West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-01A - Valuation Of Farmland And Structures Situated Thereon For Ad Valorem Property Tax Purposes › Section 110-1A-2 - Valuation Rule

Current through Register Vol. XLI, No. 28, July 12, 2024
2.1. Scope.
				This rule prescribes how the appraised value of farmland and structures
				situated thereon will be determined for property tax purposes. This rule does
				not define what property is subject to assessment for ad valorem property
				taxes. Second, this rule does not prescribe how the appraised values determined
				under it will be adjusted on account of substitutions, accretions,
				improvements, additions, replacements, destructions, removals, casualties, acts
				of God, waste or any like occurrence. Third, this rule does not prescribe when
				appraised values determined under it will first be used.
2.2. Use of rule. This rule shall be followed
				by all persons valuing farmland and structures situated thereon in all counties
				in which such property is located or has a tax situs. This is necessary in
				order to meet the requirement in the West Virginia Constitution, article X,
				§1, that ad valorem property taxation be equal and uniform throughout the
				State. Consequently, once this rule is finally promulgated, it shall be binding
				upon the Tax Commission and his employees, county assessors and their
				employees, county commissions, sitting as boards of equalization and review and
				as administrative appraisal review boards, and the Board of Public Works, until
				amended or repealed by the Tax Commissioner in the manner prescribed by law, or
				abrogated by statutory amendment, or decision of the West Virginia Supreme
				Court of Appeals. See W. Va. Code §
									11-1a-24
				(1983). The objective of these regulations is the appraisal of all real
				property used as farmland and structures situated thereon at its value for farm
				purposes.
2.3. Construction. This
				rule shall be applied, and interpreted in case of any ambiguity, in conformity
				with the West Virginia Constitution, and the several provisions of the W. Va.
				Code relating to the definition and determination of appraised value for
				purposes of ad valorem property taxation. In no event shall this rule be
				construed as requiring any property to be appraised in excess of its market
				value, or as subjecting to tax any property that is exempt from ad valorem
				property taxation under laws of the United States of this State.
2.4. Annual Updating. This rule shall be
				reviewed annually and amended as necessary in accordance with hie provisions
				and requirements of W. Va. Code §
									29A-3-1
et seq
. in order to properly reflect any future changes in
				statutory or case law, to clarify application(s) of existing laws or
				legislative regulations and to amend policies and procedures of the State Tax
				Department adopted by procedural or interpretive regulations to implement such
				laws or regulations. Whenever this rule requires the Tax Commissioner to
				annually determine factors such as capitalization rates, acreage
				classification, etc., notice of his determinations shall be given to the public
				by filing notice thereof in the State Register; and by sending a copy of the
				notice to each assessor.
2.5.
				Definition. The following definitions of terms as used in these regulations
				shall apply, unless the context clearly requires a different meaning.
2.5.1. Agriculture. The term "agriculture"
				shall mean cultivation of the soil, including the planting and harvesting of
				crops and the breeding and management of livestock. See W. Va. Code §
										11-5-3.
				Unless the context requires a more limited meaning, the term "agriculture"
				includes "horticulture" and "grazing". In this context, the term "agriculture"
				shall mean the production of food, fiber, and ornamental woodland products, by
				means of cultivation, tillage of the soil and by the conduct of farm animal,
				livestock, dairy, apiary, equine or poultry husbandry, and the practice of
				horticulture, or any other plant or farm animal production and all farm
				practices related, usual or incidental thereto, including storage, packing,
				shipping and marketing, but not including any manufacturing, milling or
				processing of such products by persons other than the producer thereof. See W.
				Va. Code §
										19-19-2(a).
				Agriculture shall not include commercial forestry or the growing of timber for
				commercial purposes; Provided, that the growing of Christmas trees, orchards
				and nursery stock shall not be deemed to be commercial forestry or the growing
				of timber for commercial purposes. See W. Va. Code §
										11-1a-3(f) and
				(g), definitions "farm" and "farming
				purposes".
2.5.2. Agricultural. The
				term "agricultural" shall mean of or relating to agriculture.
2.5.3. Agricultural Land. The term
				"agricultural land" shall mean of or relating to agriculture.
2.5.3.a. Not less than five (5) acres of land
				and the improvements thereupon, used or useable in the production of
				agricultural or farm products having an annual value of one thousand dollars
				($1,000), or more, by the conduct of the business of agriculture, as defined in
				paragraph (1) of this section. See W. Va. Code §
											19-19-2(b),
				or
2.5.3.b. Less than five (5)
				acres of land, part, or all of which is used to produce agricultural or farm
				products for sale, if annual gross proceeds from such sales are five hundred
				dollars ($500.00) or more.
(Note; Agricultural land is not automatically eligible for
				  farm use appraisal. See Section 2.6.3. for qualifications.)
2.5.4. Capitalization Rate. The
				term "capitalization rate" shall mean a rate used to convert an estimate of
				income to an estimate of market value.
2.5.5. Depreciation. The term "depreciation"
				means the loss in value of an object, relative to its replacement cost, and is
				divided into three (3) types; physical deterioration; functional obsolescence;
				and economic obsolescence.
2.5.5.a. Economic
				Obsolescence. - A loss in value of a property arising from "outside forces"
				such as changes in use, legislation that restricts or impairs property rights,
				or changes in supply and demand relationships.
2.5.5.b. Functional Obsolescence. The loss of
				value due to factors such as excess capacity. changes in technology, flow of
				material, seasonal use, part-time use or other like factors. The inability to
				perform adequately the functions for which an item was designed or the
				incapability to be adapted to alternative uses.
2.5.5.c. Physical Deterioration. A loss in
				value due to wear and tear.
2.5.5.d. Replacement Cost. The cost of
				constructing a building or improvement having the same utility, but using modem
				materials, design and workmanship.
2.5.6. Farm. The term "farm" shall mean a
				tract or contiguous tracts of land currently being used as part of a farming
				operation, primarily for farming purposes, whether by the owner thereof, or by
				a tenant, and which has been so used at least seasonally during the year
				immediately preceding the then current tax year (unless it qualifies for one of
				the exceptions in Section 2.6.3.b. of these regulations, but shall not include
				lands used primarily in commercial purposes: Provided, that the growing of
				Christmas trees or orchards and nursery stock shall not be deemed to be
				commercial forestry or the growing of timber for commercial purposes. See W.
				Va. Code §
										11-1a-3(f) and
				(g) defining "farm" and "farming purposes"
				and §
										11-4-3,
				defining "farm". For the purposes of this definition, "contiguous tracts" are
				farmlands which are in close proximity, but not necessarily adjacent: Provided,
				that all such contiguous tracts are operated as part of the same farm
				management plan.
2.5.7. Farm
				Animal. - The term "farm animal" shall mean and include any animal commonly
				found on a farm except that wildlife shall not be considered or deemed to be a
				farm animal unless intentionally and legally nurtured or raised and is intended
				for farm work, consumption as food or other commercial activity. This would
				include, but not be limited to, catfish, rabbits, buffalo, mink, foxes and
				otters.
2.5.8. Farm Building. The
				term "farm buildings" shall mean structures which directly contribute to the
				operation of the farm and shall include tenant houses and quarters furnished
				farm employees without rent as part of the terms of their employment: Provided,
				that conservation practices, such as high tunnels, shall not be considered as
				farm buildings or otherwise evaluated as structures for the purposes of
				applying this rule.
2.5.9. Farm
				Purposes. The term "farm purposes" shall mean the utilization of land to
				produce for sale, consumption or use, any agricultural products, including, but
				not limited to, livestock, poultry, fruit, vegetables, grains or hays or any of
				the products derived from any of the foregoing, tobacco, syrups, honey, and any
				and all horticultural and nursery stock, Christmas trees, all sizes of
				ornamental trees, sod, seed and any and all similar commodities or products
				including farm wood lots and the parts of a farm which are lands lying fallow
				or in timber or in wastelands. See W. Va. Code §
										11-1a-3(g).
2.5.10. Farm Rent. The term "farm rent" shall
				mean the consideration paid by a lessee to lease land used for farming
				purposes. Such consideration may be in cash or in kind, or a combination
				thereof.
2.5.11. Farm Use
				Application. The term "farm use application" means the application form
				designed by the Tax Commissioner which the landowner must complete and file
				with the county assessor on or before September 1st of each year in order to
				claim and obtain farm use valuation for the assessment year beginning July 1st
				of each year.
2.5.12. Application
				Form. The application form required to be filed with the assessor on or before
				September 1st of each year shall require certification that the farm complies
				with criteria set forth in Section 2.6.3. of these regulations, and renewal
				application from year to year shall be sufficient upon statement certifying
				that no change has been made in the use of farm property which would disqualify
				"farm use" classification for assessment purposes.
2.5.13. Farm Use Valuation. The term "farm
				use valuation" shall mean a value estimated by capitalizing the fair and
				reasonable income which farm property might be expected to earn in the locality
				where situated, if rented.
2.5.14.
				Filing Date. The term "filing date" shall mean the date by which the annual
				application for farm use must be received by the assessor of the county wherein
				the property is situated. This application for farm use must be annually filed
				and received by the assessor on or before September 1st following the July 1st
				assessment date.
2.5.15. Grazing.
				The term "grazing" shall mean the use of land for pasturage. See W. Va. Code
				§
										11-5-3.
2.5.16. High Tunnels, also known by other
				names, including but not limited to, polytunnels or hoophouses, are unheated,
				plastic-covered structures that provide an intermediate level of environmental
				protection and control compared to open field conditions and heated
				greenhouses.
2.5.17. Horticulture.
				The term "horticulture" shall mean plant production of every character except
				forestry and plants not legally grown. See W. Va. Code §
										11-5-3.
2.5.18. Horticultural. The term
				"horticultural" shall mean of or relating to horticulture.
2.5.19. Management Rate. The term "management
				rate" shall mean a rate reflecting a return to an investor for the management
				of similar investment portfolios.
2.5.20. Natural Resource. The term "natural
				resource" shall mean and include the coal, oil, gas, ore, limestone, fireclay
				or other mineral or mineral substance(s) in and under the surface of the land,
				and the timber thereon.
2.5.21.
				Non-liquidity Rate. The term "non-liquidity rate "shall mean a rate reflecting
				a return to an investor representing the loss of interest on an investment
				arising from the time required to sell the investment.
2.5.22. Normal Gross Rent. The term "normal
				gross rent" shall mean the rental amount which a property would attain in the
				open market at the time of appraisal, whether it is higher, lower or the same
				as the actual contract rent.
2.5.23. Nursery. The term "nursery" shall
				mean and include any ground or premises on or in which plants are grown for
				sale or distribution and transplanting. This may include any place where
				nursery stock is being treated, packed, or stored in preparation for sale, if
				such place is leased to or owned by the same person (including a firm or
				corporation) who owns the plants while they are growing in the same
				nursery.
2.5.24. Nursery Stock. The
				term "nursery stock" shall mean all trees, shrubs and woody vines, including
				ornamentals, bush fruits, grapevines, fruit trees and nut trees, whether
				cultivated, native or wild, and all buds, grafts, scions, fruit pits and
				cuttings from such plants. It also shall mean sod, including sod plugs and sod
				producing plants, and herbaceous plants, including strawberry plants, narcissus
				plants and narcissus bulbs. Florists' or greenhouse plants for inside culture
				or use shall not be considered nursery stock, except that all woody plants,
				whether greenhouse or field grown, if for outside planting, are hereby defined
				as "nursery stock". See W. Va. Code §
										19-12-2(g).
				No plant shall be considered nursery stock unless it is situated in an actual
				"nursery," as defined in subsection 2.5.23. of this section.
2.5.25. Plant and Plant Products. The terms
				"plant" and "plant products" shall mean trees, shrubs, vines; forage, fiber,
				cereal plants, and all oilier plants; cuttings, grafts, scions, buds and all
				other parts of plants; and fruit, vegetables, roots, bulbs, seeds and all other
				parts of plants and plant products. See W. Va. Code §
										19-12-2(i).
2.5.26. Property Tax Component. The term
				"property tax component" shall mean a rate reflecting a provision for returning
				to an investor a sum of money equal to property taxes paid over the life of the
				investment.
2.5.27. Risk Rate. The
				term "risk rate" shall mean a rate reflecting a return to an investor a
				necessary to attract capital to an investment containing a possible loss of
				principal or interest, or both.
2.5.27.a. Safe
				Rate. The term "safe rate" shall mean a rate reflecting a return to an investor
				on an investment which has little, if any, likelihood of loss of principal or
				anticipated return on investment.
2.5.27.b. Wood Lot. The term "wood lot" shall
				mean that portion of a farm in timber but shall not include land used primarily
				for the growing of timber for commercial purposes except that Christmas trees,
				or nursery stock and woodland products, such as nuts or fruits harvested for
				human consumption, shall be considered farm products and not timber
				products.
2.5.27.c. Woodland
				Products. The term "woodland product" shall mean cut trees, firewood, posts,
				rails, splints, logs, limbs and similar wood products and hickory nuts,
				walnuts, beechnuts, butternuts, and similar edible nuts or fruits of woody
				plants and maple sap used in making syrup and maple sugar.