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MINNESOTA- REVENUE www.revenue.state.mn.us Green Acres —a (Minnesota Agricultural Property Tax Law) Property Tax Fact Sheet 5 The Green Acres Program provides property tax relief for owners of agricultural property in areas where the market value of land is being affected by development pressure,sales of recreational land,or other non-agricultural factors. The Green Acres Program When the property is sold,transferred,or no longer qualifies, This fact sheet provides information to property the deferred tax(the difference between the agricultural tax owners who currently have land enrolled in and the tax based on highest and best use)for the current tax Green Acres about the options payable year and the two prior years must be paid to the available for their land.It also county. ' provides farm owners information about how to enroll their class 2a What about special local assessments? agricultural land into the program. Special local assessments may be deferred while the property qualifies for Green Acres.When the property is sold, Minnesota law requires assessors to value property at its transferred,or otherwise withdrawn from the program,all estimated market value_Estimated market value must reflect deferred special assessments are due. the use of the property that will bring the greatest economic return to the land(its"highest and best use").For many farm properties,the highest and best use may be to develop the What is the "agricultural value" of a property? land for a residential or commercial use. The residential or commercial value of a property is typically significantly Simply stated,the agricultural value of a property is its value higher than that of farmland. when used for agricultural purposes. Unfortunately, it is difficult to find sales of agricultural property that are not In the 1960s,the Legislature recognized that urban sprawl affected by the non-agricultural factors such as development was causing valuation and tax increases that had the potential pressure or sales of recreational land. In an effort to develop of forcing farmers off their land in certain situations. The statewide uniformity,the Legislature directed the Legislature developed a mechanism that allowed qualifying Commissioner of Revenue to develop a fair method for farmers to pay real estate taxes based upon the agricultural determining the agricultural values for each county. value of their land while deferring the higher property taxes attributable to the land's value as residential or commercial The Department of Revenue studied statewide sales of largely property.This law,officially known as the Agricultural tillable agricultural property across the state in a time period Property Tax law,is commonly referred to as Green Acres that was relatively unaffected by non-agricultural market and is codified in Minnesota Statutes, section 273.111_ influences. Each county's agricultural market was compared to the state's purest agricultural market,and these Only class 2a agricultural land can qualify for Green Acres. relationships help determine the agricultural values that the Class 2b rural vacant land that is part of a property enrolled individual counties use. in Green Acres may be eligible for enrollment in the Rural Each year,the Department of Revenue reviews current sales Preserve property tax program. and calculates the counties'base values that are used to How does Green Acres work? determine agricultural values for all properties enrolled in For properties enrolled in Green Acres,taxes are calculated Green Acres. The base value is adjusted for each county to on both the estimated market value(higher value based on determine the average tillable value per acre for that county. highest and best use)and the agricultural value(lower value). The county assessor then applies this average value to individual properties. The value may differ on each individual The difference between the tax calculated on the agricultural parcel due to quality of land, location,or other factors. market value and the estimated market value is deferred until the property is sold or no longer qualifies for the Green Acres program. Property Tax Division—Mail Station 3340—St.Paul,MN 55146-3340 This fact sheet is intended to help you become more familiar with Minnesota tax laws and your rights and responsibilities under the laws.Nothing in this fact sheet supersedes,alters,or otherwise changes any provisions of the tax law,administrative rules,court decisions,or revenue notices.Alternative formats available upon request. Revised 01/12 Minnesota Revenue,Green Acres 7