Print Friendly HOUSE BILL NO. 645 – Property tax exmpt, agric land
HOUSE BILL NO. 645
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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
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fourth Legislature Second Regular Session - 1998
IN 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 of
18 agricultural land 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 crop
27 rental 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, land which is actively devoted to agriculture
32 shall be eligible for appraisal, assessment and taxation as agricultural prop-
33 erty each year it if 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, and is actively devoted to agriculture
37 the 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 produce field crops 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
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 the
8 last three (3) previous growing season s ;
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 preceding year season of one thousand dol-
15 lars ($1,000) or more. When the area of land is five (5) acres or
16 less, such the 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 ( 3 5 ) Land utilized for the grazing of a
32 horse or other animals 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 ( 4 6 ) 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
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
There will be a cost to the State Tax Commission of
$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
Dan Chadwick, Tony Poinelli, Lorna Jorgenson
STATEMENT OF PURPOSE/ FISCAL NOTE
Bill No. H 645