Property Tax Breaks for Agricultural Land Benefit Developers

Friday, July 9, 2010 at 8:40 PM by

Tax breaks intended to provide property tax relief to farmers have had the side effect of lowering property taxes for some developers, according to a new report released by the Wisconsin Legislative Audit Bureau.

Under use value assessment, land used primarily for agricultural purposes is taxed based on its agricultural productivity, rather than its full market value as other land is. As a result, owners of agricultural land pay much lower taxes than they would if the land was not considered agricultural.

State law determines how land is classified for tax purposes, but municipalities determine how the land is zoned, which may give a better picture of how the land will be used in the future. The report examined properties in 14 municipalities, and found that more than 6,300 agricultural acres in those communities were zoned for non-agricultural purposes, and more than 3,800 agricultural acres were owned by real estate or property development businesses.

According to the report, “If those communities had assessed agricultural land that is zoned for another purpose at market value in 2009, the owners of the land would have owed a total of $4.7 million in additional property taxes, and the tax liability of other property owners in those municipalities would have been reduced by the same amount. On an individual basis, taxes on agricultural land that is zoned for another purpose would have increased by an average of $3,516, while taxes on all other parcels would have decreased, on average, by $38.”

The report also included several convincing photographs, including a photo of an agricultural parcel in the City of Eau Claire that is adjacent to a hotel, a state highway and a retail establishment, and is in a commercial zoning district.

The Milwaukee Journal Sentinel also ran an article on the report.

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