Yes, the additional taxes imposed and the deferred special local assessments are a lien upon the property assessed. It is a tax lien to the same extent and duration as the regular payable real estate taxes levied against the property.
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Minnesota law requires assessors to value property at its estimated market value. Estimated market value must reflect the use of the property that will bring the greatest economic return to the land (its highest and best use). For many farm properties, the highest and best use may be to develop the land for a residential or commercial use. The residential or commercial value of a property has typically been significantly higher than that of farmland although the last few years the market has seen a greater increase in farmland values.
highest and best use
In the 1960s, the Legislature recognized that urban sprawl was causing valuation and tax increases that had the potential of forcing farmers off their land in certain situations. The Legislature developed a mechanism that allowed qualifying farmers to pay real estate taxes based upon the agricultural value of their land, while deferring the higher property taxes attributed to the land’s value as residential or commercial property. This law, officially known as the Agricultural Property Tax law, is commonly referred to as Green Acres and is codified in Minnesota Statute section 273.111.
In 2008, the Legislature amended the law to clarify that, going forward, only class 2a productive agricultural land can qualify for Green Acres. Class 2b rural vacant land that is currently enrolled in Green Acres may be grandfathered into the program until the 2013 assessment. Beginning with the 2013 assessment, any class 2b rural vacant land that has been grandfathered into Green Acres will be removed from the program and deferred taxes may be collected.
The implementation of a Green Acres program and its use are based upon the discretion of each county according to its location, land characteristics, and prevailing market conditions. It is administered for many reasons, one of which is to help curtail the loss of farmland due to urban growth.
Owners who possess agricultural property that is devoted to the production for sale of agricultural products may qualify. The property must:
production for sale of agricultural products
In addition to the preceding qualifications of size and classification, the property must also meet one of the following characteristics:
All parcels being enrolled for the deferred tax must be under the same ownership.
It may or may not. It depends on the property owner's plans. If the property owner plans to farm the property for an extended period of time, it may be advantageous to enroll in this tax deferment program. If he/she has plans to sell, develop, or put part or all of the property into a non-agricultural use within a reasonably short period of time, it may not be practical to enroll in the program. The option to sign up for the program should be carefully reviewed by the property owner.
The financial incentive, if any, to enroll in Green Acres will presumably be higher for those properties that are in the path of development. As the demand for these properties increased, the prices paid, and the market values reported, also rose at a faster rate than the general market increases evident in the agricultural market place. That trend has changed over the past few years, resulting in less benefit to having the farmland enrolled in the Green Acres program.
The greater the difference between a qualifying property's market value and agricultural value, the higher the associated property tax benefit.
For properties enrolled in Green Acres, taxes are calculated on both the estimated market value (higher value based on highest and best use) and the agricultural value (lower value).
The difference between the tax calculated on the agricultural market value and the estimated market value is deferred until the property is sold or no longer qualifies for the Green Acres program.
When property is sold, transferred, or no longer qualifies, the deferred tax (the difference between the agricultural tax and the tax based on the highest and best use) for the current tax payable year and the two prior years must be paid to the county.
Simply stated, the agricultural value of a property is its value when used for agricultural purposes. Unfortunately, it has been nearly impossible to find sales of agricultural property that are not affected by non-agricultural factors such as development pressure or sales of recreational land. In an effort to develop statewide uniformity, the Legislature directed the Commissioner of Revenue to develop a fair and equitable method for determining the agricultural values of each county.
The Department of Revenue studied statewide sales of largely tillable agricultural property across the state from 1990 to 1996. The department found that sales in several southwestern Minnesota counties were affected the least by non-agricultural factors, and thus were as close as possible to true agricultural sales. They are known as the base counties. Sales in the other 82 Minnesota counties during the same period were then compared to those in the base counties. This comparison yielded a set of individual county factors that measure the percentage relationship between each county and the base counties.
Each year, the Department of Revenue reviews current sales and calculates a base value that is used to determine agricultural values for all properties enrolled in the Green Acres program. The base value is adjusted for each county to determine the average tillable value per acre for that county. The County Assessor then applies this average value to individual properties. The value may differ on each individual parcel due to quality of land, location, or other factors.
Yes, the payment of special local assessments for improvements made to property qualifying for the Green Acres Program can also be deferred. However, when the property sells, all deferred special assessments become due.
The maximum number of years that the County Auditor-Treasurer can impose additional taxes on a property that had qualified for a tax deferment is three years. No payment is required for previously deferred taxes that extend beyond the most recent three-year period.
Land that no longer qualifies for a tax deferment prior to the expiration of the three-year period is subject to additional taxes only in the amount equal to the taxes that were deferred.
When the property no longer qualifies for the Green Acres Program, all deferred special local assessments, plus interest, become payable in equal installments spread over the time remaining until the last maturity date of the bonds issued to finance the improvements for which the assessments are levied.
If the bonds have matured, the deferred special local assessments, plus interest, are payable within 90 days.
Only that part of the property that has been sold for a use other than farming, or has been put to a non-agricultural use, shall be subject to additional taxes.
When property qualifying for the Green Acres Program is sold, no additional taxes will be extended against it provided the property continues to be classified by the Assessor as agricultural for property tax purposes and meets the requirements for the tax deferral.
However, the new owner must file an application for the continued deferment within 30 days after the sale. The purchaser then assumes any deferred tax that goes with the property
If the property is not sold within three years of losing the agricultural classification for property tax purposes, no deferred taxes will be due on the property.
Beginning with the 2009 assessment for taxes payable in 2010, only property that is classified by the assessor as 2a productive agricultural land is eligible for enrollment in the Green Acres Program. The property must:
Read more information about qualifying for the Green Acres Program.
If you have class 2b rural vacant land as a part of your farm homestead, it will not qualify for Green Acres tax deferral. However, it may be eligible to receive other benefits under the Rural Preserve property tax program. Only lands engaged in the production of an agricultural product for sale will qualify for Green Acres.
A description of agricultural production can be found in Minnesota Statue, section 27313, subdivision 23. The County Assessor will be able to assist you in determining which portions of your farm are considered agriculturally productive and which are considered rural vacant land. Enrollment in the Green Acres program is limited to properties owned by individuals and certain farm family entities.
rural vacant land.
Green Acres applications must be filed with, and approved by, the County Assessor. Proper documentation to verify agricultural use must be submitted with the application. Download an application (PDF) and addendum form (PDF) or pick-up copies at the County Assessor’s Office The application must be filed by May 1 in order to receive consideration for the next year's payable tax.
The Assessor may also require:
If you have any questions about the program, please contact the County Assessor's Office at 320-983-8311 or 888-280-8311.