The Utah Farmland
Assessment Act (FAA, also called the Greenbelt Act) allows
qualifying agricultural property to be assessed and taxed based
upon its productive capability instead of the prevailing market
value. This unique method of assessment is vital to agriculture
operations in close proximity to expanding urban areas, where
taxing agricultural property at market value could make farming
operations economically prohibitive.
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How is productive value determined?
Productive values are
established by the Utah State Tax Commission with the assistance
of a five-member Farmland Assessment Advisory Committee and the
Agricultural Economics Department of Utah State University.
Productive values are county-specific and are based upon income
and expense factors associated with agricultural activities in
that county. These factors are expressed in terms of value per
acre for specific land classifications.
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How is land classified?
Land is classified
according to its capability of producing crops or forage.
Capability is dependent upon soil type, topography, availability
of irrigation water, growing season and other factors. The County
Assessor classifies all agricultural land in the county based
upon Soil Conservation Service soil surveys and guidelines
provided by the Tax Commission.
The general
classifications of agricultural land are irrigated, dryland,
grazing land, orchard and meadow.
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What does it take to
qualify?
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land must be at least
five acres (land under and directly related to the
farmhouse, is not included in computing the five acre
minimum). Land less than five acres may qualify where
devoted to agricultural use in conjunction with other
eligible acreage under identical ownership.
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land must be actively
devoted to agricultural use, and the operation is managed
in such a way that there is a reasonable expectation of
profit;
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land has been devoted
to agricultural use for at least two successive years
immediately preceding the tax year in which application
is made; and
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land meets average
annual (per acre) production requirements.
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Production
Requirement Defined:
To qualify for the
Farmland Assessment Act land must produce in excess of 50 percent
of the average agricultural production per acre for the given
type of land and the given county or area. To determine
production levels the County Assessor will use the following
sources: the most recent publication of Utah Agricultural
Statistics; crop and enterprise budgets published by Utah State
University; or standards established by the Tax Commission. Examples:
(1) A farmer grows alfalfa. The average annual production of
alfalfa in his area is four tons per acre. To qualify he must
produce more than two tons per acre per year. (2) A rancher has
10 acres of irrigated pasture which would reasonably carry 10
cows or 50 sheep through the grazing season. To qualify he will
need to graze more than five head of cattle or 25 sheep.
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Exceptions:
The production requirement
may be waived if the owner shows that the property has been in
agricultural use for the previous two years and that failure to
meet the production requirement in a particular year was due to
no fault or act of the owner, purchaser, or lessee.
The production requirement
will be waived if the land is involved in a bona-fide range
improvement program, crop rotation program, or other similarly
accepted agricultural practice which does not give reasonable
opportunity to satisfy the production level requirement for that
year.
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What happens when land is
withdrawn from FAA?
When land becomes
ineligible for farmland assessment (such as when it is developed
or goes into nonuse), the owner becomes to subject to what is
known as a "roll-back tax." The roll-back tax is the
difference between the tax that was levied based on agricultural
use value and the tax that would have been levied if the property
had not been on greenbelt. The roll-back tax is computed for all
years for which the property was assessed based on agricultural
use up to a maximum of five years. The tax rate for each of the
years in question will be applied to determine the tax amount.
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