2023 Oklahoma Statutes › Title 68. Revenue and Taxation › §68-2817. Valuation and assessment of property - Fair cash value - Use value

A. All taxable personal property, except intangible personal property, personal property exempt from ad valorem taxation, or household personal property, shall be listed and assessed each year at its fair cash value, estimated at the price it would bring at a fair voluntary sale, as of January 1.
The fair cash value of household personal property shall be valued at ten percent (10%) of the appraised value of the improvement to the residential real property within which such personal property is located as of January 1 each year. The assessment of household personal property as provided by this section may be altered by the taxpayer listing such property at its actual fair cash value. For purposes of establishing the value of household personal property, pursuant to the requirement of Section 8 of Article X of the Oklahoma Constitution, the percentage of value prescribed by this section for the household personal property shall be presumed to constitute the fair cash value of the personal property.
Stocks of goods, wares, and merchandise shall be assessed at the value of the average amount on hand during the preceding year, or the average amount on hand during the part of the preceding year the stock of goods, wares, or merchandise was at its January 1 location. Provided, persons primarily engaged in selling lumber and other building materials including cement and concrete, except for home centers classified under Industry No. 444110 of the North American Industrial Classification Systems (NAICS) Manual, shall be assessed at the average value of the inventory on hand as of January 1 of each year and the value of the inventory on hand as of December 31 of the same year.
B. All taxable real property shall be assessed annually as of January 1, at its fair cash value, estimated at the price it would bring at a fair voluntary sale for:
1. The highest and best use for which the property was actually used during the preceding calendar year; or
2. The highest and best use for which the property was last classified for use if not actually used during the preceding calendar year.
When improvements upon residential real property are divided by a taxing jurisdiction line, those improvements shall be valued and assessed in the taxing jurisdiction in which the physical majority of those improvements are located.
The Ad Valorem Division of the Oklahoma Tax Commission shall be responsible for the promulgation of rules which shall be followed by each county assessor of the state, for the purposes of providing for the equitable use valuation of locally assessed real property in this state. Agricultural land and nonresidential improvements necessary or convenient for agricultural purposes shall be assessed for ad valorem taxation based upon the highest and best use for which the property was actually used, or was previously classified for use, during the calendar year next preceding January 1 on which the assessment is made.
C. The use value of agricultural land shall be based on the income capitalization approach using cash rent. The rental income shall be calculated using the direct capitalization method based upon factors including, but not limited to:
1. Soil types, as depicted on soil maps published by the Natural Resources Conservation Service of the United States Department of Agriculture;
2. Soil productivity indices approved by the Ad Valorem Division of the Tax Commission;
3. The specific agricultural purpose of the soil based on use categories approved by the Ad Valorem Division of the Tax Commission; and
4. A capitalization rate to be determined annually by the Ad Valorem Division of the Tax Commission based on the sum of the average first mortgage interest rate charged by the Federal Land Bank for the immediately preceding five (5) years, weighted with the prevailing rate or rates for additional loans or equity, and the effective tax rate.
The final use value will be calculated using the soil productivity indices and the agricultural use classification as defined by rules promulgated by the State Board of Equalization. This subsection shall not be construed in a manner which is inconsistent with the duties, powers, and authority of the Board as to valuation of the counties as fixed and defined by Section 21 of Article X of the Oklahoma Constitution.
However, in calculating the use value of buffer strips as defined in Section 2817.2 of this title, exclusive consideration shall be based only on income from production agriculture from such buffer strips, not including federal or state subsidies, when valued as required by subsection C of Section 2817.2 of this title.
D. The use value of nonresidential improvements on agricultural land shall be based on the cost approach to value estimation using currently updated cost manuals published by the Marshall and Swift Company or similar cost manuals approved by the Ad Valorem Division of the Tax Commission. The use value estimates for the nonresidential improvements shall take obsolescence and depreciation into consideration in addition to necessary adjustments for local variations in the cost of labor and materials. This section shall not be construed in a manner which is inconsistent with the duties, powers, and authority of the Board as to equalization of valuation of the counties as determined and defined by Section 21 of Article X of the Oklahoma Constitution.
The use value of facilities used for poultry production shall be determined according to the following procedures:
1. The Ad Valorem Division of the Tax Commission is hereby directed to develop a standard system of valuation of both real and personal property of such facilities, which shall be used by all county assessors in this state, under which valuation based on the following shall be presumed to be the fair cash value of the property:
a.
for real property, a ten-year depreciation schedule, at the end of which the residual value is twenty percent (20%) of the value of the facility during its first year of operation, and
b.
for personal property, a five-year depreciation schedule, at the end of which the residual value is zero;
2. Such facilities shall be valued only in comparison to other facilities used exclusively for poultry production. Such a facility which is no longer used for poultry production shall be deemed to have no productive use;
3. During the first year such a facility is placed on the tax rolls, its fair cash value shall be presumed to be the lesser of the actual purchase price or the actual documented cost of construction; and
4. For the purpose of determining the valuation of nonresidential improvements used for poultry production, the provisions of this subsection shall be applicable and such improvements shall not be considered to be commercial property.
E. The value of investment in property used exclusively by an oil refinery that is used wholly as a facility, device, or method for the desulphurization of gasoline or diesel fuel as defined in Section 2817.3 of this title shall not be included in the capitalization used in the determination of fair market value of such oil refinery if such property would qualify as exempt property pursuant to Section 2902 of this title, whether or not an application for such exemption is made by an otherwise qualifying manufacturing concern owning the property described by Section 2817.3 of this title.
F. The use value of a lot in any platted addition or a subdivision in a city, town, or county zoned for residential, commercial, industrial, or other use shall be deemed to be the fair cash value of the underlying tract of land platted, divided by the number of lots contained in the platted addition or subdivision until the lot shall have been conveyed to a bona fide purchaser or the lot with building or buildings located thereon shall have been occupied other than as a sales office by the owner thereof, or shall have been leased, whichever event shall first occur. One who purchases a lot for the purposes of constructing and selling a building on such lot shall not be deemed to be a bona fide purchaser for purposes of this section. However, if the lot is held for a period longer than two (2) years before construction, then the assessor may consider the lot to have been conveyed to a bona fide purchaser. The cost of any land or improvements to any real property required to be dedicated to public use including, but not limited to, streets, curbs, gutters, sidewalks, storm or sanitary sewers, utilities, detention or retention ponds, easements, parks, or reserves shall not be utilized by the county assessor in the valuation of any real property for assessment purposes.
G. The transfer of real property without a change in its use classification shall not require a reassessment thereof based exclusively upon the sale value of the property. However, if the county assessor determines:
1. That by reason of the transfer of a property there is a change in the actual use or classification of the property; or
2. That by reason of the amount of the sales consideration it is obvious that the use classification prior to the transfer of the property is not commensurate with and would not justify the amount of the sales consideration of the property;
then the assessor shall, in either event, reassess the property for the new use classification for which the property is being used, or, the highest and best use classification for which the property may, by reason of the transfer, be classified for use.
H. When the term "fair cash value" or the language "fair cash value, estimated at the price it would bring at a fair voluntary sale" is used in the Ad Valorem Tax Code, in connection with and in relation to the assessment of real property, it is defined to mean and shall be given the meaning ascribed and assigned to it in this section and when the term or language is used in the Code in connection with the assessment of personal property it shall be given its ordinary or literal meaning.
I. Where any real property is zoned for a use by a proper zoning authority, and the use of the property has not been changed, the use and not zoning shall determine assessment. Any reassessment required shall be effective January 1 following the change in use. Taxable real property need not be listed annually with the county assessor.
J. If any real property shall become taxable after January 1 of any year, the county assessor shall assess the same and place it upon the tax rolls for the next ensuing year. When any building is constructed upon land after January 1 of any year, the value of the building shall be added by the county assessor to the assessed valuation of the land upon which the building is constructed at the fair cash value thereof for the next ensuing year. However, after the building has been completed it shall be deemed to have a value for assessment purposes of the fair cash value of the materials used in such building only, until the building and the land on which the building is located shall have been conveyed to a bona fide purchaser or shall have been occupied or used for any purpose other than as a sales office by the owner thereof, or shall have been leased, whichever event shall first occur. The county assessor shall continue to assess the building based upon the fair market value of the materials used therein until the building and land upon which the building is located shall have been conveyed to a bona fide purchaser or is occupied or used for any purpose other than as a sales office by the owner thereof, or is leased, whichever event shall first occur.
K. In the event improvements on land or personal property located therein or thereon are destroyed or partially destroyed, or the land itself is impaired or partially impaired by fire, lightning, storm, winds, floodwaters, overflow of streams, or other cause (all such destruction or impairments being referred to herein as "damage") during any year, the county assessor shall determine the amount of damage and shall reassess the property for that year at the fair cash value of the property, taking into account the actual loss of functional use of the property occasioned by such damage. The assessor shall make the appropriate value adjustments to the property for that tax year up to the time at which the assessor publishes the "Assessor's Report to the Excise Board" as required by subsection D of Section 2867 of this title. After such time, adjustments can be made only by the county board of tax roll corrections and only after the assessor has certified the tax roll for that year. The board secretary shall notify property owners in advance of the time and place at which the value adjustment to their property will be heard by the board. The board of tax roll corrections is authorized only to approve or reject the value adjustment submitted by the county assessor.
L. All taxable personal property used in the exploration of oil, natural gas, or other minerals including drilling equipment and rigs, shall be assessed annually at the value set forth in the first Hadco International monthly bulletin published for the tax year, using the appropriate depth rating assigned to the drawworks by its manufacturer and the actual condition of the rig.
M. The value of taxable tangible personal property used in commercial disposal systems of waste materials from the production of oil and gas shall not include any contract rights or leases for the use of such systems nor any value associated with the wellbore or non-recoverable down-hole material including casing.
Added by Laws 1988, c. 162, § 17, eff. Jan. 1, 1992. Amended by Laws 1989, c. 321, § 8, operative Jan. 1, 1991; Laws 1996, c. 189, § 1, eff. Nov. 1, 1996; Laws 1997, c. 318, § 1, eff. Nov. 1, 1997; Laws 1998, c. 405, § 4, eff. Nov. 1, 1998; Laws 1999, c. 1, § 24, emerg. eff. Feb. 24, 1999; Laws 2000, c. 255, § 1, eff. Jan. 1, 2001; Laws 2001, c. 358, § 17, eff. July 1, 2001; Laws 2002, c. 345, § 1, eff. Jan. 1, 2003; Laws 2003, c. 431, § 2, eff. Jan. 1, 2004; Laws 2005, c. 381, § 13, eff. Jan. 1, 2006; Laws 2006, c. 16, § 70, emerg. eff. March 29, 2006; Laws 2007, c. 250, § 1, eff. Jan. 1, 2008; Laws 2008, c. 3, § 39, emerg. eff. Feb. 28, 2008; Laws 2008, c. 140, § 1, emerg. eff. May 9, 2008; Laws 2013, c. 158, § 1, eff. Nov. 1, 2013; Laws 2014, c. 4, § 20, emerg. eff. April 2, 2014; Laws 2014, c. 177, § 1, eff. Nov. 1, 2014; Laws 2016, c. 176, § 1, eff. Jan. 1, 2017; Laws 2022, c. 374, § 1, eff. Nov. 1, 2022.
NOTE: Laws 1998, c. 403, § 6 repealed by Laws 1999, c. 1, § 45, emerg. eff. Feb. 24, 1999. Laws 2005, c. 451, § 1 repealed by Laws 2006, c. 16, § 71, emerg. eff. March 29, 2006. Laws 2007, c. 329, § 1 repealed by Laws 2008, c. 3, § 40, emerg. eff. Feb. 28, 2008. Laws 2013, c. 401, § 3 repealed by Laws 2014, c. 4, § 21, emerg. eff. April 2, 2014.