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Report on Farmland Property Tax Assessment Expected This Year

Report on Farmland Property Tax Assessment Expected This Year
Final report will be issued soon as directed by the 2013 legislative session.

Your property taxes went up on average, bare farmland the past two years, and will likely go up again this year as well. However, your property tax bill for bare farmland hasn't been as high as it could have been if farm groups hadn't stepped in and helped thwart efforts to raise property taxes on land based on arbitrary changes in soil productivity ratings.

Soil productivity index changes? The Department of Local Government and Finance will soon issue a report detailing proposals, if there are any, to change land valuation based upon updated soil productivity indexes.

First, understand that property tax on land will go up because the formula that is used to calculate property tax values will produce a higher number. Each year, one of six years rolls out, and the most recent year used for calculations rolls in. The formula includes corn price and other factors. It was originally set up with the help of Purdue University ag economists to help establish reasonable values for farmland.

The newest year rolling into the formula will likely have higher crop prices than the year rolling out. So the property tax valuation and the amount will continue to rise. Unless you've hit the property tax cap limit on land in your county, which hasn't happened in most counties, your bill will go up. The 2013 legislature took no action which would stem the valuation and thus the amount of property tax due from increasing, based upon the formula.

What it did do was stop the Department of Local Government and Finance's plan to also change and in most cases increase bare land valuation based on revised soil productivity factors. DLGF actually tried to implement it in 2012, and the effort was thwarted, largely due to lobbying by Indiana Farm Bureau, Inc. This past session the change was stopped again. This time the legislature passed a bill preventing DLGF from implementing changes on property tax valuations on bare land due to soil productivity index changes until it worked with Purdue University to arrive at science-based reasons for adjusting soil productive values.

That report is due to the legislature now. Katrina Hall, Indiana Farm Bureau, has seen a preliminary report, but is waiting until a final report is issued before commenting on the findings.

The hope is that any changes that would increase property taxes based on soil productivity indexes will be minor. Stay tuned.

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