Current through Register Vol. 35, No. 18, September 24, 2024
A.
APPLICATION FORM FOR VALUATION AS AGRICULTURAL LAND:
(1) Applications by owners of land for
valuation pursuant to Section
7-36-20
NMSA 1978 must be on a form which has been approved by the director of the
division. The form shall contain the following requirements for information to
be provided:
(a) description of the
land;
(b) the use of the land
during the year preceding the year for which the application is made;
(c) whether the land was held for speculative
land subdivision and sale or has been subdivided;
(d) whether the land was used for commercial
purposes of a nonagricultural character;
(e) whether the land was used for
recreational purposes and if so, how; and
(f) whether the land was leased and if so,
who was the lessee, did he report livestock for valuation and what was the
lessee's use of the property.
(2) The form, or a separate document, may
also contain requirements for providing information as to the owner's farm
income and farm expenses reported to the United States internal revenue service
for federal income tax purposes.
B.
AGRICULTURAL PROPERTY - BURDEN OF
DEMONSTRATING USE ON OWNER:
(1) To be
eligible for the special method of valuation for land used primarily for
agricultural purposes, the owner of the land bears the burden of demonstrating
that the use of the land is primarily agricultural. This burden cannot be met
without submitting objective evidence that:
(a) the plants, crops, trees, forest
products, orchard crops, livestock, captive deer or elk, poultry or fish which
were produced or which were attempted to be produced through use of the land
were:
(i) produced for sale or subsistence in
whole or in part; or
(ii) used by
others for sale or resale; or
(iii)
used, as feed, seed or breeding stock, to produce other such products which
other products were to be held for sale or subsistence; or
(b) the use of the land met the requirements
for payment or other compensation pursuant to a soil conservation program under
an agreement with an agency of the federal government; or
(c) the owner of the land was resting the
land to maintain its capacity to produce such products in subsequent
years.
(2) The use of
land for the lawful taking of game shall not disqualify land from a
determination that it is used primarily for agricultural purposes. Any income
to the landowner from the use of the landowner's land for the lawful taking of
game will not be considered for purposes of determining whether land is used
primarily for agricultural purposes.
(a) The
taking of game is lawful for purposes of this subsection if it complies with
the requirements of NMSA 1978, Chapter 17.
(b) The land is used for the lawful taking of
game if the landowner actively participates in the lawful taking of game on the
landowner's land or authorizes others to use the landowner's land for the
lawful taking of game.
(3) A presumption exists that land is not
used primarily for agricultural purposes if income from nonagricultural use of
the land exceeds the income from agricultural use of the land.
(4) A homesite is not land used for
agricultural purposes and is not to be valued as agricultural land pursuant to
Section
7-36-20
NMSA 1978. A "homesite" as that term is used in this section is the site used
primarily as a residence, together with any appurtenant lands used for purposes
related to residing on the site. It is more than the boundary of the foundation
of an improvement used as a residence and includes land on which yards,
swimming pools, tennis courts and similar nonagricultural facilities are
located but does not include land on which agricultural facilities such as
barns, pig pens, corrals, bunk houses, farm equipment sheds and outbuildings
are located. A homesite shall be presumed to be a minimum of one acre, unless
the property owner establishes that a portion of the acre allocated to
classification as homesite is actually used for agricultural purposes under the
conditions of this section. A homesite can exceed one acre if nonagricultural
facilities extend beyond one acre.
(5) Once land has been classified as land
used primarily for agricultural purposes, no application for that
classification is required for any succeeding year so long as the primary use
of the land remains agricultural. The land will retain its status for property
taxation purposes in every succeeding year as land used primarily for
agricultural purposes.
(6) When use
of the land changes such that it is no longer used primarily for agricultural
purposes, the owner of the land must report the change in use to the county
assessor in which the land is located. A report by the owner that land
classified as land used primarily for agricultural purposes in the preceding
property tax year is not used primarily for agricultural purposes in the
current property tax year rebuts the presumptions in Subsection A of Section
7-36-20
NMSA 1978. If subsequently use of the land again becomes primarily
agricultural, the owner must apply for classification of the land as land used
primarily for agricultural purposes.
(7) When the owner of the land has not
reported that the use of the land is no longer primarily for agricultural
purposes but the county assessor has evidence sufficient to rebut the
presumptions in Subsection A of Section
7-36-20
NMSA 1978, the county assessor must change the classification of the land. In
such a case the county assessor must also consider whether the penalty provided
by Subsection H of Section
7-36-20
NMSA 1978 should be applied. The owner may protest the change in
classification.
C.
AGRICULTURAL LAND - MINIMUM SIZE: Tracts or parcels of land of
less than one (1) acre, other than tracts or parcels used for the production of
orchard crops, poultry or fish, are not used primarily for agricultural
purposes. Property used for grazing is only eligible for special valuation as
land used primarily for agricultural purposes if the property meets the
requirements of Paragraph (1) of Subsection B of this section, is stocked with
livestock that are reported to the county assessor for valuation by either the
property owner or the owner of the livestock, and contains the minimum number
of acres capable of sustaining one animal unit as established in the order
issued pursuant to Paragraph (5) of Subsection F of this section. Tracts or
parcels of property smaller than the minimum number of acres capable of
sustaining one animal unit may qualify as land used primarily for agricultural
purposes as grazing land upon application to the county assessor. The county
assessor shall consider the following in determining whether the property is
eligible for special valuation as land used primarily for agricultural purposes
as grazing land:
(1) whether the property
owned or leased is of sufficient size and capacity to produce more than
one-half of the feed required during the year for the livestock stocked on the
property;
(2) the predominant use
of the land has been continuous;
(3) the purchase price paid;
(4) whether an effort has been made to care
sufficiently and adequately for the land in accordance with accepted commercial
agricultural practices;
(5) whether
the property has been divided, without regard to whether such division was made
pursuant to county or municipality subdivision regulations;
(6) whether the property is eligible for
landowner hunting permits issued by the department of game and fish;
(7) whether the property is contiguous to
land used primarily for agricultural purposes owned by a member or members of
the immediate family of the owner; "immediate family" means a spouse, children,
parents, brothers and sisters, and
(8) such other factors as may from time to
time become applicable.
D.
AGRICULTURAL PRODUCTS
DEFINED: The phrase "agricultural products" as it is used in Section
7-36-20
NMSA 1978 and regulations under the Property Tax Code means plants, crops,
trees, forest products, orchard crops, livestock, captive deer or elk, wool,
mohair, hides, pelts, poultry, fish, dairy products and honey.
E.
PRODUCTION CAPACITY OF AGRICULTURAL
LAND - IMPLEMENTATION OF VALUATION METHOD:
(1) The production capacity of agricultural
land shall be determined by the income method of valuation based on the income
derived or capable of being derived from the use of the land for agricultural
purposes. If information about income amounts from the use of land for
agricultural purposes is unavailable, then income shall be imputed to the land
being valued on the basis of income amounts from the use of comparable
agricultural lands for agricultural purposes. The comparability of the land
used for purposes of imputing income shall be determined on the basis of class.
A determination of income from agricultural land is not required to be
restricted to income from actual production of agricultural products on the
agricultural land, since the basis for determination of value is on the land's
capacity to produce agricultural products.
(2) "Income" as that term is used in this
section is generally the average for the preceding five tax years of:
(a) the amount reported for federal income
tax purposes on Schedule F of the individual federal income tax return as net
farm profit, excluding income and expenses not attributable to the agricultural
land being valued; plus
(b) fees
for rental of land or machinery less expenses relating thereto; plus
(c) the reasonable value of unpaid labor of
the operator or the farm family; less
(d) the expense of depreciation on farm
buildings and machinery.
(3) In lieu of calculating income in the
manner set forth in Paragraph (2) of Subsection B of this section, income may
be determined by either of the following methods.
(a) Income may be determined from reference
services such as the New Mexico crop and livestock reporting service, the
cooperative extension service, and the agriculture departments of state
universities. If a source other than the reported federal farm income, referred
to in Paragraph (2) of Subsection E of this section, is used, adjustments
should be made to allow for costs allowable on the federal farm income tax
return if such costs are not allowed in the income figure provided. Also,
income from sources other than the federal farm income return are to be closely
matched to the class of agricultural land being valued so that the income
properly reflects income from the class of agricultural land being
valued.
(b) The division by order
may determine annual income from various classes of agricultural land based on
the land's capacity to produce agricultural products, as provided in Subsection
E of this section. This order or orders, if issued, would be issued before the
last day of the tax year preceding the year in which the annual income amounts
are to be used.
(4) The
capitalization rate to be used in valuing land used primarily for agricultural
purposes pursuant to this section may be set by the division by order. This
order, if made, will be issued before the last day of the tax year preceding
the year in which the capitalization rate is to be used. The division shall
review the capitalization rate used at least once every five tax years. In
setting the capitalization rate, consideration is given to the current interest
rates for government loans, federal land bank loans and production credit
association loans.
(5) The
capitalization rate is divided into the annual "income" per acre, except for
grazing land, to arrive at the value per acre for property taxation purposes of
the agricultural land being valued.
F.
CLASSES OF AGRICULTURAL LAND:
(1) Pursuant to Section
7-36-20
NMSA 1978, the division shall annually issue an order establishing the carrying
capacity of grazing land in accordance with the methods of classification
contained in this subsection.
(2)
Agricultural land is classified as either:
(a)
"irrigated agricultural land", which is all agricultural land receiving
supplemental water to that provided by natural rainfall; or
(b) "dryland agricultural land", which is all
agricultural land without a supplemental water supply; or
(c) "grazing land" which is all agricultural
land which is used solely for the grazing of livestock as established in
Subsections B and C above; land the bona fide and primary use of which is the
production of captive deer or elk shall be valued as grazing.
(3) All lands that were previously
irrigated or dryland meeting the preceding classifications but which are now
participating in any of the various crop retirement programs such as the soil
bank or acreage set-aside program sponsored by the United States department of
agriculture are still to be classified as irrigated or dryland until the
program expires from the subject land and clear evidence is shown that a change
in land use is occurring, unless there has been a sale of the water rights, the
use of which permitted irrigation.
(4) Irrigated and dryland agricultural land
is classified using the following sources:
(a)
The land capability classification of the natural resources conservation
service which is a rating of land according to its ability to produce
permanently and the requirements of management to sustain production. It
consists of eight (8) different land capability classes. Classes I through IV
are considered suitable for cultivation; Classes V through VIII are considered
to be not suitable for cultivation. Classes II through VIII are further
modified by four (4) subclasses that are used to signify the particular kind of
limitation affecting the soil. In addition, there are nine (9) land capability
units which are used to indicate a special kind of condition. This system is an
interpretative rating that includes not only the physical factors of soil, but
the availability of water and the effects of climate. It is designed primarily
for soil management and conservation practices. Each land capability
description carries with it specific recommendations for farming practices that
were developed by actual farming experience to offset or allow for the existing
production-limiting factors of the soil.
(b) Natural land classification of soil by
physiographic groups based on their general topographic, or slope,
position.
(c) Classification by
series and type which is the classification used in the cooperative survey of
New Mexico state university and the United States department of agriculture and
by the natural resources conservation service and which classify in a
series-type grouping.
(d) Soil
characteristics shown by the current New Mexico county assessor's agricultural
manual.
(e) Weather data. The
general weather pattern of an area is usually well known and presents no
special problems. However, the possible presence of microclimatic zones should
be considered. Weather data can be obtained from the national weather service,
agriculture experiments stations, extension service and others connected with
growing conditions.
(f) Cost and
availability of water. Irrigation districts and other water suppliers
boundaries can be obtained from the local conservancy district office or the
New Mexico state engineer's office. The supply of water and its cost is to be
considered. Electric utility companies often have information on pumping costs
and related charges. District taxes, where they are charged, are to be
ascertained as well as other water costs. Many areas are subject to charges
related to reclamation and drainage; information on such charges must be
obtained.
(g) Cropping information.
Knowledge of crop production, yields, prices received, costs and cultural
practices is essential to many appraisal situations.
(5) The minimum carrying capacity of grazing
land will be established in an order of the division by the number of animal
units per section (conventionally 640 acres) that the grazing land will support
under accepted management practices. The assessor can allocate acreage per
animal unit for land parcels that are less than 640 acres as long as the
allocation is proportionate and meets the criteria of Subsection C
"agricultural land-minimum size" herein. In establishing carrying capacity, the
division shall adhere to the definition of livestock in Subsection C of Section
7-35-2
NMSA 1978, as well as utilize the animal unit equivalencies recognized by and
information obtained from livestock industry representatives, the bureau of
land management, the natural resources conservation service, the forest
service, agricultural departments of state universities and the state and
federal departments of agriculture shall be used. The division will consider
drought and natural conditions which would tend to reduce the carrying capacity
of grazing land. The division may establish in each county one or more carrying
capacities based on different natural conditions within the county. Economic
conditions, such as the market price of livestock, are not taken into
consideration in determining carrying capacity of grazing land. The order is
issued before the last day of the year preceding the tax year in which it is to
be used.
(6) The division, by
order, shall determine the values per animal, which values reflect the net
income derived or capable of being derived from the use of the land (or
fractional interests in real property) used for grazing being valued for the
tax year for grazing purposes. These animal values are applied uniformly
throughout the state and are calculated in a manner so that the tax ratio is
applied. This amount or these amounts shall be reviewed by the division prior
to the issuance of the annual order. The annual order is to be issued before
the last day of the tax year preceding the tax year in which it is to be used;
however, this deadline may be extended by order of the director.
G.
IMPROVEMENTS ON
AGRICULTURAL LAND - VALUATION: All improvements, other than those
specified in Subsection C of Section
7-36-15
NMSA 1978, on land used primarily for agricultural purposes shall be valued
separately, using the methods described in Section
7-36-15
NMSA 1978 and regulations thereunder, and the value of these improvements shall
be added to the value of the land.
H.
VALUATION OF CAPTIVE DEER AND
ELK: The department shall establish the value of captive elk and deer
under Section
7-36-21
NMSA 1978 and 3.6.5.28 NMAC. For purposes of the department's determination:
(1) captive deer shall be valued and taxed as
sheep; and
(2) captive elk shall be
valued and taxed as cattle.