Wisconsin Administrative Code › Department of Revenue › Chapter Tax 18 - Assessment Of Agricultural Property › Section Tax 18.07 - Use-value

Current through June 24, 2024
(1)
(a)
			 Beginning in 1997 and each year thereafter, the council shall adopt and the
			 department shall publish in the Wisconsin property assessment manual a use
			 value per acre for each category of agricultural land, except specialty land,
			 in each municipality. Use value per acre of specialty land shall be adopted and
			 published for the municipalities in which specialty land is located. Use value
			 per acre for each category of agricultural land in each municipality shall be
			 calculated by dividing the net rental income per acre for that category of
			 agricultural land in that municipality calculated under par. (b) by the
			 capitalization rate for that municipality calculated under par. (c).
(b)
Net rental income per
			 acre
.
1. Beginning in 2006 and in
			 each year thereafter, net rental income per acre for each category of
			 agricultural land in each municipality shall be calculated according to the
			 income attributable to a landowner under a crop-share lease. The department
			 shall assume a lease agreement where the income and direct operating costs are
			 distributed equally between the landowner and farm operator. The department
			 shall adhere to professionally accepted appraisal practices in determining
			 gross income, cost of production, and net income that are attributable to a
			 landowner under a crop-share lease. Net income shall be calculated by
			 subtracting average total cost of production per acre under subd. 3. from
			 average gross income per acre under subd. 2.
2. Beginning in 2006 and in each year
			 thereafter, the landowner's average gross income per acre for each category of
			 agricultural land in each municipality shall be calculated by multiplying the
			 category's 5-year average corn yield per acre, adjusted for the typical
			 productivity of that category, by the 5-year average corn market price per unit
			 of output. The product shall be reduced by 50% to reflect a crop-share lease
			 with equal distribution of income. Yield per acre shall be based on the natural
			 resource conservation service's soil productivity indices and corn market price
			 data shall be obtained from the Wisconsin department of agriculture, trade and
			 consumer protection. If the natural resource conservation service and the
			 Wisconsin department of agriculture, trade and consumer protection are unable
			 to provide, or to provide timely, soil productivity indices and corn market
			 price data, respectively, comparable data shall be obtained from other
			 generally acceptable sources.
3.
			 Beginning in 2006 and in each year thereafter, the landowner's average total
			 cost of production per acre for each category of agricultural land shall be
			 calculated by multiplying the category's 5-year average corn yield per acre,
			 adjusted for the typical productivity of that category, by the 5-year average
			 cost of corn production. In calculating the 5-year average cost of corn
			 production, the department shall include the direct operating costs incurred by
			 the landowner under a crop-share lease, which shall include the cost of seed,
			 fertilizer, lime, manure, chemicals, commercial drying, interest on operating
			 capital, or their equivalent. The total cost of corn production is reduced by
			 50% to reflect a crop-share lease with equal distribution of direct operating
			 costs. The 5-year average cost of corn production shall not include those costs
			 incurred by a farm operator under a crop-share lease, which includes labor,
			 opportunity cost of unpaid labor, machinery, fuel, repairs, overhead, or their
			 equivalent. An additional landowner cost for operational management, equal to
			 7.5% of the average gross income determined in subd. 2., shall be subtracted
			 from the average gross income calculation in subd. 2. Property taxes are not a
			 farm expense for purposes of calculating average total cost of production per
			 acre. Yield per acre shall be based on the natural resource conservation
			 service's soil productivity indices and cost of corn production data shall be
			 obtained from the Wisconsin department of agriculture, trade and consumer
			 protection. If the natural resource conservation service and the Wisconsin
			 department of agriculture, trade and consumer protection are unable to provide,
			 or to provide timely, soil productivity indices and cost of corn production
			 data, respectively, comparable data shall be obtained from other generally
			 acceptable sources.
(c)
Capitalization rate
. Beginning in 1997 and each year
			 thereafter, the capitalization rate for each municipality shall be determined
			 as follows:
1. The department shall survey
			 each federal land credit association (FLCA) and each agricultural credit
			 association (ACA) in Wisconsin to obtain the interest rate charged by that
			 association for a medium-sized, 1-year adjustable rate mortgage (ARM), as of
			 January 1 of the year prior to the assessment year. In addition, the survey
			 shall obtain each association's stock purchase requirement, if any, for such a
			 mortgage. The 1997 survey shall include each association's 1-year ARM rate and
			 the stock purchase requirement for a medium-sized loan, as of January 1 for the
			 years 1993 to 1997.
Note:
If an FLCA and an ACA merge, the combined
				association's interest rate and stock purchase requirement shall be
				obtained.
Note:
Each FLCA and each ACA divides loans into 3
				to 5 tiers based on loan size and sets a 1-year ARM rate for each tier.
				Although the dollar amount of a medium-sized loan may vary among FLCAs and
				ACAs, each FLCA and each ACA offers medium-sized or middle tier loans at a
				specific 1-year ARM rate as of January 1.
2. The effective 1-year ARM rate of each FLCA
			 and ACA for each year shall be calculated by dividing that association's 1-year
			 ARM rate by one minus that association's stock purchase requirement as of
			 January 1 of the same year, expressed as a percentage of the loan.
Example:
If an FLCA or an ACA has a 2% stock
				purchase requirement, a borrower receives $98,000 of a $100,000 loan. If the
				1-year ARM rate is 9%, the effective rate of the loan is 9.18% [9 /
				(1-.02)].
3. The statewide
			 average effective rate for each year shall be calculated by averaging the
			 effective 1-year ARM rates under subd. 2.
4. The statewide average effective rate for
			 the year prior to the assessment year shall be averaged with the statewide
			 average effective rates for the 4 prior years to obtain a statewide 5-year
			 moving average rate.
5. The
			 capitalization rate for each municipality for each assessment year shall be 11%
			 or the sum of the statewide 5-year moving average rate for the year prior to
			 the assessment year and the net tax rate of that municipality for the property
			 tax levy 2 years prior to the assessment year, whichever is greater.
(d)
1. Beginning in 2006 and in each year
			 thereafter, increases and decreases in the use values for each category of
			 agricultural land in each municipality shall be limited to the prior year's
			 percentage change in the statewide equalized value. When determining the
			 percentage change in the statewide equalized value, the department shall
			 exclude the value of agricultural land and new construction. New construction
			 shall include increases in land value due to higher land use, new subdivisions,
			 and increases in improvement value due to new construction, completion of
			 improvements partially assessed, remodeling and additions, and land
			 improvements such as addition of curb, gutter, sewer, water, or their
			 equivalent. The amount of new construction shall be reduced by the loss of land
			 utility and loss of property value due to full or partial destruction, removal,
			 contamination, or their equivalent.
2. The department shall calculate the
			 percentage change from the previous year's use-values to the current year's
			 use-values according to the formula in s. Tax 18.07(1) (b). Increases and
			 decreases in the use values for each category of agricultural land in each
			 municipality shall be limited to the percentage change determined in subd. 1.
			 If the increase or decrease is less than the percentage change determined in
			 subd. 1., the use value per acre will equal the value calculated by the
			 department according to the formula in s. Tax 18.07(1) (b).