Renters’ tax credit may decrease

Brady Averill

Many students who rent are eligible to receive a tax credit because a portion of their rent goes toward property taxes.

But the refund check they usually receive in the mail in August could get smaller.

Since 1998, on average, 19 percent of rent goes toward paying property taxes. But under Gov. Tim Pawlenty’s 2006-07 budget recommendation, it could be reduced to 15 percent by fiscal year 2008.

Carrie Resch, spokeswoman for the Minnesota Department of Revenue, said the reasoning for the potential reduction is that rental property taxes have “fallen significantly” since 2001.

The change would reduce general fund expenditures for the renters’ property tax refund by $30.4 million for

fiscal years 2006-07 and by $82.6 million for fiscal years 2008-09, according to Pawlenty’s recommendation.

Jane Fandrey, an urban studies senior, said the tax credit is the only break renters get.

“It would definitely impact us,” she said. “I don’t think it’s a good idea.”

She said she thinks student renters usually wait to make big purchases until after they get a tax rebate check or renters’ tax refund in the mail.

But Sen. Larry Pogemiller, DFL-Minneapolis, chairman of the Senate Taxes Committee, said the refund program was not designed to be a renter’s subsidy.

“It was designed as a way to protect renters from property tax increases,” he said.

The renters’ tax credit reduction is included in an omnibus tax provisions bill the Senate Tax Committee will hear in the next three or four weeks, Pogemiller said.

“I think renters should be paying attention to it. Since students are a large portion of renters, I think it is something they want to notice,” he said.

Leah Satterlund, a sociology sophomore, said she didn’t know about the renters’ tax credit until she received a Certificate of Rent Paid in the mail from her landlord.

Some students like Satterlund don’t know about the tax credit or if they’re eligible to receive it.

Landlords are required to give tenants a Certificate of Rent Paid by Jan. 31, according to the revenue department. The form is needed to apply for the refund.

By law, landlords are required to give tenants the form, but an advocate from Minneapolis Housing Services said that doesn’t always happen.

In that case, renters can file an affidavit with the revenue department.

People are eligible based on their household income and on the property taxes they pay in rent, according to the department.

The maximum refund a renter can receive is $1,310. Resch said the average refund this year will be $535. She said approximately 280,000 refunds will be given.