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TAXES ON AGRICULTURAL REAL PROPERTY AND OPEN SPACE
What is required to qualify for an Agricultural Use Assessment and what does it all mean?
“Agricultural real property” NRS 361A.020
• Land devoted exclusively to agricultural use for at least 3 consecutive years immediately preceding the assessment date.
• Land leased by the owner to another person for agricultural use made up of any lot or parcel which
(1) Includes at least 7 acres of land devoted to accepted agricultural practices; or
(2) Is contiguous to other agricultural real property owned by the lessee.
• Land covered by a residence or necessary to support the residence if it is part of a qualified agricultural parcel.
“Agricultural Use” NRS 361A.030Must produce a minimum of $5000 from agricultural pursuits during the immediately preceding calendar year by:
a. Raising and selling crops, etc. b. Feeding, breeding, management of livestock, poultry,
etc. c. Operating a feed lot (min. 50 head cattle etc.) d. Raising fur‐bearing animals or bees e. Dairying or f. Any other use determined by the department to constitute Ag use.
Current employment of real property includes: land lying fallow for 1 year and land planted in orchards or other perennial prior to maturity.
Assessment of Agricultural Property
NRS 361A.110
Any application for agricultural use assessment must be filed on or before June 1 of any year:
With the County Assessor if the property contains 20 acres or more
With the Department, if the property contains LESS than 20 acres
NRS 361A.110 & .120• A new application is required following any change in ownership or conversion to a higher use of any portion of the property.
• The application must be made on forms prepared by the Department and must be signed by all owners or their lawful power of attorney. Additional information may be required.
• The applicant shall be sent a written notice of the determination within 10 days after determining the applicant’s entitlement to agricultural use assessment.
• The application shall be recorded with the county recorder within 10 days after its approval.
Any use other than agricultural use or open-
space useNRS 361A.032
“Converted to a higher use” (P.R.E.Z.): 1) A Physical alteration of the surface enabling a higher use; 2) Recording of a final map or parcel map which creates one or more parcels not intended for Ag use; 3) The Existence of a final map or parcel map which creates one or more parcels not intended for Ag use; or 4) A change in Zoning to a higher use made at the request of the owner.
NRS 361A.031(1)
What are the different types of AG Property and where can I get more
information about it????
Who is authorized to define the classifications and determine the
valuations of AG land?
Nevada Tax Commission
Ag Land Classifications
I Intensive UseC Cultivated LandN Native Meadow Land or Wild Hay LandP Pasture LandG Grazing Land
I Intensive Use
• does not depend on the quality of the soil for production
• operations whose products do not grow out of the soil but whose operations are carried out entirely on the soil
C Cultivated LandLand developed for agricultural use and is no longer in its natural condition
4 classes that produce during an average year a specified number of tons of alfalfa hay, small grains or the equivalent of other feeds for livestock
*First Class: 4 or more tons of alfalfa hay or 1 ½ tons or more of small grains or the equivalent of other feedsSecond Class: 3 or more but less than 4 tons of alfalfa hay or 1 ton but less than 1½ tons of small grains or the equivalent of other feedsThird Class: 2 to 3 tons of alfalfa hay or ½ to 1 ton of small grains or the equivalent of other feedsFourth Class: 1 ½ to 2 tons of alfalfa hay or ½ ton of small grains or the equivalent of other feeds
N Native Meadow Land or Wild Hay Land
Irrigated by streams or rivers and has not been cultivated but will yield enough native Wild Hay growth to afford at least one hay cutting each season with average or better than average precipitation
*• First Class : Land that
produces during an avg year 1 or more tons of hay per acre.
• Second Class : Land that produces during an avg year ½ ton or more but less than 1 ton of hay per acre.
P Pasture LandNot “harvested and stored” as with Wild Hay Lands (Native), therefore, the value of Pasture Lands are measured by the “Carrying Capacity” per acre
*During an average year the land
produces enough feed per acre for a specified number of Animal Units Per
Month (AUMs)…. *
• First Class: 4 grown cattle (4 AUMs)
• Second Class: 3 to 4 grown cattle(3.5 AUMs)
• Third Class: 2 to 3 grown cattle (2.5 AUMs)
• Fourth Class: 1 to 2 grown cattle (1.5 AUMs)
G Grazing LandUsually lacks irrigation and has a lower carrying capacity per acre than pasture land. It is commonly identified as “range land”, either open or fenced
*During an average year, this land
produces enough feed…
• First Class: on 4 acres or less for 1 grown cow (1/4 up to 1 AUM)
• Second Class: on 4 to 6 acres for 1 grown cow (1/4 up to 1/6 AUM)
• Third Class: on 6 to 12 acres for 1 grown cow (1/6 up to 1/12 AUM)
• Fourth Class: on 12 acres or more for 1 grown cow (1/12 or less AUM) This land is barren or rocky
FARMSTEAD*
The value of the land in the farmstead area covered by a residence or necessary to support a residence is computed as taxable value pursuant to NRS 361.227. Any remaining farmstead area of an agricultural property that is part of the operation is valued by applying the same value as the highest land classification used for that operation. *
Causes for Disqualification of AG property
a) Notification by the applicant to remove b) Sale or transfer to an owner making it exempt c) Removal of the agricultural use assessment by
the assessor upon discovery that the property is no longer qualifies
d) Failure to file an application. Within 30 days after agricultural property becomes disqualified the county assessor shall send written
noticeNRS 361A.150
When must AG deferred taxes be paid?
*
After a parcel or any portion of a parcel is converted to a
higher use
NRS 361A.155
7yrs
Taylor Grazing Act of 1934
Administered by the BLM, a federal grazing fee is charged to people leasing land from the Federal Government. Fees are sent to the U.S. Treasury who redistributes the money. In Nevada, the BLM provides annual payments to the State Controllers Office who then distributes that money to each grazing district. Grazing Advisory Boards from the districts then spend the money on range improvements and range related activities.
Open‐SpaceA program for land preservation, as well as for sites designated as historic by the Office of Historic
Preservation
“Open‐space real property” NRS 361A.040
Land that….
Is located within an area classified pursuant to NRS 278.250 (Zoning districts and regulations) and subject to regulations designed to promote the
conservation of open space and the protection of other natural and scenic resources from unreasonable impairment and devoted exclusively to open‐
space use
The improvements on the land are used primarily to support the open‐space use and not primarily to increase the value of surrounding developed
property or secure an immediate monetary return
The owner has granted and has an outstanding lease of surface water rights appurtenant to the property to a political subdivision of this State for a
municipal use, if the land was agricultural real property at the time the lease was granted.
Is used as a golf course
Who decides what qualifies as Open – Space?
Within 10 days, the Assessor refers the open‐space application (due by June 1) to …The Board of County Commissioners and if required to the governing body of an incorporated city
No later than 90 days after receipt the board shall consider the application at a public hearing(but no later than March 31). Within 10 days of approval they must send copies to the Assessor & the applicant and record the order with the
Recorder
NRS 361A.200
Causes for Disqualification of Open‐ Space property
a) Notification by the applicant to remove b) Sale or transfer to an owner making it exempt c) Removal of the open‐space assessment by the assessor, with concurrence of the board, upon discovery that the property is no longer in approved open‐space use (other than golf courses)d) Failure to file a new application as provided in NRS 361A.90
NRS 361A.230
Open‐Space ValuationThe Nevada Tax Commission adopted a formula that grants open‐space use assessments (except golf courses) a discount of 9 percent for a term of 3 1/2 years, which yields a discount factor of 0.74
Open‐space value thus equals taxable value of the open‐space property times a factor of 0.74. Therefore assessed value equals 35 percent of the open‐space use value.
For open‐space historic sites with both land and improvements, apply the 0.74 factor to the taxable value of both land and improvements.
ExampleThe subject property, is a Registered Historical Building on a one acre site and it
qualifies as open‐space land
The full cash value of comparable land nearby, which is notopen‐space, equals $100,000 per acre
The taxable value (RCNLD) of the subject improvements equals $50,000
Land $100,000 x 0.74 = $ 74,000 x 35% = $ 25,900 (reduced AV)
Improvements $50,000 x 0.74 = $37,000 x 35% = $12,950 (reduced AV)
Total open‐space use Assessed Value $25,900+$12,950 = $38,850 (total AV taxed)*
Same property without the open‐space tax deferralLand $100,000 x 35% = $ 35,000
Improvements $50,000 x 35% = $17,500Total Assessed Value = $52,500
*
“Golf Course” NRS 361A.0315*
Real property used for golfing or golfing practice by the public or members and guests of a private club and Improvements including, without limitation, turf, bunkers, trees, irrigation, lakes, lake liners, bridges, practice ranges, golf greens, golf tees, paths and trails.
DOES NOT INCLUDE include:A commercial golf driving range that is not operated in conjunction with a golf course.A clubhouse, pro shop, restaurant or other building that is associated with a golf course.
Disqualification of Open‐Space use, Exceptions for Golf Courses
*Property for golfing or golfing practice, involving the cessation of use as a result of:
(1) A seasonal closure of the property to such use;
(2) A temporary closure of the property for maintenance or repairs; or
(3) A temporary closure of the property, upon notification of the county assessor, for not more than 12 months for any other purpose that is incidental to such use or necessary for the continuation of such use
NRS 361A.230
How do we calculate Golf Course Open‐Space Land??????
*NAC 361A.390 Golf course land: Determination of taxable value for open‐space use.(NRS 360.090, 360.250, 361A.225) A county assessor shall:1. Determine the value of the golf course land in the same manner as the county assessor would determine the taxable value of the land for purposes other than open‐space use;2. Multiply the amount of acreage of the golf course land by the product obtained by multiplying $2,860 by 1 plus the percentage change in the Consumer Price Index (All Items) for July 1 immediately preceding the date of valuation as compared to July 1, 2004; and3. If the value calculated pursuant to subsection 1 is:
(a) Greater than or equal to the value calculated pursuant to subsection 2, use the value calculated pursuant to subsection 2 as the taxable value for open‐space use of the golf course land; or
(b) Less than the value calculated pursuant to subsection 2, use the product obtained by multiplying the value calculated pursuant to subsection 1 by an open‐space discount factor of 0.74 as the taxable value for open‐space use of the golf course land.
Deferred Taxes*
1. When does an owner become liable for deferred taxes?As of the date the deferred taxes are due (NAC 361A.290(2))
2. When must a seller notify the buyer of deferred taxes due and how must it be done? At the time the real property is sold or transferred; in writing (NAC 361A.290(1))3. If agricultural or open‐space real property receiving agricultural or open‐space use assessment is sold or transferred to an ownership making it exempt from taxation ad valorem, any such liens for deferred taxes must, unless the property is sold or transferred to the Nevada System of Higher Education, a school district or another local governmental entity, be paid in full_______before the transfer of ownership if the property is converted to another use (NAC
361A.286(2))4. How long does the owner have to notify the Assessor of cessation of agricultural or open‐space use or conversion to higher use?
30 days (NAC 361A.270)
NRS 361A