Community Agriculture Alliance: Farm Property Tax Laws Revisited

The Colorado Court of Ap­­­peals recently considered the question: When is the owner of agricultural property eligible to receive the favorable “agricultural” tax classification? Fortunately for the landowner involved and for the owners of agricultural property in this region, the court took a common-sense approach to applying the facts of the case to the Colorado real estate tax law.

Under Colorado law, a property that is used for agricultural purposes, where the owner is attempting to make a profit — either from crops or from livestock uses — is entitled to an “agricultural” tax classification. This then results in a favorable tax rate. In this case, the Adams County assessor had classified the subject property as “vacant,” which resulted in a much higher tax rate to the owner, Aberdeen Investors Inc.

Aberdeen had purchased the property in 2004 and in July 2005 leased the property out for grazing for the remainder of the grazing season. Aberdeen also leased the property for grazing in 2006 and in 2007 requested that the property be classified as “agricultural.” The assessor denied the request, indicating that the property would have had to be in agricultural use on Jan. 1, 2005, in order to satisfy the requirement that the property be in agricultural use for the previous two years.

Although the court’s decision bogs down a bit in some technical legal interpretation, it did apply common sense in stating, “using a property as a farm or ranch seldom occurs on January 1.” Of course, this is not because farmers and ranchers party so hard on New Year’s Eve, it is because this time of winter is not growing season or grazing season in most of Colorado.

In summary, the court considered some of the basic realities of agriculture in our climate — the seasonal aspect of much of the activity, the fact that a portion of the property may lie fallow for a time to replenish the soil, and the fact that areas may be excluded from grazing or tilling for conservation reasons. The court indicated that the legal interpretation of this property tax law is to be reasonably applied to the realities of agricultural operations. If the Colorado Legislature wants the rules to be interpreted differently, then the Legislature can amend the law.

This type of practical opinion is important to this area of Colorado, where our growing and grazing seasons are much more abbreviated than much of the state. It also is important that the court recognizes that conservation practices might dictate that portions of the agricultural property are not used for specific agricultural purposes in a given year.

As a final aside, consider whether the county assessor might have viewed the situation differently — before he classified this property as “vacant” land in 2007 — if the owner had been the Aberdeen Ranch Inc., rather than the Aberdeen Investors Inc.

The citation to this case is Aberdeen Investors, Inc., v. Adams County Board of County Commissioners, 240 P.3d 398 (Colo.App. 2009)

Originally published in The Steamboat Pilot & Today