Property Tax is a recurring levy imposed by local governments on property owners, based on the value of their real estate. Typically, property taxes are collected locally and fund local community services such as schools, roads, law enforcement and fire departments. In the state of North Dakota, property tax is broken out into three primary categories: Locally Assessed, Centrally Assessed and In Lieu of Property Tax. More information and additional links regarding each of these property taxes and their tax types can be found below.
Locally Assessed Property
Locally assessed property is real property that is owned by an individual or a business. All real property, unless specifically exempt, is subject to property tax. Real property means land and other assets that are permanently structured on the land. A mobile home used as a residence or business is also subject to property tax if it is 27 or more feet long or is attached to utility services.
Property tax for real property is due January 1 following the year of assessment and is payable without penalty until March 1. A 5% discount is allowed for taxes paid in full by February 15. Property tax for a mobile home is due January or 10 days after the home is purchased or moved into the state. A 5% discount is allowed for taxes paid in full by February 15 or within 30 days after the mobile home is purchased or moved into the state.
Counties determine and collect real property and mobile home property taxes, and distribute the revenue to the county, cities, townships, school districts, and other taxing districts. Property taxes are determined by three elements: 1) mills (tax rate), 2) taxable values, and 3) taxing entity. Visit North Dakota Association of Counties - Understanding Property Tax to learn more about counties’ work with property taxes and mills (tax rate).
Definitions to Know in Property Tax
- Real property means land and other assets that are permanently structured on the land.
- Market value is what real property would sell for in the current market.
- Assessed value of all real property in North Dakota is equal to 50% of the market value.
There are three types of Locally Assessed Property, shown below:
- Residential Property Tax: A building classified as residential is one that is used as a dwelling by an individual or group of individuals and provides separate family living quarters for less than 4 separate family units. When assessing residential property, the assessor primarily uses the sales comparison approach and the cost approach.
- Commercial Property Tax: Buildings not located on the same parcel as a residence and not used in connection with a residence are classified as commercial property. An apartment building or other building with four or more separate family living units, retail buildings, shop condos, hotels, vacant lots, and any building that is not exempt as a farm building is classified as commercial property. When assessing commercial property, the assessor uses all three approaches to value, the sales comparison approach, the cost approach, and the income approach.
- Agricultural Property Tax: Agricultural property means platted or unplatted lands used for raising agricultural crops or grazing farm animals. In brief, ag land assessments are based on soil type and soil classification data from detailed soil surveys, modifiers that have been approved by the state supervisor of assessments, and actual use of the land, as in cropland and non-cropland.
Centrally Assessed Property
Centrally Assessed property is assessed by the property tax division of the Office of State Tax Commissioner and equalized and approved by the State Board of Equalization.
The following entities are all taxed ad valorem, which means, according to value:
Although broken out by entities above, you can review an all-encompassing list of Centrally Assessed resources.
Centrally Assessed Payment In Lieu of Tax
A Payment in Lieu of Taxes, often called a PILOT, is a financial arrangement where an entity makes a voluntary payment to a local government instead of paying traditional property taxes. These agreements are a tool used to address situations where a property is exempt from taxation but still receives benefits from public services.
The following entities are all taxed in lieu of property tax:
- Building and associated real property owned by Workforce Safety and Insurance
- Coal Conversion Facilities
- Farmland or ranchland owned by nonprofit organizations for conservation purposes
- Land owned or leased by the North Dakota Game and Fish Department
- Land owned by the Board of University and School Lands
- Land owned by the North Dakota National Guard
- Rural Electric Cooperatives
- Telecommunications Carriers
- Tourism or Concession License Fees