State officials will issue directives to county assessors in an effort to keep agricultural land evaluations from spiking.
Guidelines from the Department of Revenue will recommend throwing out factors which lead to premiums on farmland prices, such as bidding wars, special financing, tax breaks, and purchases for recreational use.
“The whole idea is to make sure that we are getting valuations as close as possible to what the true market is to be able to make sure that as we have a changing market in our ag land that we see that market price accurately reflected,” Gov. Pete Ricketts said during a news conference in Kearney.
Ricketts contends such factors have unfairly driven up assessed valuations, putting a pinch on farmers struggling under a variety of pressures.
“We’ve seen commodity prices go down and the valuations on ag land not follow down as quickly,” according to Ricketts. “That does create pressure on our farmers and ranchers.”
Even if property taxes don’t increase, an increase in the valuation of property triggers a higher property tax bill.
The directives will be issued by the Department of Revenue next week. Training will be offered to help assessors comply with the new guidelines.
According to the state, the factors which could lead to spikes in farmland valuations include:
- The acquiring of adjoining land.
- So-called “once-in-a-lifetime” sales which produce bidding wars.
- IRS 1031 like-kind exchanges of land, which offer special tax breaks.
- The purchase of agricultural land for recreational purposes.
- Special financing offered to the buyer.
Property assessments are based on the market value of property as of January 1, 2017.
AUDIO: Brent Martin reports [:50]