Posted 9/27/01 Property taxes on farmland will drop in 2002 Owners of farmland and agricultural homestead property should see a big drop in property taxes payable in 2002, thanks to property tax reform passed by the Minnesota Legislature this year. The legislation will reduce agricultural property taxes across the state by an estimated $66 million, according to Blue Earth County educator Kent Thiesse of the University of Minnesota Extension Service. ìState officials estimate taxes will drop an average of 27 percent statewide on agricultural homesteads, which include the house, garage and one acre,î says Thiesse. ìThe reduction will average 19 percent for other homestead agricultural land. The reduction for non-homestead agricultural land is estimated to be about 16 percent.î Exact reductions for individual property owners will vary, notes Thiesse. Rates will be affected by school district excess levy and building referendums, as well as tax adjustments made by counties, townships and other local government units. New property tax legislation includes elimination of the state-determined general education levy and compression of property tax class rates, says Thiesse. A new agricultural homestead market value credit was also established for property excluding the house, garage and one acre. The maximum value of this credit is $230 per household. Another provision exempts agricultural land, except the house, garage and one acre, from school district excess operating levies. These levies are in place or are being proposed in many school districts. All agricultural land, including the house, garage and one acre, is still subject to tax increases from local school district bond referendums for new buildings or facility improvements. The property tax reductions wonít benefit farm operators who rent farmland unless landlords lower cash rental rates for 2002, says Thiesse. He says 50-60 percent of non-homestead farmland in south central Minnesota is owned by landlords who rent the land to others for farming. ìPast history shows landlords have not reduced cash rental rates to farm operators when property taxes have been lowered,î says Thiesse. ìThatís based on annual land rental surveys. The same surveys show that landlords tend to increase cash rental rates if there is a major property tax increase.î The impact current property tax reductions will have on 2002 cash rents wonít be clear until rental contracts for next year have been finalized, notes Thiesse. For specific questions on property taxes, contact county land records, auditorís or recorderís offices. ©Post Review