Purpose

• To modify how tax-exempt property that isleased for at least one year is treated for personal property taxation in Minnesota.

What the bill would do

• Adds a new rule to Minnesota’s property tax rulebook: when tax-exempt property (as defined in existing law) is held under a lease for at least one year and is not taxable under certain existing exemptions, that property will be treated for all tax purposes as if the leaseholder (the person or entity holding the property) is the owner.
• This applies to property that is not taxable under section 272.01 subdivision 2 or under a contract for the purchase of the property.
• The new rule does not apply to certain types of exemptions described in other parts of the law (specifically, it excludes applications covered by subdivision 1b or subdivision 4).

Main provisions and mechanisms

• The bill amends Minnesota Statutes 2024 section 273.19 subdivision 1 by adding a subdivision labeled as tax-exempt property lease.
• Key condition: the lease must be for a term of at least one year.
• Outcome: the leaseholder is treated as the property “owner” for purposes of taxation, even though the property is tax-exempt and typically owned by a government, school, religious or benevolent organization, or similar exempt entity.
• Exclusions: cannot apply to property exempt under section 272.01 subdivision 2 paragraph b clauses 2 and 3 and 4, or to property exempt under section 272.02? (the text references 272.0213.1 and 272.01 subdivision 2, with other specific exceptions). Subdivisions 1b and 4 contain other carve-outs.

Significant changes to existing law

• Shifts, for certain long-term leases of tax-exempt property, the taxation perspective from the owner of the property (often an exempt entity) to the leaseholder for all tax purposes.
• Creates a formal rule to treat the lessee as the owner for tax purposes when the above conditions are met, which could affect how taxes are assessed or administered in practice.
• Adds a new subdivision to the existing section 273.19, while preserving specified exemptions and carve-outs (notably those in subdivisions 1b and 4).

Practical implications (high level)

• Tenants leasing tax-exempt property for at least a year could be considered the responsible party for tax purposes under the new rule, altering how such leases are treated in the personal property tax system.
• Some leases or properties remain governed by existing exemptions, so they would not be affected by this change.

Notes on scope

• The changes apply specifically to personal property taxation and only to tax-exempt property held under a lease meeting the duration and exemption criteria described.

Relevant Terms - tax-exempt property - lease - term of at least one year - personal property taxation - Minnesota Statutes 2024 section 273.19 subdivision 1 - subdivision 1b - subdivision 4 - property owner vs. lessee (holder) - not taxable under section 272.01 subdivision 2 - contract for the purchase thereof - exemption sections (272.01, 272.0213.1)