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Land (Agricultural and Vacant)
Notices of Value (NOV)
Agricultural land is:
• Located in an incorporated or unincorporated area (without regard to zoning)
• Used in the last two years and presently used as a farm or ranch (or is being restored through conservation practices through a conservation district approved plan)
• A parcel of land used as a farm or ranch with a decreed water right or final permit to appropriated ground water for non-residential purposes and the water is used for production of agricultural or livestock products
• Forest land: 40 acres or more of forest land that is subject to a forest management plan (land is used to produce tangible wood products for profit)
• Conservation easements: 80 acres or more of land (or less than 80 acres with no residential improvements) subject to a perpetual conservation easement which was granted at the time the land was classified agricultural. The easement must have been granted exclusively for conservation purposes and all current and future uses are described in the conservation easement.
• Farm – land used to produce agricultural products for the primary purpose of obtaining a monetary profit. Products include plant and animal products from farming, ranching, animal husbandry and horticulture.
• Ranch – land used for grazing livestock for the primary purpose of obtaining a monetary profit products for profit
• Livestock – domestic animals used for food for human or animal consumption, breeding draft, or profit products for profit
• Improvements – structures, buildings, fixtures, fences, and water rights attached to the land. Homes and buildings are appraised and valued separately from the land. Water rights, windmills and sprinklers are improvements that are appraised and valued as a unit with the land.
Agricultural land value is based on the actual value of agricultural lands, exclusive of building improvements, and is determined by the earning or productive capacity of such lands, capitalized at a rate of 13%, § 39-1-103(5)(a), C.R.S.
Earning or productive capacity is determined by measuring the landlord’s net income over a reasonable amount of time (the current 10-year average)
The net income is equal to the gross income less allowable expenses, including baling, fencing, water, fertilizer, alfalfa seed, and chemicals. Those expenses must be typical for the use.
The gross income is determined by the earning or productive capacity of the land.
To ensure that your property is classified properly, the Assessor may request additional information from you, which could be a copy of your previous year’s income tax 1040-F form, a grazing lease, or an agricultural land classification questionnaire. The Assessor may also conduct a physical inspection of your property.
Please note that there is a two-year waiting period after the year of application before the classification will take effect.
Please Click Here for Application
For more information, please click here for a copy of the State brochure (Classification and Valuation of Agricultural Property in Colorado)
To see ALL of the State of Colorado Division of Property Taxation Brochures, click here
Vacant Land is assessed at 29% of actual value and valuation is based on the actual value of the property based on the market approach, § 39-1-103(5)(a), C.R.S.
Vacant land is one of the most controversial classifications because it is assessed at 29%. Vacant land does not have a residential house, but it may have a minor structure, such as a detached garage. Vacant land does not include land used for ranches and farms which qualify for agricultural status.
The Assessor’s office often hears from homeowners who own a parcel of land adjacent to property that is classified residential. The homeowner is unhappy because the taxes on the vacant parcel are more than the taxes on the parcel with the house. One example is a 2.2-acre parcel of land valued at $113,000 with taxes of $2,254, which is adjacent to parcel with a 2000 square foot house on 2.4 acres of land with taxes of $1,154.
If you are using a vacant lot or parcel adjacent to your residence, you may want to consider vacating the boundary line between the parcels. You should contact your city or county planning department for assistance.
If you do not wish to vacate the boundary line, you may contact the Assessor’s office to complete a Request for Combination of Properties form. This request will combine the parcels, provided that certain conditions are met. Conditions include the unity of ownership, which means that the ownership of the vacant parcel must be identical to the ownership of the parcel containing the house. The vacant parcel must be contiguous to and used as an integral part of the residence for the support, enjoyment or other noncommercial activity of the homeowner. There are other conditions, so you will need to call the Assessor’s office to request the form, a review, and an inspection.
Sub-dividers and Developers Discount
By law, the Assessor must consider and, if appropriate, apply present worth valuation procedures when using the market approach to valuing vacant land, § 39-1-103(14)(b), C.R.S. Present worth valuation is usually applied to subdivision lots owned by developers or sub-dividers and, it involves discounting based on various factors. The use of present worth valuation is used to account for the time necessary to sell an inventory of vacant lots and, under Colorado law, equates to actual or market value. This method of valuation is also applied to lots held in inventory by banks and lending institutions pursuant to foreclosure or deeds in lieu of foreclosure.
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