Agricultural Production and Tax Classification

Lands used to grow crops or graze livestock (with the primary purpose of producing a profit) can be classified as “Agricultural Lands” in Grand and Summit Counties. To qualify for this classification, the property owner must be able to provide clear evidence of such use to the County Assessor. To establish or regain the agriculture classification, one must show proof of agricultural use for three consecutive years. In the third year, the property can be classified as “Agriculture.” If the land is not being used for agriculture, it is classified based on its primary use (vacant, residential, commercial, or industrial).

The “Agricultural” classification means the property’s value is based on its potential agricultural income value instead of its market value. In Grand and Summit Counties, there is a substantial difference between agricultural land value and market value; thus, agricultural lands have lower property taxes. Agricultural tax classification is based on the USE of the land regardless of its zoning classification. A zoning class of ‘Ag or Forestry’ does NOT automatically ensure an agricultural TAX classification.

Criteria for Agricultural Classification

The land must primarily be used to obtain a monetary profit from the land’s production of an agricultural product. Agricultural use, as defined by the State of Colorado, means using the land as a farm or ranch. A “farm” is generally used for planting, harvesting, and selling a crop that originates from the land’s soil (such as wheat, oats, and barley). A “ranch” is defined as a livestock grazing operation for human or animal consumption. Horse operations may ONLY be considered agricultural if the horses are used for food, breeding, draft, or another commercial use (such as guide and outfitting). Pleasure horses and 4-H projects are NOT considered agricultural operations. Animal production that is not sustainable by the land itself (such as pigs or chickens) is also NOT considered agriculture. The key concept is that the land is supporting the crops and/or livestock.

Horticultural operations are considered agricultural if the produce is grown in the soil. Forested parcels of 40 acres or more can be classified as “Forest Ag” if they are registered in the Forest Ag Program administered by the Colorado State Forest Service (see page 3 for contact info).

To maintain the agriculture tax classification, proof of agricultural use is required by the Assessor. Documents that can be used as “proof” may include: certain forms from your federal tax return, copy of leases with proof of payment, bills of sale for products bought or sold, and brand inspection certificates. The Assessor will periodically view parcels of land for verification of agricultural activity. Any questions regarding the current classification of your land or the possible agricultural uses of said land should be directed to the Assessor’s Office in your respective county (see page 3 for their contact info).