Policy Analysis | October 2010

Agricultural Land Assessments

Jonathan Watts Hull

Every state except Michigan assesses agricultural land for tax purposes based on production rather than market value. In some states, this has lead to reports of abuse by developers and landowners claiming agricultural use for land being held for development purposes. A handful of states have taken steps to review this issue.

Florida has a handbook on ag land taxation that outlines the state's procedures, but does not indicate if it was updated to avoid abuse. The law was changed in 2002 to require an active, affirmative process for ag certification. The Florida Statute Section indicates a relatively rigorous standard to be met (see 193.461(3)(b)1-7), but it is still possible that the land could be called "forest" even if it was non-commercial varieties. Agicultural land sold for three or more times the agricultural assessment value is considered to no longer be in agricultural use and is assessed at the higher, market rate.

Colorado has a relatively high bar for establishing agricutural use, prohibiting horticulture if the plants aren't in the ground, 4-H, and pleasure horses. A recent report from the county government association indicates that the law has some deficiencies, and offers up some points where clarification would help (slide 24). The Legislature passed legislation creating a task force to review ag land classifications, which the governor signed. The report is due on the 15th of October (the Task Force only was formed in June).

South Dakota established a task force on agricultural land assessment in 2008.