15-7-201. Legislative intent -- value of agricultural
property. (1) Because the market value of many agricultural
properties is based upon speculative purchases that do not reflect the
productive capability of agricultural land, it is the legislative intent that
bona fide agricultural properties be classified and assessed at a value that is
exclusive of values attributed to urban influences or speculative purposes.
(2) Agricultural land must be classified
according to its use, which classifications include but are not limited to
irrigated use, nonirrigated use, and grazing use.
(3) Within each class, land must be subclassified by production categories. Production
categories are determined from the productive capacity of the land based on
yield.
(4) In computing the agricultural land valuation
schedules to take effect on the date when each revaluation cycle takes effect
pursuant to 15-7-111,
the department of revenue shall determine the productive capacity value of all
agricultural lands using the formula V = I/R where:
(a) V is the per-acre productive capacity value
of agricultural land in each land use and production category;
(b) I is the per-acre net income of agricultural
land in each land use and production category and is to be determined as
provided in subsection (5); and
(c) R is the capitalization rate and, unless the
advisory committee recommends a different rate and the department adopts the recommended
capitalization rate by rule, is equal to 6.4%. This capitalization rate must
remain in effect until the next revaluation cycle.
(5) (a) Net income must
be determined separately in each land use based on production categories.
(b) Net income must be based on commodity price
data, which may include grazing fees, crop and livestock share arrangements,
cost of production data, and water cost data for the base period using the best
available data.
(i) Commodity price
data and cost of production data for the base period must be obtained from the
Montana Agricultural Statistics, the
(ii) Crop share and livestock share arrangements
are based on typical agricultural business practices and average landowner
costs.
(iii) Allowable water costs consist only of the
per-acre labor costs, energy costs of irrigation, and, unless the advisory
committee recommends otherwise and the department adopts the recommended cost
by rule, a base water cost of $15 for each acre of
irrigated land. Total allowable water costs may not exceed $50 for each acre of
irrigated land. Labor and energy costs must be determined as follows:
(A) Labor costs are $5 an acre for pivot
sprinkler irrigation systems; $10 an acre for tow lines, side roll, and lateral sprinkler irrigation systems; and $15 an
acre for hand-moved and flood irrigation systems.
(B) Energy costs must be based on per-acre energy
costs incurred in the energy cost base year, which is the calendar year
immediately preceding the year specified by the department in 15-7-103(5).
By July 1 of the year following the energy cost base year, an owner of
irrigated land shall provide the department, on a form prescribed by the
department, with energy costs incurred in that energy cost base year. In the
event that no energy costs were incurred in the energy cost base year, the
owner of irrigated land shall provide the department with energy costs from the
most recent year available. The department shall adjust the most recent year's
energy costs to reflect costs in the energy cost base year.
(c) The base crop for valuation of irrigated land
is alfalfa hay adjusted to 80% of the sales price, and the base crop for
valuation of nonirrigated land is spring wheat. The
base unit for valuation of grazing lands is animal unit months (AUM), defined
as the average monthly requirement of pasture forage to support a 1,000-pound
cow with a calf or its equivalent.
(d) Unless the advisory committee recommends a
different base period and the department adopts the recommended base period by
rule, the base period used to determine net income must be the most recent 7
years for which data is available prior to the date the revaluation cycle ends.
Unless the advisory committee recommends a different averaging method and the
department adopts the recommended averaging method by rule, data referred to in
subsection (5)(b) must be averaged, but the average
must exclude the lowest and highest yearly data in the period.
(6) The department shall compile data and develop
valuation manuals adopted by rule to implement the valuation method established
by subsections (4) and (5).
(7) The governor shall appoint an advisory
committee of persons knowledgeable in agriculture and agricultural economics.
The advisory committee shall include one member of the
(a) compile and review data required by
subsections (4) and (5);
(b) recommend to the department any adjustments
to data or to landowners' share percentages if required by changes in
government agricultural programs, market conditions, or prevailing agricultural
practices;
(c) recommend appropriate base periods and
averaging methods to the department;
(d) evaluate the appropriateness of the
capitalization rate and recommend a rate to the department;
(e) verify for each class of land that the income
determined in subsection (5) reasonably approximates that which the average
Montana farmer or rancher could have attained; and
(f) recommend agricultural land valuation
schedules to the department. With respect to irrigated land, the recommended
value of irrigated land may not be below the value that the land would have if
it were not irrigated.
History: En. Sec. 1, Ch. 512, L. 1973;
R.C.M. 1947, 84-437.1; amd. Sec.
1, Ch. 644, L. 1983; amd. Sec.
1, Ch. 681, L. 1985; amd. Sec.
1, Ch. 705, L. 1985; amd. Sec.
1, Ch. 172, L. 1991; amd. Sec.
3, Ch. 680, L. 1991; amd. Sec.
2, Ch. 267, L. 1993; amd. Secs. 1,
2, Ch. 563, L. 1995; amd. sec.
36, Ch. 308, L. 1995; amd. Sec.
1, Ch. 459, L. 2001; amd. Sec. 8,
15-7-202. Eligibility of land for valuation as
agricultural. (1) (a) Contiguous parcels of land totaling 160
acres or more under one ownership are eligible for valuation, assessment, and
taxation as agricultural land each year that none of the parcels is devoted to
a residential, commercial, or industrial use.
(b) (i) Contiguous
parcels of land of 20 acres or more but less than 160 acres under one ownership
that are actively devoted to agricultural use are eligible for valuation,
assessment, and taxation as agricultural land if:
(A) the land is used primarily for raising and
marketing, as defined in subsection (1)(c), products that meet the definition
of agricultural in 15-1-101 and
if, except as provided in subsection (3), the owner or the owner's immediate
family members, agent, employee, or lessee markets not less than $1,500 in
annual gross income from the raising of agricultural products produced by the
land; or
(B) the parcels would have met the qualification
set out in subsection (1)(b)(i)(A) were it not for
independent, intervening causes of production failure beyond the control of the
producer or a marketing delay for economic advantage, in which case proof of
qualification in a prior year will suffice.
(ii) Noncontiguous parcels of land that meet the
income requirement of subsection (1)(b)(i) are
eligible for valuation, assessment, and taxation as agricultural land under
subsection (1)(b)(i) if:
(A) the land is an integral part of a bona fide
agricultural operation undertaken by the persons set forth in subsection
(1)(b)(i) as defined in this section; and
(B) the land is not devoted to a residential,
commercial, or industrial use.
(iii) Parcels of land of 20 acres or more but
less than 160 acres that do not meet the income requirement of subsection
(1)(b)(i) may also be valued, assessed, and taxed as
agricultural land if the owner:
(A) applies to the department requesting
classification of the parcel as agricultural;
(B) verifies that the parcel of land is greater
than 20 acres but less than 160 acres and that the parcel is located within 15
air miles of the family-operated farming entity referred to in subsection
(1)(b)(iii)(C); and
(C) verifies that:
(I) the owner of the parcel is involved in
agricultural production by submitting proof that 51% or more of the owner's
Montana annual gross income is derived from agricultural production; and
(II) property taxes on the property are paid by a
family corporation, family partnership, sole proprietorship, or family trust
that is involved in Montana agricultural production and 51% of the entity's
Montana annual gross income is derived from agricultural production; or
(III) the owner is a shareholder, partner, owner,
or member of the family corporation, family partnership, sole proprietorship,
or family trust that is involved in Montana agricultural production and 51% of
the person's or entity's Montana annual gross income is derived from
agricultural production.
(c) For the purposes of this subsection (1):
(i)
"marketing" means the selling of agricultural products produced by the
land and includes but is not limited to:
(A) rental or lease of the land as long as the
land is actively used for grazing livestock or for other agricultural purposes;
and
(B) rental payments made under the federal
conservation reserve program or a successor to that program;
(ii) land that is devoted to residential use or
that is used for agricultural buildings and is included in or is contiguous to
land under the same ownership that is classified as agricultural land, other
than nonqualified agricultural land described in 15-6-133(1)(c),
must be classified as agricultural land, and the land must be valued as
provided in 15-7-206.
(2) Contiguous or noncontiguous parcels of land
totaling less than 20 acres under one ownership that are actively devoted to
agricultural use are eligible for valuation, assessment, and taxation as
agricultural each year that the parcels meet any of the following
qualifications:
(a) except as provided in subsection (3), the
parcels produce and the owner or the owner's agent, employee, or lessee markets
not less than $1,500 in annual gross income from the raising of agricultural
products as defined in 15-1-101;
(b) the parcels would have met the qualification
set out in subsection (2)(a) were it not for independent, intervening causes of
production failure beyond the control of the producer or marketing delay for
economic advantage, in which case proof of qualification in a prior year will
suffice; or
(c) in a prior year, the parcels totaled 20 acres
or more and qualified as agricultural land under this section, but the number
of acres was reduced to less than 20 acres for a public use described in 70-30-102
by the federal government, the state, a county, or a municipality, and since
that reduction in acres, the parcels have not been further divided.
(3) For grazing land to be eligible for
classification as agricultural land under subsections (1)(b)
and (2), the land must be capable of sustaining a minimum number of animal unit
months of carrying capacity. The minimum number of animal unit months of
carrying capacity must equate to $1,500 in annual gross income as determined by
the
(4) Parcels that do not meet the qualifications
set out in subsections (1) and (2) may not be classified or valued as
agricultural if they are part of a platted subdivision that is filed with the
county clerk and recorder in compliance with the Montana Subdivision and
Platting Act.
(5) Land may not be classified or valued as
agricultural land or nonqualified agricultural land if it has stated covenants
or other restrictions that effectively prohibit its use for agricultural
purposes.
(6) The grazing on land by a horse or other
animals kept as a hobby and not as a part of a bona fide agricultural
enterprise is not considered a bona fide agricultural operation.
(7) The department may not classify land less
than 160 acres as agricultural unless the owner has applied to have land
classified as agricultural land. Land of 20 acres or more but less than 160
acres for which no application for agricultural classification has been made is
valued as provided in 15-6-133(1)(c)
and is taxed as provided in 15-6-133(3).
If land has been valued, assessed, and taxed as agricultural land in any year,
it must continue to be valued, assessed, and taxed as agricultural until the
department reclassifies the property. A reclassification does not mean
revaluation pursuant to 15-7-111.
(8) For the purposes of this part, growing timber
is not an agricultural use.
History: En. Sec. 4, Ch. 512, L. 1973; amd. Sec. 2, Ch. 56, L. 1974; amd. Sec. 1, Ch. 457, L. 1975;
R.C.M. 1947, 84-437.2; amd. Sec.
1, Ch. 608, L. 1979; amd. Sec.
16, Ch. 693, L. 1979; amd. Sec.
4, Ch. 681, L. 1985; amd. Sec.
1, Ch. 699, L. 1985; amd. Sec.
1, Ch. 35, Sp. L. June 1986; amd. Sec. 1, Ch. 590, L. 1991; amd. Sec. 2, Ch. 705, L. 1991; amd. Sec. 16, Ch. 773, L. 1991; amd. Sec. 3, Ch. 627, L. 1993; amd. Sec. 1, Ch. 474, L. 1995; amd. Sec. 2, Ch. 485, L. 1995; amd. Sec. 2, Ch. 376, L. 2005; amd. Sec. 1, Ch. 543, L. 2005; amd. Sec. 1, Ch. 478, L. 2007; amd.
Sec. 1,
15-7-203. Agricultural uses only considered in valuation. In valuing
land as agricultural, the department of revenue shall consider only those
indicia of value which such land has for agricultural use.
History: En. Sec. 5, Ch. 512, L. 1973; amd. Sec. 3,
15-7-204. Repealed. Sec. 6,
History: En. Sec. 6,
15-7-205. Repealed. Sec. 6,
History: En. Sec. 7, Ch. 512, L. 1973; amd. Sec. 4,
15-7-206. Improvements on agricultural land.
(1) In determining the total area of land actively devoted to agricultural
use, there is included the area of all land under barns, sheds, silos, cribs,
greenhouses, and like structures, lakes, dams, ponds, streams, irrigation
ditches, and like facilities.
(2) One acre of land beneath agricultural
improvements on agricultural land, as described in 15-7-202(1)(c)(ii), is valued at the class with the highest productive
value and production capacity of agricultural land.
History: En. Sec. 8, Ch. 512, L. 1973; amd. Sec. 2, Ch. 457, L. 1975;
R.C.M. 1947, 84-437.6; amd. Sec. 3,
15-7-207. Continuance of valuation as
agricultural land. Continuance of valuation, assessment, and
taxation under this part shall depend upon continuance of the land in
agricultural use and compliance with the other requirements of this part and
not upon continuance in the same owner of title to the land.
History: En. Sec. 10, Ch. 512, L. 1973;
R.C.M. 1947, 84-437.8; amd. Sec. 3,
15-7-208. Reclassification by department.
The department may reclassify land as nonagricultural upon giving due
notice to the property owner or any purchaser under contract for deed under the
provisions of 15-7-102.
Upon notice of a change in classification of land from agricultural to another
use, the property owner may petition the department to reclassify the land as
agricultural by completing a form prescribed by the department and by producing
whatever information is necessary to prove that the subject land meets the
definition of agricultural land embodied in 15-7-202.
History: En. 84-437.15 by Sec. 4, Ch. 56, L.
1974; R.C.M. 1947, 84-437.15; amd. Sec. 12, Ch. 526, L. 1983; amd.
Sec. 42,
15-7-209. Reclassification by owner -- lien.
(1) Whenever land that is or has been in agricultural use and is or has
been valued, assessed, and taxed for agricultural use is applied to a use other
than agricultural, the owner shall notify the department.
(2) The department shall provide, in a form
eligible for recording, releases of lien, for those liens attributable to the
former rollback tax, and the department shall present the releases to the
county clerk and recorder for recording.
History: En. 84-437.16 by Sec. 5, Ch. 56, L.
1974; R.C.M. 1947, 84-437.16; amd. Sec. 1, Ch. 201, L. 1981; amd. Sec. 1, Ch. 423, L. 1981; amd. Sec. 1, Ch. 585, L. 1981; amd.
Sec. 43,
15-7-210. Tax on change of use of part of tract.
Separation or split-off of a part of the land which is being valued,
assessed, and taxed under this part, either by conveyance or other actions of
the owner of such land, for a use other than agricultural shall subject the
land so separated to reclassification by the department but shall not impair
the right of the remaining land to continuance of valuation, assessment, and
taxation hereunder, provided it meets the minimum requirements of this part.
History: En. Sec. 11, Ch. 512, L. 1973;
R.C.M. 1947, 84-437.9; amd. Sec. 4,
15-7-211. Repealed. Sec. 6,
History: En. Sec. 12,
15-7-212. Tract crossing county line -- whole.
Where contiguous land in agricultural use in one
ownership is located in more than one county, compliance with the
minimum requirements shall be determined on the basis of the total area and
value of farm crops on such land and not the area or value of farm crops on
land which is located in the particular county.
History: En. Sec. 13,