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Maintaining Agricultural Tax Status for Colorado Ranches for Sale

One of the many benefits of owning a Colorado Ranch for Sale is that agricultural land is taxed at a much lower rate than many other property classifications such as residential or commercial.  Given this low agricultural tax rate, it is possible for landowners to pay less in taxes on hundreds of acres of ranchland than they do on their primary residence that may be much smaller.

Colorado Ranches for Sale | South Park Cattle

While most of the ranches Mirr Ranch Group markets are classified as agricultural land, there are certain steps that landowners need to take to ensure that their agricultural status stays in place.  If landowners do not pay attention to this, they run the risk of their zoning status being switched, which would result in a significantly higher annual tax liability.

According to the Colorado Division of Property Taxation, land must meet one of four main requirements to qualify for agricultural classification.  Below is a brief overview of each of the requirements, and the full information can be found by downloading the division’s pamphlet “Classification and Valuation of Agricultural Property in Colorado.”

1) The parcel of land must have been used as a farm or ranch during the previous two years, as well as during the current year.  To be designated as a “farm or ranch” the property must be either producing agricultural products or being used to graze livestock.  If the agricultural land is being restored through the use of the Conservation Reserve Program (CRP), it still qualifies as agricultural land.  The Red Hill Ranch is an example of a property that has maintained its agricultural status because the owners graze cattle on the property as a part of their ongoing ranching operations.

2) The parcel of land contains at least 40 acres of forestland and the landowners have enacted a forest management plan.  Under a forest management plan, the owners systematically harvest trees from the property and sell the timber to lumber companies or other wood product businesses.  This option is an excellent choice for landowners who are not interested in running cattle or growing crops, but want to reap the monetary benefits of having their land zoned as agricultural.  Also, a well-executed forest management plan can be an effective way to maintain healthy trees and mitigate a ranch’s forest fire risk.  Both Phantom Lake Ranch and the Shadow Wild Ranch have maintained their agricultural tax status through the use of a forest management plan.

3) The parcel of land is at least 80 acres (or less than 80 acres if there are no homes or residential structures) and has been permanently protected by a conservation easement held by a qualified land trust.  Also, the land should have been classified as agricultural prior to the placement of the conservation easement.  The recently sold Jensen Ranch maintained its agricultural status through the placement of a conservation easement held by Legacy Land Trust.

4) The parcel of land uses appropriated ground water for non-residential purposes, and this water is being used for agricultural or livestock purposes such as crop irrigation or growing hay.

It is extremely important for landowners of Colorado ranches for sale to consult with their county assessor’s office and personal accountant to ensure that they are meeting all of the requirements to maintain their agricultural tax status.  Complying with the requirements listed above is generally a simple process for most ranch owners, but failure to do so could prove to be a very costly mistake.

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  1. The Importance of Agricultural Tax Status | Mountain & Prairie

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