From the Lafayette Journal & Courier:
Farmland owners in Indiana will pony up more in property taxes next year as a result of a bump in the value of farmland and rising commodity prices.
Driving the rise in farmland assessments is an increase in the base rate for assessed land value, which rose nearly 8 percent from 2013 on taxes payable in 2014. The rate factors into account land rents, crop yields, commodity prices, costs and interest rates.
The base rate has doubled in the past seven years as market conditions for farmers in these areas have improved, Purdue Extension agriculture economist Larry DeBoer said.
The base rate in tax year 2007 was $880 per acre of farmland, according to the Indiana Department of Local Government Finance. This year’s base rate is $1,760 per acre.
Commodity prices, which reached all-time highs in 2012, are a major force between changes in the base rate. The drought pushed prices to top $8 per bushel in the fall. The U.S. Department of Agriculture predicted corn would sell for $4.80 per bushel a few months earlier.
“The higher the prices, the more a rational buyer would pay for land,” DeBoer said.
Determined by a capitalization formula that takes into account a six-year moving average of land values and other conditions, this year’s base rate figure was calculated by considering conditions from 2005 to 2010.
The state, which frequently changes the base rate formula it uses, also takes into account soil productivity, weather events and land grade when it determines property taxes. A bill in the General Assembly is weighing changes to soil productivity factors.
Since 2007, net farm income has generally, with the exception of weather events and effects from the recession, risen along with taxes.
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http://www.jconline.com/apps/pbcs.dll/article?AID=2013302090050
