As a landlord, you already know that every state has a particular set of rules that must be followed when it comes to renting out properties. Laws for tenant-landlord relationships and property management businesses are primarily set on the state level, so it is up to you to be familiar with the particulars of your state’s rules.
Landlords in Minnesota have to do something that landlords in other states might never have heard of before. They are responsible for filling out the Minnesota Certificate of Rent Paid form each year for all of their tenants.
This form is a type of tax form that is used when managing taxes and rental costs, and landlords are legally obligated to provide it to their tenants by January of each year. If you do not file the form properly, you could end up getting fined by the state government, so it is in your best interest to learn how to work with the MN CRP form.
Today, we’ll introduce the form, what it is used for, what you must include, and other useful tips for landlords working in Minnesota.
A Table Of Contents For Certificate Of Rent Paid In MN
- What Is The CRP Minnesota & What Is It For?
- Minnesota CRP Instructions For Landlords
- What Do Renters Need To Do With The CRP?
- When You Have More Than One Renter
- How CRP Disputes Are Handled
A Certificate of Rent Paid, also known as the CRP form, is a document that residential landlords are required to send to their tenants each year in Minnesota. This form must be filed by January 31.
Why is this form used in Minnesota?
Just as you can get some deductions as a landlord, tenants in Minnesota can get some deductions, too!
The MN CRP form is necessary because tenants may be able to get a refund for part of the property taxes that they are indirectly contributing to when they pay their rent. Whether or not each renter gets this refund depends on their specific income and rental amounts paid, but since there is a possibility of a refund, you are required to provide the CRP as documentation for their tax purposes.
To be eligible for this tax refund, the property in question must be a tax-paying unit. If you are for some reason not required to pay property taxes or otherwise make payments rather than pay taxes, the tenant will not be eligible for any type of refund. You will still need to provide a CRP in these cases.
If, however, you are working on a tax-exempt property, you do not need to issue a CRP.
It’s important for you to be familiar with the ways that your tenants might be eligible for a refund as they might have questions for you about how the CRP and related refund works. Remember that you can direct them to the Minnesota Department of Revenue’s website for the most complete information.
Potential CRP Penalties
If you fail to issue a CRP to a renter before the January 31 deadline, you will be on the hook for a $100 fine from the Minnesota government.
Another penalty that you should be aware of is the overstatement penalty. If you overstated the amount of rent that went to property taxes, you will be penalized either $100 or 50 percent of the overstated amount. The final penalty will be whichever of those two amounts is larger.
This penalty happens because the state assumes that any overstatement was done intentionally. Even if you did not make this error on purpose, you will still be responsible for paying the resulting penalty.
When preparing a Certificate of Rent Paid form, you might be worried about getting things right or wrong. After all, this is a Minnesota rental tax form, and messing up tax forms as a business can be a very big deal for your future bottom line.
Thankfully for landlords like you, there are clear Minnesota CRP instructions updated by the state yearly that can be useful for figuring out how to write your form.
Filling Out The Form
Thankfully for you, this is not a form that you ever need to create and keep on file for yourself!
The MN Department of Revenue keeps an updated and fillable form on file, so you can always go straight to the form and fill it out when needed. By simply typing the relevant information into the document, you save yourself a lot of time and aggravation.
While the form will tell you exactly what to write, it’s always good to have an idea of what information will need to be provided beforehand. Most years, the CRP has required this information:
- Renter’s name
- Property address
- Property ID or parcel number
- Owner’s name
- Owner’s address
- Number of apartments on property
- Lease period
- Information about the property (number of adults living there, rent amount, type of building, etc.)
- Landlord signature
- Date of signing
- Landlord’s business phone number
As you can see, this is all the information that you already know! Still, it’s great to be ready with all of these facts so that you can fill out your CRP forms quickly and efficiently each year.
Calculating The Property Tax Paid
The basics of what you will be doing on the form are quite simple:
- Enter the total amount of rent paid by the tenant. This rent should only cover money actually received for rent, and it should not include any money that was paid as a late charge or any rent that hasn’t yet been paid.
- Multiply that amount by 17% or 0.17.
- The resulting number is the amount of property tax that the renter will have paid that year.
While many tax forms can be quite complicated, we’re happy to tell you that this form fairly simple and only requires a few simple calculations. Be careful about your record keeping throughout the year, and then you will be able to fill out this form in five minutes or left!
To find the most up-to-date requirements for this form, search “CRP form” on the Minnesota Department of Revenue Website.
The chances are pretty high that a tenant might ask you what they are supposed to do with the CRP that they receive. After all, maybe they’ve never had to think about how to file the certificate of rent paid before! New renters, especially, might have these questions.
While you are not responsible for telling them how to handle their taxes, letting them know that they need to file a property tax refund with form M-1PR will set them on the right path!
Not every rental contract is going to line up exactly with the calendar year. Instead, you might have two different renters that lived in a single property last year. How would you handle the CRP form in this case?
Here’s what you need to do:
- Give a CRP to the person who was renting on December 31 by January 31.
- When a tenant moves out mid-year, give them a CRP at the time of move out. If you cannot do this, send the CRP to the forwarding address on file by January 31.
No matter how many tenants you have in a year, you will need to make sure that every single one of them gets a CRP from you. The easiest way to stay on top of this is to give it to tenants when they move out or send it out immediately after receiving their forwarding address. Otherwise, you might forget!
There may be cases where you and your tenant disagree about how much rent was paid during the previous tax year. Or maybe you’ve found our article today because you forgot to provide your tenants with one at all, and now the Minnesota Depart of Revenue is contacting you.
How is it that CRP problems are handled?
If a tenant believes that the form was not filled out properly or they did not receive it at all by January 31, the renter can then request that the Minnesota Department of Revenue give them a Rent Paid Affidavit. For more information about how this works or if your renter has questions of their own, they can contact the department at 1-800-652-9094.
Keep The CRP In Mind
Filling out the MN CRP form for every property that you manage each year is essential. As a landlord, it’s your responsibility to follow all landlord-tenant laws, and CRPs are part of that responsibility.
We have a few recommendations to help you ensure that you don’t forget about CRPs:
- Set up a specific range of dates each year during which you will ensure that you have filled out and sent out all appropriate forms
- Send the CRP to tenants that move out throughout the year ASAP so that you will only need to deal with current tenant CRP forms during the new year
CRP forms don’t have to be difficult. Now that you know more about how this property tax form works, it should be one of the easiest forms that you have to work with as a Minnesota landlord!