Agricultural property is taxed with a special “use” valuation for the land. All improvements (including residential homes, barns and outbuildings) are taxed as if they were not on agricultural property and should be valued at fair cash value. In addition, the valuation of the residential property includes the surrounding land taxed at a fair cash value. The lot that your home sits on does not qualify for the land/use valuation method per KRS132.450 (2)(a) (written below). See Residential Property for more information on how your home is valued.
Please note that agricultural land is defined by KRS 132.010(9) as:
- (a) any tract of land, including all income- producing improvements of at least ten (10) contiguous acres in area used for the production of livestock, livestock products, poultry, poultry products, and/or the growing of tobacco and/or other crops including timber;
- (b)Any tract of land, including all income – producing improvements of at least five (5) contiguous acres in areas commercially used for aquaculture; or
- (c) Any tract of land devoted to and meeting the requirements and qualifications for payments pursuant to agricultural programs under and agreement with the state or federal government.
In addition, KRS 132.450(2)(a) indicates “… there shall be excluded, land used in connection with dwelling houses including but not limited to, lawns, drives, flower gardens, swimming pools, or other areas devoted to family recreation”
The purpose of the agricultural/horticultural land use valuation is to stimulate the continuation of farming operations and encourage the preservation of farmland in Kentucky by providing property tax relief. The value of land used for farm production is assessed at a “use” value, which results in a lower taxable dollar value per acre than fair cash value for the same land. The program was enacted through a constitutional referendum in 1969 to keep rising property assessments, particularly in developing areas, from forcing farmers out of business to pay real estate taxes and accelerating the land conversion process.
The PVA calculates the agricultural or horticultural use value based on standard appraisal techniques, using methodologies established by the Kentucky Department of Revenue’s Office of Property Valuation. Such methods include an analysis of rent values on income-producing capabilities arrived at by the use of Soil Conservation Service land use classifications and adjusted for influencing factors. The agricultural land use is a formula and the PVA office does not deviate from the approved formula.
To print off the agricultural application please click here.