4.4 Taxes & Closing Requirements
Key Takeaways
- Minnesota state deed tax is 0.33% ($3.30 per $1,000) of net consideration, customarily paid by the seller (Minn. Stat. ch. 287)
- Mortgage Registry Tax is 0.23% ($2.30 per $1,000) of the debt secured, customarily paid by the buyer/borrower at recording
- Hennepin and Ramsey counties add a 0.0001 Environmental Response Fund (ERF) tax ($0.10 per $1,000) to both deed and mortgage tax
- Property taxes are paid in the year they are levied (current-year billing), due in two installments on May 15 and October 15
- An eCRV (electronic Certificate of Real Estate Value) is required to record deeds over $3,000, and a Well Disclosure Certificate is required when the property has a well
State Deed Tax (Minn. Stat. ch. 287)
Minnesota levies a deed tax on the transfer of real property at 0.33% of net consideration, equal to $3.30 per $1,000. It is customarily paid by the seller and collected when the deed is recorded. Deeds for consideration under $3,000 are exempt from the tax (a flat minimum may still apply at the county).
| Sale Price (net consideration) | State Deed Tax @ 0.33% |
|---|---|
| $200,000 | $660 |
| $350,000 | $1,155 |
| $500,000 | $1,650 |
Net consideration is the price actually paid for the real property. Excluded from the base: the value of any mortgage or lien the buyer assumes, and personal property sold separately.
Worked example: A home sells for $300,000, but the buyer assumes an existing $120,000 mortgage. Deed tax applies to the net cash consideration. If the full $300,000 is consideration for the real property, the deed tax is $300,000 × 0.0033 = $990.
County ERF Surcharge
In Hennepin and Ramsey counties only, an Environmental Response Fund (ERF) tax of 0.0001 ($0.10 per $1,000) is added to both the deed tax and the mortgage registry tax. On a $300,000 deed, that is an extra $30 in those two counties.
Mortgage Registry Tax (MRT)
When a mortgage is recorded, Minnesota imposes a Mortgage Registry Tax of 0.23% ($2.30 per $1,000) of the debt secured, customarily paid by the buyer/borrower.
| Mortgage Amount | MRT @ 0.23% |
|---|---|
| $200,000 | $460 |
| $300,000 | $690 |
| $400,000 | $920 |
Exam trap: Don't swap the two rates. Deed tax = 0.33% on the sale price; MRT = 0.23% on the loan amount. A cash purchase pays deed tax but no MRT because there is no mortgage to record.
Property Taxes — Timing and Proration
Minnesota property tax runs on a calendar cycle. Property is assessed as of January 2, and the resulting tax is billed and due the same year in two installments: May 15 and October 15 (the second half for certain agricultural and qualifying homestead property may be October 15 or November 15). Because the bill is paid during the year it covers (rather than the year after), exam questions describe Minnesota as a current-year payment state — a contrast some students mislabel; the operative facts to memorize are the May 15 / October 15 due dates.
Proration at closing: taxes are split between seller and buyer based on the closing date. The seller is responsible for taxes covering the portion of the year they owned the property; that share is typically a credit to the buyer on the settlement statement so the buyer can pay the full bill when due.
| Property Tax Item | Minnesota Rule |
|---|---|
| Assessment date | January 2 |
| First installment due | May 15 |
| Second installment due | October 15 |
| Proration | Split at closing by days of ownership |
Common tax relief programs: the homestead classification (lower rate for owner-occupants), the homestead credit refund and special property tax refund for income-qualified owners, and Green Acres for qualifying agricultural land.
Required Closing & Recording Documents
| Document | Purpose |
|---|---|
| Deed | Transfers title; deed tax paid to record |
| eCRV (electronic Certificate of Real Estate Value) | Required to record deeds for transfers over $3,000; reports sale data to the state |
| Well Disclosure Certificate | Required when the property has a well; discloses each well's location and status to the county recorder under Minnesota Department of Health (MDH) rules |
| Septic/subsurface compliance | Where local rules require an SSTS disclosure |
Well disclosure trap: the seller must disclose the number, location, and status of all wells. If the property has no wells, the seller still states that fact — usually on the deed itself — rather than filing a separate certificate. Recording staff will reject a deed that omits the required well statement, stalling the closing.
Putting the Numbers Together at the Closing Table
Expect a math item that combines both transfer taxes. Treat them as two independent calculations: deed tax on the price, mortgage registry tax on the loan. Consider a $250,000 sale with a $200,000 mortgage in a county with no ERF surcharge. The seller's deed tax is $250,000 x 0.0033 = $825. The buyer's mortgage registry tax is $200,000 x 0.0023 = $460. If that same transaction closed in Hennepin or Ramsey county, add the 0.0001 ERF tax to each: deed tax $825 + $25 = $850, and MRT $460 + $20 = $480.
Knowing who customarily pays which tax (seller pays deed tax, buyer pays MRT) lets you place each figure on the correct side of the settlement statement.
A few additional closing traps round out this section. A purely cash buyer records no mortgage, so there is no mortgage registry tax at all — only deed tax applies. The eCRV is filed electronically and is the modern replacement for the old paper Certificate of Real Estate Value; it is required for taxable transfers over $3,000, the same threshold below which the deed tax itself does not apply.
Finally, remember that property taxes are separate from transfer taxes: transfer taxes are one-time charges triggered by the sale and recording, while property taxes are the recurring annual levy prorated between the parties at closing. Confusing the recurring property-tax due dates (May 15 / October 15) with the one-time transfer-tax rates (0.33% / 0.23%) is the single most common error students make on this material.
A Minnesota home sells for $400,000 with the buyer financing $320,000. What is the state deed tax (ignoring any county surcharge)?
When are Minnesota property taxes due each year?
Which document must be recorded to disclose the location and status of any wells on a property at a Minnesota closing?
You've completed this section
Continue exploring other exams