slightly more affordable—especially for lower- and middle-income buyers.
If you’re planning a move or a land purchase in Minnesota, talk with your real estate agent or tax professional about how this exclusion will affect your property tax outlook. With proper planning, this change could be a meaningful advantage as you make Minnesota your home.