Owen County Assessor Outlines Increase In Agricultural Land Base Rates For 2012
In just the past year, a nine-percent increase was made to the assessed value of Indiana farm land, from $1,500 per acre for 2011 property taxes payable in 2012 to $1,630 per acre on 2012 taxes payable in 2013. There has been an 85-percent increase dating back to 2005 taxes payable in 2006, when the price was just $880 per acre. However, the impact is lessened by property tax caps and assessments are made based on the classification of ground by land use type, soil productivity index among other factors.
“You’ve got to look at what the cash grain prices have done in that period of time, too, though,” Owen County Assessor Kenny Anderson said. “They’ve gone up considerably.”
“They’ve got people who provide yield records, what it costs to plant an acre of corn and other things, so that’s half of the equation, people who traditionally farm,” Anderson explained. “They have the expenses, the income and everything. Then the other half of it are people who own ground for cash rent. If it’s $100 an acre, the taxes on that ground are taken off of that and then the net cash rent is used. All of this is based on the six previous years and they subtract the highest year to take the average of the five years. They take the two (owner-operated and cash rent), capitalize them, divide them and come up with the price – unfortunately it keeps going up.”
Anderson provided an example. In 2004, the cash rent was $104 per acre, while the owner-operated income was figured at $135 per acre. The two were added, divided and the cap rate was used to come up with the value of the land for each. So $104 and $135 capitalized at 6.35 percent gives you $1,638 cash and $2,126 owner-operated, divided by two provides the average market value in use per acre.
“The capital rate they use comes from the Great Lakes Area Farm Credit Association and they provide the average of what loans are to agriculture,” Anderson said. “They take the crop prices from several different periods, they don’t just take the fall harvest time. In 2003 and ‘04, the average was $2.53 for corn. If we go up to 2008 and ‘09, the average was $4.10, so the increase was around 60-percent. I’m not sure where the (grain) elevators are they get these prices. The inputs, they come from farmers’ reports of their income and expenses.”
Anderson said that $1,638 per acre is a base price and that adjustments to the final taxing price follow.
“A lot of people say, ‘Well, Owen County ground isn’t worth what White County or Benton County ground is worth. Well, the adjustment comes from the productivity factor,” Anderson explained. “Where Benton County has a productivity factor of 1.3, we’re looking at a rate of about .6 or .8, so their base price is elevated to around $2,000 an acre and ours is devalued down to around $1,000 an acre.”
Anderson utilizes a program that allows him to select options related to a specific tract of land.
“Different types of land are valued differently – tillable land, nontillable land, commercial, wood land, classified forest, wetland and others. They ask if it’s flooded occasionally or flooded frequently,” Anderson noted. “The system defaults to tillable ground, but once I select those options for each area of my land, the remaining part defaults to tillable ground. It shows me the soil ID’s which tells me the productivity factor. We take that times the base rate and that adjusts the value for that acre of ground.”
Anderson also noted that assessors are out in the field looking over land to ensure information submitted is correct for filing and taxing purposes. For more information regarding assessed value, contact the Owen County Assessor’s Office at 829-5018.
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