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What is Kentucky’s Agricultural Value Program?

By Eugenia Jones

What is Kentucky’s Agricultural Value Program? What is its purpose?

Since farming is somewhat limited in McCreary County, many may not be aware of Kentucky’s agricultural value program. Although Section 172 of the Kentucky Constitution provides that all property not otherwise exempt shall be assessed at its fair cash value, Section172A of the Constitution allows farmland to be assessed at its agricultural value.
According to the Boone County, KY Property Valuation Administrator’s (PVA) website, the purpose of the agricultural value program is to stimulate the continuation of farming operations and encourage the preservation of farmland in Kentucky by providing property tax relief. The value of land used for farm production is assessed at a “use” value, which results in a lower taxable dollar value per acre than the fair cash value for the same land. This program was enacted through a constitutional referendum in 1969 to keep rising property assessments, particularly in developing areas, from forcing farmers out of business and accelerating the land conversion process.
Agricultural land is defined by KRS 132.010(9) as:
(a) Any tract of land, including all income- producing improvements of at least ten (10) contiguous acres in area used for the production of livestock, livestock products, poultry, poultry products, and/or the growing of tobacco and/or other crops including timber;
(b) Any tract of land, including all income – producing improvements of at least five (5) contiguous acres in area commercially used for aquaculture; or
(c) Any tract of land devoted to and meeting the requirements and qualifications for payments pursuant to agricultural programs under and in agreement with the state or federal government.
In addition, KRS 132.450(2)(a) indicates “… there shall be excluded, land used in connection with dwelling houses including but not limited to, lawns, drives, flower gardens, swimming pools, or other areas devoted to family recreation”
“Horticultural land” is defined as any tract of land at least five acres in area commercially used for the cultivation of a garden, orchard, or the raising of fruits, vegetables, flowers, or ornamental plants.
A “Listing Period” runs January 1 through March 1 for all Kentucky counties and all property owners. Owners of land devoted to agricultural or horticultural use who feel their PVA has placed a value in excess of the agricultural or horticultural value on their farmland may file application for valuation at the agricultural or horticultural value. This application must be made with the property valuation administrator of the county in which the land is located on Revenue Form 62A351, “Application of Valuation, Assessment, and Taxation of Land under the Agricultural and Horticultural Land Use Act.”

How does
Agricultural Value Program impact McCreary County?

According to McCreary County PVA Dwight Ross, there are approximately 1,000 parcels of land in McCreary County that qualify as farm status. There is no special request to have property valued at farm values. According to Ross, the PVA’s office is in the process of updating all parcels in the county that will qualify for this status.
“The rate for property taxes is set by the fiscal court and special taxing districts,” Ross noted. “It is the same rate for residential, commercial, and farm. There is no difference in the three. Most people assume each category has a different rate.”
Ross noted the difference in farm classification is the property assessment. Farms (property of ten acres or more that is not maintained as a yard or space for a house) is assessed based upon the soil classification as determined by the United States Department of Agriculture (USDA.) In general, those classifications are less than fair market value of the land.
“Even though farm property is valued at a lower assessment than residential or commercial property, any structures (house, barn, garage, fences) are still valued at fair market value,” Ross explained. “Many homeowners are misled in believing their homes will be assessed significantly lower if it is located on property considered a farm. They don’t realize the reduction applies to land only.”
With an Open Inspection Period coming up beginning the first Monday in May for thirteen business days, including Saturdays, Ross extended an invitation to McCreary County property owners to come to the PVA’s office in the Courthouse to inspect their assessments.
“I’ll be happy to discuss any changes they feel should be considered,” Ross said.

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