TAXES ON AGRICULTURAL REAL PROPERTY AND OPEN SPACE What is required - - PowerPoint PPT Presentation

TAXES ON AGRICULTURAL REAL PROPERTY AND OPEN SPACE

What is required to qualify for an Agricultural Use Assessment and what does it all mean?

“Agricultural real property” NRS 361A.020

• Land devoted exclusively to agricultural use for at least

3 consecutive years immediately preceding the assessment date.

• Land leased by the owner to another person for

agricultural use made up of any lot or parcel which (1) Includes at least 7 acres of land devoted to accepted agricultural practices; or (2) Is contiguous to other agricultural real property owned by the lessee.

• Land covered by a residence or necessary to support

the residence if it is part of a qualified agricultural parcel.

“Agricultural Use” NRS 361A.030

Must produce a minimum of $5000 from agricultural pursuits during the immediately preceding calendar year by:

• a. Raising and selling crops, etc.
• b. Feeding, breeding, management of livestock, poultry,

etc.

• c. Operating a feed lot (min. 50 head cattle etc.)
• d. Raising fur‐bearing animals or bees
• e. Dairying or
• f. Any other use determined by the department to

constitute Ag use. Current employment of real property includes: land lying fallow for 1 year and land planted in orchards or other perennial prior to maturity.

Assessment of Agricultural Property

NRS 361A.110

Any application for agricultural use assessment must be filed on or before June 1 of any year: With the County Assessor if the property contains 20 acres or more With the Department, if the property contains LESS than 20 acres

NRS 361A.110 & .120

• A new application is required following any change in
• wnership or conversion to a higher use of any

portion of the property.

• The application must be made on forms prepared by

the Department and must be signed by all owners or their lawful power of attorney. Additional information may be required.

• The applicant shall be sent a written notice of the

determination within 10 days after determining the applicant’s entitlement to agricultural use assessment.

• The application shall be recorded with the county

recorder within 10 days after its approval.

Any use other than agricultural use or open- space use

NRS 361A.032

“Converted to a higher use” (P.R.E.Z.):

1) A Physical alteration of the surface enabling a higher use; 2) Recording of a final map or parcel map which creates one or more parcels not intended for Ag use; 3) The Existence of a final map or parcel map which creates one or more parcels not intended for Ag use; or 4) A change in Zoning to a higher use made at the request of the owner.

NRS 361A.031(1)

What are the different types of AG Property and where can I get more information about it????

Who is authorized to define the classifications and determine the valuations of AG land?

Nevada Tax Commission

Ag Land Classifications

I Intensive Use C Cultivated Land N Native Meadow Land or Wild Hay Land P Pasture Land G Grazing Land

I Intensive Use

• does not depend on the

quality of the soil for production

• operations whose

products do not grow

• ut of the soil but

whose operations are carried out entirely on the soil

C Cultivated Land

Land developed for agricultural use and is no longer in its natural condition

4 classes that produce during an average year a specified number of tons of alfalfa hay, small grains or the equivalent of

• ther feeds for livestock

* First Class: 4 or more tons of alfalfa hay

• r 1 ½ tons or more of small grains or the

equivalent of other feeds Second Class: 3 or more but less than 4 tons of alfalfa hay or 1 ton but less than 1½ tons of small grains or the equivalent

• f other feeds

Third Class: 2 to 3 tons of alfalfa hay or ½ to 1 ton of small grains or the equivalent

• f other feeds

Fourth Class: 1 ½ to 2 tons of alfalfa hay

• r ½ ton of small grains or the equivalent
• f other feeds

N Native Meadow Land

• r Wild Hay Land

Irrigated by streams or rivers and has not been cultivated but will yield enough native Wild Hay growth to afford at least one hay cutting each season with average

• r better than average

precipitation *

• First Class : Land that

produces during an avg year 1

• r more tons of hay per acre.
• Second Class : Land that

produces during an avg year ½ ton or more but less than 1 ton of hay per acre.

P Pasture Land

Not “harvested and stored” as with Wild Hay Lands (Native), therefore, the value of Pasture Lands are measured by the “Carrying Capacity” per acre

*

During an average year the land produces enough feed per acre for a specified number of Animal Units Per Month (AUMs)….

*

• First Class: 4 grown cattle

(4 AUMs)

• Second Class: 3 to 4 grown cattle

(3.5 AUMs)

• Third Class: 2 to 3 grown cattle

(2.5 AUMs)

• Fourth Class: 1 to 2 grown cattle

(1.5 AUMs)

G Grazing Land

Usually lacks irrigation and has a lower carrying capacity per acre than pasture land. It is commonly identified as “range land”, either open or fenced

* During an average year, this land produces enough feed…

• First Class: on 4 acres or less for 1

grown cow (1/4 up to 1 AUM)

• Second Class: on 4 to 6 acres for 1

grown cow (1/4 up to 1/6 AUM)

• Third Class: on 6 to 12 acres for 1

grown cow (1/6 up to 1/12 AUM)

• Fourth Class: on 12 acres or more for

1 grown cow (1/12 or less AUM) This land is barren or rocky

FARMSTEAD

* The v The value of the land in the f lue of the land in the farmst rmstead area co ead area covered b red by a a residence or necessar residence or necessary t y to suppor support a residence is com t a residence is comput uted as ed as taxable v taxable value pursuant t lue pursuant to NRS 36 NRS 361.22 1.227. An Any remaining y remaining farmst rmstead area of an agricultur ead area of an agricultural al pr proper

• perty that is par

ty that is part of the

• f the
• peration is v
• peration is valued b

lued by applying applying the same v the same value as the highest lue as the highest land classif land classification used f cation used for that operation. * r that operation. *

Causes for Disqualification of AG property

a) Notification by the applicant to remove b) Sale or transfer to an owner making it exempt c) Removal of the agricultural use assessment by the assessor upon discovery that the property is no longer qualifies d) Failure to file an application. Within 30 days after agricultural property becomes disqualified the county assessor shall send written notice NRS 361A.150

When must AG deferred taxes be paid?

*

After a parcel or any portion

• f a parcel is converted to a

higher use

NRS 361A.155

7yrs

Taylor Grazing Act of 1934

Administered by the BLM, a federal grazing fee is charged to people leasing land from the Federal

• Government. Fees are sent to the U.S. Treasury

who redistributes the money. In Nevada, the BLM provides annual payments to the State Controllers Office who then distributes that money to each grazing district. Grazing Advisory Boards from the districts then spend the money

• n range improvements and range related

activities.

Open‐Space

A program for land preservation, as well as for sites designated as historic by the Office of Historic Preservation

“Open‐space real property” NRS 361A.040

Land that…. Is located within an area classified pursuant to NRS 278.250 (Zoning districts and regulations) and subject to regulations designed to promote the conservation of open space and the protection of other natural and scenic resources from unreasonable impairment and devoted exclusively to open‐ space use The improvements on the land are used primarily to support the open‐space use and not primarily to increase the value of surrounding developed property or secure an immediate monetary return The owner has granted and has an outstanding lease of surface water rights appurtenant to the property to a political subdivision of this State for a municipal use, if the land was agricultural real property at the time the lease was granted. Is used as a golf course

Who decides what qualifies as Open – Space?

Within 10 days, the Assessor refers the open‐space application (due by June 1) to …The Board of

County Commissioners and if required to

the governing body of an incorporated city

No later than 90 days after receipt the board shall consider the application at a public hearing(but no later than March 31). Within 10 days of approval they must send copies to the Assessor & the applicant and record the order with the Recorder NRS 361A.200

Causes for Disqualification of Open‐ Space property

a) Notification by the applicant to remove b) Sale or transfer to an owner making it exempt c) Removal of the open‐space assessment by the assessor, with concurrence of the board, upon discovery that the property is no longer in approved open‐space use (other than golf courses) d) Failure to file a new application as provided in NRS 361A.90 NRS 361A.230

Open‐Space Valuation

The Nevada Tax Commission adopted a formula that grants open‐space use assessments (except golf courses) a discount of 9 percent for a term of 3 1/2 years, which yields a discount factor of 0.74 Open‐space value thus equals taxable value of the

• pen‐space property times a factor of 0.74. Therefore

assessed value equals 35 percent of the open‐space use value. For open‐space historic sites with both land and improvements, apply the 0.74 factor to the taxable value of both land and improvements.

Example

The subject property, is a Registered Historical Building on a one acre site and it qualifies as open‐space land The full cash value of comparable land nearby, which is not

• pen‐space, equals $100,000 per acre

The taxable value (RCNLD) of the subject improvements equals $50,000

Land $100,000 x 0.74 = $ 74,000 x 35% = $ 25,900 (reduced AV) Improvements $50,000 x 0.74 = $37,000 x 35% = $12,950 (reduced AV) Total open‐space use Assessed Value $25,900+$12,950 = $38,850 (total AV taxed) * Same property without the open‐space tax deferral Land $100,000 x 35% = $ 35,000 Improvements $50,000 x 35% = $17,500 Total Assessed Value = $52,500 *

“Golf Course” NRS 361A.0315

* Real property used for golfing or golfing practice by the public or members and guests of a private club and Improvements including, without limitation, turf, bunkers, trees, irrigation, lakes, lake liners, bridges, practice ranges, golf greens, golf tees, paths and trails. DOES NOT INCLUDE include: A commercial golf driving range that is not

• perated in conjunction with a golf course.

A clubhouse, pro shop, restaurant or other building that is associated with a golf course.

Disqualification of Open‐Space use, Exceptions for Golf Courses

* Property for golfing or golfing practice, involving the cessation of use as a result of: (1) A seasonal closure of the property to such use; (2) A temporary closure of the property for maintenance or repairs; or (3) A temporary closure of the property, upon notification of the county assessor, for not more than 12 months for any other purpose that is incidental to such use or necessary for the continuation of such use NRS 361A.230

How do we calculate Golf Course Open‐Space Land??????

* NAC 361A.390 Golf course land: Determination of taxable value for open‐space use. (NRS 360.090, 360.250, 361A.225) A county assessor shall: 1. Determine the value of the golf course land in the same manner as the county assessor would determine the taxable value of the land for purposes other than open‐ space use; 2. Multiply the amount of acreage of the golf course land by the product obtained by multiplying $2,860 by 1 plus the percentage change in the Consumer Price Index (All Items) for July 1 immediately preceding the date of valuation as compared to July 1, 2004; and 3. If the value calculated pursuant to subsection 1 is: (a) Greater than or equal to the value calculated pursuant to subsection 2, use the value calculated pursuant to subsection 2 as the taxable value for open‐space use of the golf course land; or (b) Less than the value calculated pursuant to subsection 2, use the product

• btained by multiplying the value calculated pursuant to subsection 1 by an open‐

space discount factor of 0.74 as the taxable value for open‐space use of the golf course land.

Deferred Taxes

* 1. When does an owner become liable for deferred taxes? As of the date the deferred taxes are due (NAC 361A.290(2))

• 2. When must a seller notify the buyer of deferred taxes due and how must it be

done? At the time the real property is sold or transferred; in writing (NAC 361A.290(1))

• 3. If agricultural or open‐space real property receiving agricultural or open‐space

use assessment is sold or transferred to an ownership making it exempt from taxation ad valorem, any such liens for deferred taxes must, unless the property is sold or transferred to the Nevada System of Higher Education, a school district or another local governmental entity, be paid in full_______ before the transfer of ownership if the property is converted to another use (NAC 361A.286(2))

• 4. How long does the owner have to notify the Assessor of cessation of

agricultural or open‐space use or conversion to higher use? 30 days (NAC 361A.270)

NRS 361A