Legal Issues - About Taxes

For tax purposes, an agricultural classification means that a property's value is based on its use in agricultural production and not on its market value. This can make quite a difference in the amount of taxes you pay on it. The statute defines agricultural land as: A parcel of land used the previous two years and presently being used as a farm or ranch, and the gross income from such use equals or exceeds one-third of the total gross income resulting from all uses of the property during any given tax year. Such land must have been classified or eligible for classification as agricultural land during the ten years preceding the year of assessment. Such land must continue to have agricultural use. Agricultural land includes land underlying any residential improvement located on such agricultural land and also includes the land underlying other improvements if such improvements are an integral part of the farm or ranch. The use of a portion of such land for hunting, fishing or other wildlife purposes, for monetary profit or otherwise, shall not affect the classification of agricultural land.

"Farm" means a parcel of land used to produce agricultural products that originate from the land's productivity for the primary purpose of obtaining a monetary profit. "Ranch" means a parcel of land used for grazing livestock for the primary purpose of obtaining a monetary profit.

Parcels consisting of at least 40 acres of forest land which are used to produce tangible wood products that originate from the productivity of such land for the primary purpose of obtaining a monetary profit, which are subject to forest management plans and are not considered farms or ranches may also qualify for agricultural classification.

All other agricutural property that doesn't meet any of the above criteria is classified as "all other property" and is valued like vacant land: using appropriate consideration of the three approaches to appraisal based on its actual use on the date of assessment. Improvements used exclusively and solely for agricultural purposes (barns, equipment storage sheds, etc.) and any water rights are appraised and valued with the land. All other improvements (homes, garages, etc.) are appraised and valued separate from the land. Land must continually be used for agricultural purposes to mainain an agricultural classification and the owner must be able to provide the county assessor with clear evidence of such use. Physical review and taxpayer documentation are the two primary criteria areas used as evidence.

Physical Review:

  • Grazing livestock or recent evidence of grazing activity.
  • Crop preparation, planting or harvesting.
  • Physical geology and topography of the land.
  • Size of the acreage.
  • Accessibility of the land.
  • Presence of farm/ranch outbuildings.
  • Presence of agricultural machinery or equipment.
  • Aerial photos.
  • Soil capability.
  • Fencing.
  • Water for livestock.
  • Presence of irrigation ditches or canals.
  • Evidence of soil conservation practices.

Taxpayer Documentation:

  • IRS Form 1040 or equivalent.
  • Agricultural leases.
  • Receipts for items purchased and services rendered.
  • Paycheck records.
  • Brand inspection certificates.
  • Account balance sheets or profit and loss statements.
  • Enrollment in or payments from Federal agricultural programs.
  • Membership in agricultural organizations (Colorado Cattlemen Association, Farm Bureau, Grange, etc.)
  • Ownership of irrigation water shares.
  • Sales invoices of agricultural products or livestock.

All urban and rural residences are valued the same. Only the land receives the agricultural classification and a lower assessed valuation. For more information, contact the County Assessor in the county where the land is located. logo
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