The Utah Farmland Assessment Act (FAA, also called the Greenbelt Act) allows qualifying agricultural property to be assessed and taxed based upon its productive capability instead of the prevailing market value. This unique method of assessment is vital to agricultural operations in close proximity to expanding urban areas, where taxing agricultural property at market value could make farming operations economically prohibitive.
How is productive value determined?
Productive values are established by the Utah State Tax Commission with the assistance of a five-member Farmland Assessment Advisory Committee and Utah State University. Productive values apply statewide and are based upon income and expense factors associated with agriculture activities. These factors are expressed in terms of value per acre for the various land classifications.
How is land classified?
Land is classified according to its capability of producing crops or forage. Capability is dependent upon soil type, topography, availability of irrigation water, growing season, and other factors. The County Assessor classifies all agricultural land in the county based on Natural Resource Conservation Service Soil Surveys and guidelines provided by the Tax Commission. The general classifications of agricultural land are irrigated, dryland, grazing land, orchard, and meadow.
What does it take to qualify?
Private farmland can quality for assessment and taxation under the Farmland Assessment Act if the land:
- is at least five contiguous acres in area. Land less than five acres may qualify where devoted to agricultural use in conjunction with other eligible acreage under identical legal ownership. Land used in connection with the farmhouse, such as landscaping, etc. cannot be included in the acreage for FAA eligibility.
- is actively devoted to agricultural use, and the operation is managed in such a way that there is a reasonable expectation of profit;
- has been devoted to agricultural use for at least two successive years immediately preceding the tax year in which application is made; and
- meets average annual (per acre) production requirements.
Production Requirement Defined
To qualify for the Farmland Assessment Act land must produce in excess of 50 percent of the average agricultural production per acre for the given type of land and the given county or area. To determine production levels the following sources are used: the most recent publication of Utah Agricultural Statistics; crop and enterprise budgets published by Utah State University; or standards established by the Tax Commission.
The acreage requirement may be waived if the owner can show that 80 percent or more of the owner's, purchaser's, or lessees' income is derived from agricultural products produced on the land or failure to meet the 5 acre requirement arose solely out of an eminent domain proceeding.
The production requirement may be waived if the land is involved in a bonafide range improvement program, crop rotation program, or other similarly accepted agricultural practice, which does not give reasonable opportunity to satisfy the production level requirement.
New applications for assessment and taxation under the Utah Farmland Assessment Act must be submitted by May 1 of the tax year in which assessment is requested. Applications must be filed within 120 days because of ownership change, legal description change, assessor request, etc..
How do I apply?
An application for assessment and taxation of agricultural land under the FAA can be obtained from your County Assessor. Supporting documentation may be required such as; affidavits, lease agreements, sales receipts, production records, etc. which show the production requirement has been met for the preceding two years.
Who may apply?
Any owner of agricultural land may apply for assessment and taxation under the Farmland Assessment Act.
Can leased land qualify?
Leased land can qualify for assessment and taxation under the FAA if the acreage requirement is met and the production requirement is satisfied. A purchaser or lessee may qualify the land by submitting, along with the application from the owner, documents certifying that the production levels have been satisfied.
What happens when land is withdrawn from FAA?
When land becomes ineligible for farmland assessment (such as when it is developed or goes into non-use), the owner becomes subject to what is known as a rollback tax. The rollback tax is the difference between the taxes paid while on greenbelt and the taxes which would have been paid had the property been assessed at market value. In determining the amount of rollback tax due, a maximum of five years preceding the change in use will be used. The tax rate for each of the years in question will be applied to determine the tax amount. Because land removed from Greenbelt is subject to the rollback tax, it is important to review the "market value" annually and to appeal the value if you consider it incorrect. Current law does not allow the owner to appeal the market value for past years.
The Utah State Tax Commission, based on a four-year study conducted by Utah State University, has adjusted the values used for farmland assessment. The basic changes in addition to the valuation changes include:
- A system has been developed to annually update values for land assessment under the Farmland Assessment Act.
- Under the old system land with equal productive capabilities was similarly valued by region. Under the new system land values will be individualized for each county based upon agricultural production, income, and expenses for that county.