Now
Fair
47°
High
51°
Low
29°
Full Forecast

Jobs

Cars

Homes

Rentals

Alerts

Subscribe
Home > News > Local
Bookmark Us   •   Make Us Your Homepage

20-acre parcel a farm or country house?

Comments 39 comment(s)  
E-mail Story E-mail Story
Print Story Print Story
Share  Share
Text Size: 
Tools Sponsor

by NANCY HICKS / Lincoln Journal Star

Sunday, Sep 07, 2008 - 12:32:21 am CDT

Same song. Second verse.

When is a 20-acre piece of land with a house on it a real farm that deserves a tax break?

And when is it just a quiet place to live without nearby neighbors?

Acreage dispute headed to state Supreme Court

Acreage owners save money on taxes if their land is determined to be agricultural land.

An acreage owned by Jon Large is one of the cases on its way to the Nebraska Supreme Court.

The acreage is a 21.56-acre parcel near Raymond, with a residence on about one of those acres.

The landowner leases about 16.75 acres to a tenant who grows corn or soybeans. The landowner also is trying to establish a vineyard on the property.

The county assessor said the acreage is a residence, with a value of $246,498.

The Lancaster County Board of Equalization determined the land, except for house and an acre, is agricultural land and thus gets a greenbelt tax break for a value of $202,320.

The Tax and Equalization Review Commission sided with the assessor, determining the entire acreage is a residence and no land should be taxed as agricultural.

The Nebraska Supreme Court will make the final decision.

Here are the tax consequences on the property for 2007:

* Taxes on market value ($246,498): $4,142;

* Taxes on value with greenbelt exemption ($202,320): $3,399;

* Difference: $744.

The answer depends on whether you listen to Lancaster County Assessor Norm Agena or to the Lancaster County Board, which is also the county board of equalization.

And if you own that 20 acres, the answer could mean a difference of $350 — on average — in property taxes each year. 

For the second year in a row, the county assessor and most of the county board are fighting over what acreages should qualify for the state’s special “greenbelt” tax exemptions.

The assessor says most small acreages — those around 20 acres and less — are residences, even when there are some crops planted beyond the house, or a few horses in the pasture.

And their owners should be paying taxes on the market value  of the acreage (what the owner could sell it for), just as homeowners in Lincoln do.

However, the County Board says most of these acreages are a house plus a little farm. And the portion of land used for agriculture should get a special tax break, called greenbelt protection.

Last year, around 500 acreage owners protested the assessor’s decision that they don’t qualify for the special “greenbelt” tax exemption.

The County Board, acting as the Board of Equalization, reinstated the special tax status on about 400 properties.

The assessor then appealed 190 of those decisions to the state level.

So far, Agena’s definition is winning, as these contested cases move up the judicial ladder toward a Nebraska Supreme Court decision.

The Tax Equalization and Review Commission (TERC), the legal step beyond the county board of equalization, sided with the assessor in the four cases it considered — determining that just because it looks like a farm doesn’t mean it should be taxed as a farm.

The evidence that the property was purchased for residential use also must be considered, the TERC order said.

The taxpayer’s motivation for purchasing the property for residential use, is a factor to be considered in determining the primary use of the property, according to the decision.

Two of those cases are now headed to the Nebraska Supreme Court.

This year, there’s a repeat of last year’s fight, with 233 acreage owners protesting their loss of greenbelt status, according to the county clerk.

The County Board is in the process of hearing those protests, and giving most of the property owners the agriculture exemption.

History of exemption

The state’s special greenbelt exemption, created in 1974, was intended to protect real farms near urban areas from high taxes, as encroaching development pushed up land values.

“If you actually had to pay taxes based on full market value, they would be so high you couldn't continue to farm,” said state Sen. Ron Raikes of Lincoln.

The idea was to allow legitimate farming operations to continue, he said.

However, that protection has been extended to many Lancaster County acreage owners since the early 1990s.

Agena believes acreage owners found a loophole in state law.

Lancaster County Commissioner Larry Hudkins, who has led the greenbelt fight at the board level, believes acreage owners are getting the tax break fair and square.

A 2006 change in state law was intended to eliminate the loophole and assure that full-time farmers, and not acreage owners, would get the lower ag value, according to Raikes, who sponsored the bill.

Too many people had learned how to take advantage of the tax break, he said.

“You say I need to be a farmer. Well OK, then. I’m a farmer. I wear bib overalls. I got a farm number with FSA (Farm Service Agency),” Raikes said.

The greenbelt fight began that next tax year.

In 2007, Agena began treating most acreages like residences with very big lawns, taking away their special tax protection. His office began treating these acreages just like they treat city homeowners, with taxes based on the market value.

But Hudkins maintains the 2006 bill didn’t really change anything. These acreages are farms, albeit small farms. And the law says greenbelt status can be applied to land used for agricultural purposes, he says.

“What’s the difference between a small farm and a big farm?” he asks.

“These people are showing us the picture where they are stacking the bales. They are truly small farms. They shouldn’t be penalized,” Hudkins said.

Tax shift exists

Both Hudkins and Agena contend there is a tax shift with the greenbelt debate.

Agena says giving this agricultural tax break to people who bought acreages to escape urban congestion is a tax shift — from acreage owners to everyone else.

The 500 acreage owners who protested a year ago saw $28 million of their land value evaporate under greenbelt exemption.

That’s about $77,000 in taxes to county government that someone else must pay.

Sure it’s a tax shift, says Hudkins. The acreage owners are being penalized.

“You’re shifting more taxes onto people who were getting the greenbelt exemption for years,” he says.

Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com.


$1 Sunday Delivery - Subscribe Today!
Local > Back to Top of Story

Post Your Comment

Standards and Rules
All posts to JournalStar.com are subject to our Terms and Standards.
Your posted comment will appear after it has been approved.
Frequently asked questions about story commenting.
(optional)
   
Hide Comments Hide Comments   Newest First Newest First  
SEWARD CO FARMER wrote on September 7, 2008 5:11 am:
" Seward county is doing the same thing. I own several hundred acres but parceled off 20 acres and built a house because the bank wanted me to do that. I own the farm all around it and farm the 20 acres too but they say that the 20 acres is not farm land. The Seward County Board of Supervisors vote on the side of the Assessor though. I have my hearing with TERC this week. "

 Galen wrote on September 7, 2008 7:47 am:
" Property taxes are way too high now. Counties will use any excuse to grab more money from the citizens. If you don't live IN a city/town, then you shouldn't be taxed like you DO. "

 Go rob someone else wrote on September 7, 2008 8:14 am:
" As far as I'm concerned, anything that prevents the landscape from being packed full of houses by greedy developers is a good thing. I don't care if it's being used for farming, or for a single residence, or a guy with tent. If it's not being developed, it shouldn't be taxed as though it were. Where is the logic in taxing a lightly-populated area at the same rates as a densely-populated one? A single family on an acreage doesn't cost the public nearly as much for services as fifty families in fifty houses packed into the same space do. Why should I have to pay taxes at a level that should provide fire, police, schools, roads, and other public services to fifty times the number of people who live on my property? Why does it matter if I grow corn on it or just leave it alone and enjoy the peace and the wildlife? It's absurd. The government will get their pound of flesh if and when the property is eventually sold in any case. Go rob someone else. "

 Yada wrote on September 7, 2008 8:34 am:
" It has been a while but I once tried to develop a cottage business. I was able to write off my expenses for 3 years without making a profit. After 3 years I had to show a profit or my "business" was considered a hobby and I couldn't write it off on my taxes.

Maybe the same should apply here. If they can not show the "farm" as an agricultural business with a profit after 3 years, it is taxed as a residence. "

 hey larry wrote on September 7, 2008 9:06 am:
" you really believe these are farms? how many of you campaign donors live on these "farms"? "

 Where wrote on September 7, 2008 9:55 am:
" I live and sell real estate a twenty acre lot is considered a residential acreage. Sometimes called a "gentlemans farm or ranch". It is taxed the same rate as any county residence. In nebraska I would say if they qualify for crp from usda then they can be called agriculture land. Make these tax avoiders pay up. They chose to move from the city to avoid high taxes. "

 Once again wrote on September 7, 2008 10:36 am:
" This shows the idiotic favoritism by the majority of the County Board. Three out of five members live outside of Lincoln (where only 9 percent of the population resides in Lancaster County). Of course they are going to buddy up with their neighbors to give them tax breaks, on the backs of Lincoln residents.

When will the Lincoln voters realize that the sooner Heier, Hudkins and Workman are off the County Board the better it will for Lincoln residents? You have a chance this fall to replace two of them...DO IT! "

 old Macdonald wrote on September 7, 2008 10:50 am:
" If there are crops on the land, it is a farm...plain and simple. If there is a garden and a couple of horses....not a farm. The county is getting creative in their greed. eiei owe "

 Mike in DC wrote on September 7, 2008 12:10 pm:
" So 400-500 wealthy land owners get tax breaks that the rest of the city/county residents have to pick up. It's not a lot of money given the number of people, but... are you saying that if, I had a hobby, like, say making guitars, or furniture, or fixing up old cars, and I wanted to do some home improvement I should qualify for tax-increment financing? A 20-acre farm is a hobby, and many folks would like it, but if you can afford a huge 20-acre spread near the city, and $350 is busting your chops, time to tap out. The things are working out, and high commodity prices, there's no reason why all land shouldn't be assessed full market rate unless it's tax exempt or set-aside. "

 jerry wrote on September 7, 2008 12:44 pm:
" well hudkins just because they have been getting it for years don't make it right. and if it is truely a working and producing farm then they should be required to keep records just like real farmers do and pay taxes on the income generated through their "farming" business. and if they say they only produce enough to feed the horse or cow that they put on the land just so they could back door the taxes well that still has a value so should be taxed as revenue. just because some acreage owners send pictures with a feww bales stacked on them don't make it a producing farm. funny how when someone else wants to build something in the area of these acreages the owners say no because we built our residences out here to be away from noise and traffic, etc. but to be a small farmer is never mentioned. so i find it hard to justify why you should not be taxed at the full rate like everyone elses primary residences. like most things in life you can't have it both ways "

 not just lancaster wrote on September 7, 2008 3:23 pm:
" I have been arguing with our county board for years that we deserve greenbelt status. We produce livestock-all though it is smaller than most and we produce crops and hay on our 24 acres. We move out of town to run a small farm with hopes of increasing it size. Yet the county pays no mind to our FSA payments or our products. They just want more money. "

 Roger wrote on September 7, 2008 3:32 pm:
" Pay your taxes, we all know 20 acres is a postage size lot here in Nebraska. If you call yourself a farmer your insulting the occupation.
You all want the great benefits of being a Nebraskan the greatest state
in the union but the you dont want to support it financially,stop being
a cheapskate,20 areas a farm, not here pal maybe over in New York City
or that other dump New Jersey.I will be sending my thoughts on this matter
to the state supreme court to be heard on this matter hopefully will win this matter and the county can start foreclosing on anybody caught not paying their fair share of their taxes. "

 Rural Regional Land Use Planner wrote on September 7, 2008 3:46 pm:
" Quit Complaining Hudkins...you are just as pro-development as Heier is. The only reason you are fighting so badly for it, is that you think without the greenbelt tax as 'incentive' for rural development...it will not happen. Get a life Hudkins...you too Heier! "

 Unbelievable wrote on September 7, 2008 4:02 pm:
" The assessor says, "they should pay taxes on the market value, what they
could sell it for just like Lincoln homeowners do." What a bunch of crap!
Tell me why several of my neighbors have their homes for sale, priced below the assessed value (supposedly market value) and can't even sell
their houses. They have been for sale since before Jan 1st and since
Jan 1st. Even before the housing downturn, people could not even sell
their house for the OVER assessed value, which includes me. Some of
these people need & have moved to a retirement home and are in real limbo
because they can't sell their houses, YET they are stuck with these
outragious taxes!!! How do you people look in the mirror at yourselves??
There are even 3 households who haven't even put their houses on the market but are looking for work and homes in other states, and one
neighbor fed up just packed up and moved to another state and left the
house unsold!!!!! Lincoln just loves and is notorious for sticking the
knife in and turning it!!!!! "

 mike H wrote on September 7, 2008 5:40 pm:
" Twenty acres is way to few of acres to deserve a break as farm ground the limit should be set by what the least amount of acres you would have to farm and still earn a income above poverty level at that point anyone with fewer acres should not be given a tax break simple as that. obviously if you do not have enough acres to earn a living off the land your intentions are not to be a farmer just a tax dodger "

 Are you kidding me wrote on September 7, 2008 7:05 pm:
" It's in black and white. How does the print read? 20 acres? What's grey here? It's not about who's trying to avoid this or who's trying to collect that - it's about how is it written. It's wrong for the County Assessor to twist and bend the rules per his beliefs or thoughts on the subject. If it's wrong, define it and fix it and get on with your lives. I hardly believe a couple hundred bucks will kill any of these people. Besides, with these gas prices, they are overpaying their taxes at the pump compared to us that live in the city. Fix it and go on, but don't try to push your "loophole" thoughts on us. "

 City folk wrote on September 7, 2008 8:33 pm:
" Ok. So if I live on 20 acres and my cat and dog each haver one litter a year -- my livestock is just smaller than yours -- and I let of patch of sunflowers bloom out toward the west fence line every year, am I a farmer? Would it help if I also let my "grass" grow until it's tall enough to mow up into a pile of "hay" large enough to bale? These acreages are typically undervalued for tax purposes anyway under the excuse that there are fewer comparables for those properties. This is just another way the rich cheat the rest of us. Make 'em show income tax returns for their farms to prove they are farmers. "

 You know nothing about fairness wrote on September 7, 2008 8:50 pm:
" Why is it that you all seem to want to cheer for whatever will be a stick in the eye to anyone who is doing okay for themselves? You don't have to be a multi-millionaire to own a small acreage. I repeat my earlier argument: Why should I have to pay taxes on my rural property based on how many people someone can jam onto a similarly-sized piece of land, farm or not? Taxes are collected to pay for city and county services on behalf of property owners. If I'm sitting on 20 acres with just my own family, we require, on average, only 1% of the services that would be required by 100 families on the same 20 acres. What makes any of you think I should have to justify my decision not to live elbow-to-elbow with my neighbors just to get taxed fairly? You'd scream if your house on a city lot got taxed the same as an apartment building on the same lot. How is my situation different, aside from the fact that it's not _your_ butt being ripped off? "

 Mr. Urban wrote on September 7, 2008 9:34 pm:
" Given today's total record land prices, total record commodity prices and farm subsidies (i.e., welfare), why should land called agriculture be taxed any differently than my land here in Omaha? It makes no sense whatsoever. "

 Farming wrote on September 7, 2008 9:50 pm:
" I grew up on a farm. A REAL farm. We had 1400 head of cattle 200 yards from the house. Out the window, was a large barn with 4 horses and a pen for sick cattle. There was an elevator and harvest stores for the grain for feed. There was 3 shops fulls of equipment. THAT is a farm. My parents are still there and my dad still farms over 1200 arecs of land. 20 acres is not a farm. It will not produce enough to be considered a farm. I won't argue about gov't trying to get money, but find another argument other than its a 'farm'. I may be cynical, but having lived and worked on the real deal, there has to be a line drawn somewhere. "

 sick wrote on September 7, 2008 9:51 pm:
" sick of hearing these tax dodgers wine if they have to pay their fair share of taxes cry they don't live in the city they shouldn't have to pay tax but they are in town every day driving on city streets maybe what we need is all roads into town with a toll booth "

 dee wrote on September 7, 2008 10:26 pm:
" if you have 20 achers as we do, and hay 15 of it and have chickens and goats and a house on the other five, as we do, then why every year do we get hauled in to defend our selfs? "

 Mrs. Macdonald wrote on September 7, 2008 10:36 pm:
" Dear Old Macdonald,
Kinda depends on what you're doing with the horses, doesn't it? You can sell good, farm-raised breeding stock for a heck of a lot more than a bushel of corn.
Ma "

 Farmers daughter wrote on September 8, 2008 7:29 am:
" Our farm has been in the family for generations. When my parents died they left it to myself, and two brothers. Because I wanted to live where my parent did, I bought the homestead and 20 acres from my brothers. We all share in the income, everything is farmed up to my lawn, there is no difference between my 20 acres and our shared farmland. There isn't a fence, just rows and a survey stake. In the country when I bought the land from my brothers, we had to own over 20 acres to avoid rezning the land. I pay full taxes on my house and one acre, the rest is greenbelt status, because it has corn or soybeans planted on it. Don't assume every 20 acre acreage is a gentlemens farm. I am a farmer, just like my parents, although I only own 20 acres in my name and 560 acres shared with my brothers. And yes, I do get greenbelt status on the farmland, because I submitted income tax schedules and FSA papers to prove it. "

 City folk wrote on September 8, 2008 7:45 am:
" I pay "County" taxes on a 120 foot by 100 foot lot in town valued by the Assessor at $100k. Can a "20 acre farmer" tell me what their land is valued/taxed at, for "County" taxes? I'll tell you...if it's valued at AG it's about $10k. If it's valued at "acreage" it's close to $100k. Now tell me why I should be paying more ($90k valued) in "County" taxes than you? You use the "County" portion a lot more than me, and you use the "City" portion too, without even paying.

To the commenter who asked why others are basically ganging up on him/her...we want EVERYONE to pay their fair share, and as it is you're not. And to top it off you have 3 out of the 5 County Commissioners on "YOUR" side when the City of Lincoln makes up 91 percent of the population. "

 Bill wrote on September 8, 2008 9:12 am:
" A 20 acre farm is called a loophole. "

 k wrote on September 8, 2008 9:46 am:
" There are exceptions here...how about Shadowbrook Farm? They farm a few acres each year growing organic produce--selling to restaurants, stores and at markets. They also produce goat cheese from their herd of goats...it is definitely NOT a hobby for these people; it's backbreaking work. "

 Yes wrote on September 8, 2008 10:29 am:
" To City Folk. Using your figures, the lot you own in town contains your house. The 20 acres you figure is accessed at 10K must not contain a house or buildings and is used strictly for farming. We pay full accessed value on the 1 acre parcel where our houses are. We pay greenbelt status on the remaining acres because it's used in a business. Please look at some of the public records for homes in the country and you'll see. We do pay the our fair share of taxes as you do for our homes. "

 Simple Solution wrote on September 8, 2008 11:30 am:
" There's a simple solution to this. Base it on % of income that is derived from the "farm". If the family derives greater than X% (where X is between 0 and 100) of their income from the farm itself, then tax it as farmland. If they derive less than that, then the "farm" is just there as a tax loophole and therefore they should pay acreage taxes. Now, I leave defining "X" as an exercise for the reader... :) "

 Nope wrote on September 8, 2008 11:35 am:
" It's just a lot, no house. (location, location, location) "

 cindy wrote on September 8, 2008 12:08 pm:
" Most of those house's with 20 acres are some of the more wealthy people in our State and move out there for the peace & quiet. They don't want anything to do with farming. "

 Nina wrote on September 8, 2008 12:17 pm:
" Depends - could be just a country home, or could be a farm - if you have 20 acres of grapes, that's enough wine to make a living, and you're a farmer. Most other crops, and it's still a small business of sorts. "

 Alan wrote on September 8, 2008 1:28 pm:
" We need a law that would require the property to be purchased at the accessed value if the the owner loses his TERC hearing. Each entity receiving taxes would have to kick in their share to buy out the owner unhappy with his valuation. "

 Farmer Brown wrote on September 8, 2008 3:02 pm:
" Depends where their income comes from. "

 taxes wrote on September 8, 2008 4:01 pm:
" if you use a farm tax form then you qualify as a farm. "

 sean wrote on September 8, 2008 6:12 pm:
" if the land is far from the city it should not be taxed like it is in the city. living far out from the city \services can justify the cheaper taxes. we live far out in the middle of no where so why should we have to pay high taxes for city convenience when we don't get any...other than piece and quiet from all you crazy city folk. "

 Uhhh Sean wrote on September 8, 2008 9:37 pm:
" You don't pay a penny for "city convenience" the way it is. You pay nothing to the city of Lincoln. (unless it's voluntary - sales tax) But you darn should pay more for the County share than I pay (living in the city), but that won't ever happen. So instead, you should pay COUNTY TAXES for an acreage instead of a "farm." Twenty acres does not constitute a farm. No way no how. Pay your fair share and quit-yer-bellyaching. "

 what about big business wrote on September 8, 2008 10:20 pm:
" While looking at acreages, how about looking at land the developers have purchased with the intent of developing it for a major profit??? If one spends a million or two on 20, 30, or 40 acres and the fair market value is listed as such, why are THEY allowed a greenbelt. I think there's far more tax revenue at stake if our CITY & COUNTY officials would review anyone with a greenbelt in the city limits or it's 3 mile jurisdiction. "

 Huh wrote on September 8, 2008 10:48 pm:
" There are lots of ag related business that 20 acres can sustain. Tree farming, egg, poultry, vegetable, corn, soybeans, hay. I don't get it when city people say 20 acres isn't enough. I don't think they realize how large 20 acres are. The State of Nebraska sent out letters a couple of years ago, asking us to prove we were farming. We submitted the paper work they asked for, and our greenbelt status is still in place for our 20 acre acreage. I've noticed most of the value in the city property isnt the land/lot, it's the house that's built on it. If you don't like high taxes, build smaller. "

Ads by Yahoo!