Rochelle Information Chief | Farmers and property taxes

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  Rochelle News Leader |  Farmers and property taxes

“I take pride in paying taxes in the United States; I could be just as proud for half the money. ”- Arthur Godfrey

Yes, if you have paid attention and have your mail open, you should know that your first installment invoice for property tax has arrived.

For most of us, we’re not happy to pay any type of tax, but it always seems that property tax is closest to home. Most likely, most of us aren’t smart enough to sift through the thousands of pages of the Income Tax Act to actually understand whether we’re paying too little or too much. Sales tax is easy, just call and pay for the additional freight. Nevertheless, property taxes are important to us.

Since farmers are the majority of landowners in most rural areas, they appear to be bearing the brunt of most of the property tax increases. Believe me, there isn’t a farmer out there who can’t tell you what his property taxes are and wonder why.

Farmers continue to see an increase in the estimated value of their arable land, which usually leads to higher taxes. These increases, of course, raise questions about the procedures for assessing farmland and why taxes continue to escalate.

Of course, we all know that arable land and other property are not taxed equally. Your home is taxed at a third of your estimated value. Your farmland is taxed based on its profitability.

The Illinois Farmland Assessment Law was first passed in 1977 by the Illinois General Assembly. In previous years, arable land was taxed according to its market value. Legislative changes were passed in both 1986 and 2013, both of which significantly change the Farmland Assessment Act.

When determining your farmland taxes, applicable law uses an income capitalization formula.

The Illinois Department of Revenue calculates this agricultural value for each land productivity index (PI). A PI value is assigned to each soil type in Illinois. According to the formula, the value per hectare is calculated for different types of soil based on their ability to produce plants.

Gross income minus costs is the return-to-ground value. The return to land value is divided by the five-year average of Farm Credit Bank’s farm mortgage rates.

This value is “offset” by dividing it by three, since Illinois farmland is valued at 33.3 percent of the value. However, the law limits increases or decreases in the soil estimate from year to year to a maximum of 10 percent. This “calculated value” is multiplied by your tax rate to arrive at your property tax per hectare.

In 1986 the law was amended to limit both the increase and decrease in the estimate for each soil type to a maximum of 10 percent per year. So-called “certified values” then result from this limit.

The purpose of the change was to stabilize the tax base for local administrative authorities and to control the sharp fluctuations in property taxes for farmers. However, the application of the 10 percent limit resulted in a huge gap between the certified values ​​and the assessed values ​​between low-yielding and high-yielding soils.

Simply put, the rating of the higher production land outperformed the rating of the lower production land by a ratio of 40 to one.

That injustice resulted in the second amendment to the law in 2013. After that change, the law now limits the change in value of all farmland PI soils to 10 percent of the Illinois mean farmland PI of 111.

As part of this change, the values ​​for agricultural land are directed towards a more precise representation of the income potential of the agricultural land.

In essence, this law will apply the determined tax value of the median floor (111) to all soils. The result is that soils with higher PI can still increase, but at a slower rate, and soils with lower PI will increase faster. The goal is to ultimately achieve a two-to-one ratio, not the 40-to-one we see today.

One of the best things farmers can do is check with the county assessor about how their land and buildings are classified. If you have made changes to your farm in terms of arable farming, pasture, building conservation structures, etc., this may affect your property tax.

Either way, your taxes are due and due again in August. And when all of that is done, Uncle Sam is coming to visit you in April.

“The government doesn’t levy taxes to get the money it needs; Government always needs the money it gets. ”- Ronald Reagan

Ron Kern is the manager of the Ogle County Farm Bureau.