Farmland Assessment Policy
Farmland assessments are governed and regulated by the Municipal Government Act, associated Regulations and the applicable Minister’s Guidelines of Farmland Assessment. Farmland assessments are completed on an annual basis using the valuation date of July 1 of the year prior to the tax year. The valuation standard for farmland assessment is based on “agricultural use value” as determined by the Minister of Municipal Affairs from year to year. In Alberta, the “agricultural use value” is divided into three categories, each with farmland rates: Dryland Arable, Pasture Land and Irrigated Arable. There are no irrigated farmlands found in Beaver County.
Farmland Ratings and Application
The farmland rating system categorizes all areas of the province into 16 different agro-climatic regions and four irrigation regions. Typical net income has been established for each type of soil classification within the above noted 16 zones and the four irrigation districts of the Province.
Net income was established as the basis for “agricultural use value” and reflects typical cropping rotations, yields, prices and input costs of production. A soil group classification within an agricultural zone with the highest net income was assigned a rating of 100. All other soil groups are then ranked based on their net income relative to 100%.
As the physical land attributes diminishes in agricultural production (quality of land) a lesser percent rating is applicable to the affected farmland.
All of these factors can be summarized into two groups: Net Productivity Ratings and Cost of Production Ratings. Factors recognized in the Net Productivity Ratings include the soil class, cultivation depth and color, subsoil, soil texture, saline or alkali, acidity and flood delay. Factors recognized in the Cost of Production are adverse topography, stones, irregular shaped fields, obstacles, severance of fields and other miscellaneous features affecting cost of production.
What qualifies for farmland status? The Minister of Municipal Affairs has developed strict guidelines and rules for land classified as “farmland”.
By definition, “Farming Operations” means the raising, production and sale of agricultural products and includes 1) Horticulture, aviculture, apiculture and aquaculture. 2) The production of horses, cattle, bison, sheep, swine, goats, fur bearing animals, raised in captivity, domestic cervids within the meaning of the Livestock Industry Diversification Act, and domestic camelids, and 3) The planting, growing and sale of sod.
Should any of the above activities take place on the parcel of land, only then does the land qualify for farm status and assessment as agricultural use value. What does “agricultural use value” mean? It means the value of a parcel of land based exclusively on its use for farming operation.
If the land is not used for farming operations as prescribed by definition, the land cannot be assessed as agricultural use value and must, by legislation, be assessed at the market value standard.
Please note that when a parcel of land has qualified as farmland, it is assessed using regulated rates (agricultural use value) and this value has no relationship or reflection on the market value of the property.
Farm Buildings: The definition of a farm building is any improvement other than a residence, to the extent it is used for farming operations.
The first order of priority for any building other than a residence to be considered as a “farm building” is to engage in a “farming operations” on your property. Without evidence of farming operations outbuilding or structures cannot be considered farm buildings.
In rural Alberta, farming buildings are exempt from assessment according to Provincial legislation. As a result of this exemption, no property tax is paid on a farm building.
Farm Residence(s): All farm residences in rural municipalities are valued and assessed on the basis of market value. The dominant valuation approach in leading to the market value standard in a rural municipality is the cost approach modified to the market. The direct sales comparison approach is widely used to complement the cost approach. The income approach is rare and in most cases, it is never used. The value of the farm residence is adjusted based on positive or negative attributes of the property, size and features of the house, services and location.
Farm residence(s) can receive an exemption from the market value assessment. In rural municipalities, the Provincial Government allows a farm residence to be exempt on the basis of the amount of farmland assessment in the owner’s unit. The maximum exemption is $61,540 for the first residence of a farm owner’s unit, and $30,770 for each additional residence.
Frequently Asked Questions
- What qualifies for farmland class on my property?
- How do I apply?
- Why does Beaver County need to know my sales receipt or farm income?
- What happens if I cannot supply sales receipts?
- Can the farm status be re-instated in the future?
- Do I need to apply from year to year?
- What if I sell or buy property that was assessed as farmland last year?
- Can I rent the land out to receive farmland class?
- Why does an Assessor need to visit my property?
- What right does an Assessor have in inspecting my property?
- Can my classification change as a result of a farmland inspection?
- How will the loss of farmland class change my taxes?
Lands that have previously been assessed and classed as farmland are lands that are exclusively used for farming operations and have historically been treated and taxed as such. If the use of the parcel of land continues in a farming operation, the property will continue to be assessed as farmland.
If your land has not been assessed as farmland and you start up a farming operation, you may qualify for farmland status in the following tax year. To determine if you qualify, contact one of the County’s assessors at 780-663-3730. Application/Declarations forms are available online or at the Beaver County Office.
To qualify as a farming operation, there must be a sale of agricultural products that were raised on or produced from the applying parcel of land. Sales receipts and evidence of farm income will help to determine your eligibility.
Your property will be inspected for farm activity and you will be required to provide a historical sales log or other proof of farm sales from the parcel of land on which you are making application. Otherwise, the parcel of land will be assessed on the basis of market value.
Your property can qualify for farm status in the following tax year if you re-apply for farm classification and meet the legislated requirements.
Not necessarily. To receive farm classification every year, the property which is classed as farmland shall be required on an annual basis to be used for farming operations and meet this legislative requirement.
Beaver County’s Assessment & Taxation Department may from time to time conduct property inspections or require further information from you to support the continued farm use classification.
All farmland sales are investigated thoroughly, identifying buyer and seller, analysis of arms length transactions, market value property analysis, use of existing farm practices by the seller, and future use of property by the buyer.
Beaver County’s Assessment & Taxation Department will determine whether a piece of property can continue to be assessed as farmland.
It is your responsibility to submit a farm declaration form if you change the use of your property to farming operation.
Yes, you are eligible to receive farmland status when a tenant takes over the use of the property by virtue of a lease agreement, IF the tenant is fully involved in a farming operation on the parcel of land. The tenant must meet the legislative requirements.
Secondly, you will be required to provide a copy of the lease agreement between yourself and the tenant.
An Assessor visits your property to accurately determine the physical characteristics, condition and use of the property. An Assessor will determine if buildings are present on the property and their use. The Assessor will also determine how the parcel is to be assessed, if all or part of the parcel is being used for farm, a farm residence, or other uses on the property or within buildings.
The Municipal Government Act provides assessors with the authority to enter the property and examine records in accordance with their duties. A letter is sent out from Beaver County’s Assessment & Taxation Department notifying the property owner of a forthcoming inspection. This letter officially serves as notification to the property owner of an upcoming inspection.
Can my assessment classification change as a result of an inspection?
The objective of a farm property inspection is to ensure that the proper assessment classification is placed on the property. If the assessor determines that your property may classify for farmland status, you may be contacted for more information.
How will the loss of farmland status change my taxes?
If a parcel of land is not farmed, it will be assessed at market value. This will result in an increase in property taxes.