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Agricultural Land Classification

Once any property is classified for property tax purposes, it shall remain so until such time as its actual use changes or the assessor discovers that the classification is erroneous. 

County assessors must determine the “primary purpose” of land which may qualify for agricultural designation. All facts and circumstances must be evaluated for each case when making the decision of whether or not land qualifies as agricultural land within the meaning of Colorado statutes. 

If the primary purpose of the owner is that the land be used as an operating farm or ranch, the owner will either personally work the land or will enter into a formal lease agreement with a third party to work the land. 

The assessor should request from the taxpayer documentation pertaining to the farm or ranch use of the property. This documentation can include the following: 

  • For grazing livestock, there must be some evidence in the form of a contractual agreement (recorded in the clerks office) to lease the land for the primary purpose of obtaining a monetary profit or evidence must exist that the taxpayer is the owner-user rancher.
  • For all other agricultural classifications, such evidence should be in the form of an IRS Schedule 1040F (or equivalent), veterinarian bills, brand inspection certificates, receipts for the purchase of equipment and supplies, enrollment documents from Federal Agricultural programs, and evidence of irrigation water ownership.

It is important to note that the Colorado Court of Appeals ruled that the grazing and boarding of “pleasure horses” does not qualify as a ranching use for tax classification purposes because the horses are not used for food, breeding, draft, or profit, and therefore, the horses do not meet the statutory definition of livestock (John S. Palmer and Colorado Board of Assessment Appeals v. Eagle County Board of Equalization and Mary Huddleston, Intervener, 957 P. 2d 348 (Colo. App. 1998) 

The court also concluded that the taxpayer has the burden of proof to show any qualifying “ranching” and/or “farming” uses of his land in support of his claims for agricultural classification. 

Trespass grazing cannot qualify a parcel as agricultural. The court has determined that the use must be permissive and a grazing lease should document the permissive use. 

While it is impossible to generalize a method for deciding classification questions, it is necessary that the land be a part of a functioning farm or ranch used for the primary purpose of obtaining a monetary profit from agriculture. 

Land must have legal agricultural use and continue such use for two years prior to receiving an agricultural classification.