Low-Income Rental Classification (LIRC)
Minnesota Statutes 273.128 provides that qualifying low-income rental properties are eligible for a property use classification that has a lower tax class rate thereby reducing the property tax obligation for a qualifying property. The LIRC statute specifies the type of properties that are eligible and requirements to receive the reduced tax class rate.
The 2023 legislative session included a number of changes to the LIRC program, including lowering the tax class rate for eligible properties, requirements to expend the additional property tax savings on certain eligible expenses, and new qualifying criteria for initial applications to LIRC.
Refer to the LIRC Program Guide for complete program details.
Qualifying Properties are at least 20% of total units in the rental property must meet one or more of the following criteria:
- Project Based Section 8,
- Low Income Housing Tax Credits,
- Rental Assistance units financed through Rural Housing Service of USDA,
- Rent and income restrictions at or below 60% Area Median Income placed on units by state, federal, or local unit of government as evidenced by a document recorded against the property.
For qualifying properties, the eligible units use the 4d(1) tax class rate of .25%. The lower tax class rate applies only to that portion of the rental property meeting all eligibility criteria. The regular rental class rate of 1.25% will apply to the remainder of the property. Market value determined by the assessor must be based on the standard approach to valuation using unrestricted market rents.
It is the responsibility of the owner to inform Minnesota Housing of any changes throughout the year. Failure to do so may result in missed communication or the loss of classification.