Agricultural Land Taxable Values Down . . .

Economic Tidbits 12.18.17

The taxable value on agricultural land declined 2.77 percent in 2018 according to the Nebraska Department of Revenue.  Taxable value for all real property increased 0.96 percent, with residential and recreational property value growing 3.66 percent, and commercial and industrial property growing 6.94 percent. The decline in agricultural land values marks the second consecutive year taxable values have shrunk.  Prior to last year, the taxable value on agricultural land had not declined since at least 1993, and perhaps as far back as the late 1980s.  It may seem like a distant memory, but just three years ago, the taxable value of agricultural land statewide increased almost 20 percent.  Since then, market values for land have declined between 15-20 percent and these declines are now being reflected in taxable values.  Expect taxable values to continue to decline over the next few years due to the lag effect in how taxable values are set.  Values are set using data on sales prices from the three years prior to the tax year for which the taxable values are being set.

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Property Taxes Can Still Be Expensed . . .

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Last week the House Ways and Means Committee released its long-awaited federal tax reform proposal.  The proposal would change how farmers and ranchers are taxed both as individuals and as businesses.  Many farmers and ranchers are wondering if property taxes paid on land, buildings, and equipment could still be expensed as business expense under the proposal.  Yes-the ability to deduct property taxes as a business expense by farmers and ranchers on Schedule F would continue.

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