Some Colorado ‘agricultural’ properties facing jump in value, taxes
October 10, 2011
ASPEN – Some homeowners in Pitkin County and across Colorado will see a significant jump in the value of their property next year, and a commensurate hike in their property tax bill, thanks to a new state law that goes into effect Jan. 1.
A bill the state Legislature passed last spring instructs assessors across Colorado to value the two acres beneath the residence on agricultural parcels as residential property if the home isn’t integral to an agricultural operation.
Next year is not a revaluation year, but in Pitkin County, 140 properties classified as agricultural will be reviewed and subjected to a potential revaluation in 2012, according to the county assessor’s office.
“Placing a market value on these properties will substantially increase their total assessed value and also the property tax,” notes a memo from Assessor Tom Isaac to county commissioners, informing them of the impacts of the legislation.
The assessor’s office expects to retain the agricultural exemption for about two dozen residences – on properties that have been historically ranched in the county and where the homeowners are involved in the daily management of an agricultural enterprise.
Boarding horses or keeping one’s own horses, for example, doesn’t count, according to Larry Fite, chief appraiser for the county.
The Legislature tackled the property tax reform in response to abuse of the agricultural exemption, setting up a task force that recommended changes to make the tax laws more equitable. Pitkin County Commissioners Jack Hatfield and Rachel Richards participated in hearings on the topic. Ultimately, the state panel recommended revaluing two acres under a residence as residential property if the home doesn’t qualify for the agricultural exemption.
A homeowner with property that has an agricultural exemption does not pay property taxes based on the market rate for their land, but rather on a substantially reduced rate based on a complex income formula established by the state, according to Fite. The income is derived from the agricultural use, but in the past, the income wasn’t necessarily the property owner’s. For example, if a subdivision allowed a rancher to use its open land to grow hay or graze cattle, and the rancher made an income from that endeavor, the land qualified for the agricultural exemption.
Houses in that subdivision were assessed at market value, but the lots themselves were not.
Last year, Fite cited a former working ranch in the county that was subdivided into lots that sold for as much as $1 million. Because the land had an agricultural exemption, the lots were valued for property tax purposes at roughly $26,000. That will change next year.
The effect of the new law on taxpayers in Pitkin County will vary by area, Fite said. The impact will be greater in places like the Owl Creek Valley outside of Snowmass Village than in the Crystal River Valley outside of Carbondale, where land values are lower.
“Depending on where you are, the difference is substantial,” he said.
Agricultural properties in the county that contain a residence will be notified of the change in the law in January. Notices of valuation, which the assessor’s office mails out each May to all property owners, will reflect the change in value on parcels where the lot containing a home no longer qualifies for the agricultural exemption.
The county may see additional appeals next summer as a result, but since 2012 is not a reappraisal year, the assessor isn’t anticipating a large number of appeals from other property owners.
In Pitkin County, 384 of the some 15,000 properties on the assessor’s tax rolls had an agricultural exemption last year, the assessor’s office reported. About a third of them have homes on them, Fite said.