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H0645...............................................by REVENUE AND TAXATION PROPERTY TAX - AGRICULTURAL LAND - Amends existing law to further define the phrase "speculative portion" as it is applied to the value of land devoted to agriculture for purposes of property tax exemption and to further define the phrase "land actively devoted to agriculture" as it is applied to the value of land for purposes of property tax exemption. 02/09 House intro - 1st rdg - to printing 02/10 Rpt prt - to Rev/Tax 02/17 Rpt out - rec d/p - to 2nd rdg 02/18 Returned to Rev/Tax
H0645|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 645 BY REVENUE AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO PROPERTY TAXATION; AMENDING SECTION 63-602K, IDAHO CODE, TO FUR- 3 THER DEFINE THE PHRASE "SPECULATIVE PORTION" AS IT IS APPLIED TO THE VALUE 4 OF LAND DEVOTED TO AGRICULTURE FOR PURPOSES OF PROPERTY TAX EXEMPTION; AND 5 AMENDING SECTION 63-604, IDAHO CODE, TO FURTHER DEFINE THE PHRASE "LAND 6 ACTIVELY DEVOTED TO AGRICULTURE" AS IT IS APPLIED TO THE VALUE OF LAND FOR 7 PURPOSES OF PROPERTY TAX EXEMPTION; DECLARING AN EMERGENCY AND PROVIDING 8 RETROACTIVE APPLICATION. 9 Be It Enacted by the Legislature of the State of Idaho: 10 SECTION 1. That Section 63-602K, Idaho Code, be, and the same is hereby 11 amended to read as follows: 12 63-602K. PROPERTY EXEMPT FROM TAXATION -- SPECULATIVE PORTION OF VALUE OF 13 AGRICULTURAL LAND. (1) The speculative portion of the value of land devoted to 14 agriculture is exempt from taxation. 15 (2) "Land devoted to agriculture" shall mean that property defined by 16 section 63-604, Idaho Code. 17 (3) "Speculative portion" shall mean that portion of the value of18agriculturalland actively devoted to agriculture which 19 represents the excess over the actual use value of such land established by 20 comparable sales data compared to value established by capitalization of eco- 21 nomic rent or long-term average crop rental at a capitalization rate which 22 shall be the rate of interest charged by the Spokane office of the farm credit 23 system averaged over the immediate past five (5) years plus a component for 24 the local tax rate. 25 (4) The state tax commission shall adopt rules implementing this 26 section .which shall establish economic rent, average crop27rental and capitalization rates.28 SECTION 2. That Section 63-604, Idaho Code, be, and the same is hereby 29 amended to read as follows: 30 63-604. LAND ACTIVELY DEVOTED TO AGRICULTURE DEFINED. (1) For property 31 tax purposes, landwhichis actively devoted to agriculture32shall be eligible for appraisal, assessment and taxation as agricultural prop-33erty each year itif the land annually meets one (1) or 34 more of the following qualifications: 35 (a) The total area of such land, including the homesite, is more than 36 five (5) contiguous acres, andis actively devoted to agriculture37the land is not being developed as provided in section 38 67-8203(7), Idaho Code, in a subdivision, which means: 39 (i) It is used to producefieldcrops including, but 40 not limited to, grains, feed crops, fruits and vegetables; or 41 (ii) It is used by the owner for the grazing of livestock to be sold 2 1 as part of a net profit-making enterprise, or is leased by the owner 2 to a bona fide lessee for grazing purposes; or 3 (iii) It is in a cropland retirement or rotation program. 4 (b) The area of such land is five (5) acres or less and the land is 5 not being developed as provided in section 67-8203(7), Idaho Code, in a 6 subdivision, and such land has been actively devoted to agriculture 7 within the meaning of subsection (1)(a) of this section during the8last three (3)previous growing seasons; 9 and 10 (i) It agriculturally produces for sale or home consumption the 11 equivalent of fifteen percent (15%) or more of the owners' or les- 12 sees' annual gross income; or 13 (ii) It agriculturally produced gross revenues in the immediately 14 precedingyearseason of one thousand dol- 15 lars ($1,000) or more. When the area of land is five (5) acres or 16 less,suchthe land shall be presumed to be 17 nonagricultural land until it is established that the requirements of 18 this subsection have been met. 19 (2) Lease income may be considered in determining qualifications 20 only if the lease terms are defined, the carrying capacity is shown, and the 21 rent is consistent with the market rent. 22 (3) An application for exemption shall be required if the area of land is 23 five (5) contiguous acres or less or the land is not being developed as pro- 24 vided in section 67-8203(7), Idaho Code, or is in a subdivision. The form of 25 the application shall be prescribed by the Idaho state tax commission. The 26 application must be received by the assessor of the county in which the land 27 is located by March 15. 28 (4) Land shall not be classified or valued as agricultural 29 land which is part of a platted subdivision with stated restrictions prohibit- 30 ing its use for agricultural purposes, whether within or without a city. 31 (35 ) Land utilized for the grazing ofa32horse or otheranimals kept primarily for personal use or pleasure 33 rather than as part of a bona fide profit-making agricultural enterprise shall 34 not be considered to be land which is actively devoted to agriculture. 35 (46 ) Land actively devoted to agriculture, hav- 36 ing previously qualified for exemption under this section in the preceding 37 year, or which would have qualified under this section during the current 38 year, shall not lose such qualification due to the owner's or lessee's absence 39 in the current year by reason of active military service in a designated com- 40 bat zone, as defined in section 112 of the internal revenue code. If an owner 41 fails to timely apply for exemption as required in this section solely by rea- 42 son of active duty in a designated combat zone, as defined in section 112 of 43 the internal revenue code, and the land would otherwise qualify for exemption 44 under this section, then the board of county commissioners of the county in 45 which the land actively devoted to agriculture is located shall refund prop- 46 erty taxes, if previously paid, in an amount equal to the exemption which 47 would otherwise have applied. 48 (7) The state tax commission shall adopt rules implementing this 49 section pursuant to chapter 52, title 67, Idaho Code. 50 SECTION 3. An emergency existing therefor, which emergency is hereby 51 declared to exist, this act shall be in full force and effect on and after its 52 passage and approval, and retroactively to January 1, 1998.
STATEMENT OF PURPOSE
RS 07766
The purpose of this legislation is to update and clarify the
definition of which properties qualify for the agricultural
exemption for property tax purposes by amending Sections 63-602k
and 63-604K, Idaho Code. It provides that when development takes
place in a subdivision that has been receiving an agricultural
exemption then that agricultural exemption would be removed.
Population concentration and land development creates a
definite need to update current law to provide for equitable
assessment and taxation in these areas.
The proposed legislation will provide for statewide
uniformity among counties in the determination of which
properties qualify for
agricultural
exemptions.
FISCAL NOTE
There will be a cost to the State Tax Commission of
$3,000-
$5,000 for the rule preparation and publications as well as for
information distribution to counties. There may be a slight
positive impact for local taxing districts, including school
districts due to parcels losing the exemption when improvements are
added and being included on the new construction roll. It is also
anticipated that with more clarity, there may be additional
applications for exemption.
CONTACT: Idaho Association of Counties
Phone: 345-9126
Dan Chadwick, Tony Poinelli, Lorna Jorgenson
STATEMENT OF PURPOSE/ FISCAL NOTE
Bill No. H 645