Iowa farmland value jumps, but tax impact minimal

Record increases in the assessed value of Iowa farmland will translate into much smaller property tax increases for landowners, according to the Iowa Department of Revenue.

Assessments of agricultural property for 2009 are increasing 48 percent on a statewide basis, primarily because of high crop prices during 2006 and 2007, said Dale Hyman, an administrator in the department's property tax division.

The statewide rollback factor - a record low percentage - will limit taxable value growth, however, to 4 percent for agricultural property, Hyman said.

“The 48 percent increase was not much of a surprise,” said Tim Johnson, a senior research and policy analyst with the Iowa Farm Bureau Federation.

The assessment increases reflect the record prices for corn and soybeans in 2006 and 2007 - two of the five years the assessments are based on, he said.

Johnson said Farm Bureau members support the formula used by the state to set ag land assessments. The complex formula considers crop prices and yields, and input costs - in effect reflecting farmers' ability to pay, he said.

While the formula dictates ag land assessments, actual sales prices determine the assessed value of residential and commercial property.

For owners of farmland in most Iowa counties, the actual increase in property tax payments will be less than 4 percent, Hyman said.

In Linn County, for example, where the preliminary equalization order specified a 44 percent increase in the assessed value of farmland, the actual increase in the taxable value of ag property will increase barely more than 1 percent, Hyman said.

Here's the math: Property with an assessed value of $100,000 in 2008, when the rollback percentage of was 93.86, had a taxable value of $93,860. That same property in 2009, with an assessed value of $144,000 and an estimated rollback percentage of 66, would have a taxable value of $95,040.

Of course, the tax levy set by local government also will influence the amount of any actual property tax increase.

Preliminary equalization orders were issued Friday to 31 of the state's 107 assessing jurisdictions (99 counties and eight cities). Jurisdictions not covered by the equalization orders had already adjusted their ag land assessments in accordance with the state formula.

Eastern Iowa counties and cities receiving farmland equalization orders, in addition to Linn, were Benton (42 percent), Buchanan (50), Cedar (44), Delaware (40), Jackson (32), Johnson (40), Jones (40), Tama (42) and Iowa City (61).