By Larry Riley in the Muncie Star-Press:
Two weeks ago, two farmland properties in Indiana were auctioned off and buyers bid up the price to an incredible $10,000 per acre.
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Farmland owners are lucky with respect to Indiana law exempting their property assessment for tax purposes from following the marketplace.
Can you imagine that Kokomo farmland paying 2 percent in property taxes annually? That’d take $31,000 of the $46,500 cash rent proceeds.
In what probably was considered a concession to farmers, the state legislature has established a convoluted formula for establishing a base value of farmland.
The equation involves “averaged capitalized net farm income” for the lowest five of the last six years, but with a four-year lag in data for commodity prices and yields.
Farmers might not be feeling so lucky, however.
While last year’s tax bills were paid on farm grounds assessed at $1,500 per acre for the base value, this year’s base value rose 10 percent, to $1,650 per acre.
(This gets complicated: last year’s tax bills were actually the 2012 taxes, paid, as our Hoosier system operates, in arrears in 2013. Your 2013 taxes will be paid in May and November of this year — or earlier if you want to help a distressed county government.)
This year (for 2014 taxes to be paid in 2015), the base assessment rises another 8 percent, to $1,760 an acre.
These are going to make eye-popping tax bills to farmers.
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http://www.thestarpress.com/apps/pbcs.dll/article?AID=2014303300025&nclick_check=1
