Tag Archive for: Nebraska Land Values

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Nebraska Land Values and Property Taxes

Nebraska Land Values

 

Amid the many challenges that face farmers and landowners across Nebraska, a continued concern is high property taxes. With the plummeting grain prices over the last 3 years, and with the skyrocketing property tax rates of the last 10 years—which have increased 176 percent—it’s no wonder landowners and producers are hoping for property tax relief at the legislative level.

Toward the end of this year’s 2016 legislative session, lawmakers were able to advance LB 958 and LB 959, which provides additional money to the state’s property tax credit program, valuing ag land at 90 percent versus 75 percent of market value for the credit program, tightens limits on budget growth and levy increases for all local governments, and slows the rise in government-assessed cropland values across the state—measures that proponent and Governor Pete Ricketts calls “tools to help local governing entities control spending.”

In a state where 51 percent of total school spending comes from property taxes, in comparison to the national average of 32 percent—this is welcome news to landowners.

In calculating real estate taxes, all land is taxed based on either market value or fair use value. Often farmland appraisals are based on a formula for Current Agricultural Use Value (CAUV), or the income a farmer can expect to earn based on factors including grain prices, farm rental rates, soil type and productivity, production expenses, and interest rates, among other variables.

As such, the record high crop prices in 2012 and the all time high farm incomes of 2013 are now factoring in to property tax appraisals. Given the plummeting farm incomes since then, combined with low interest rates, which also push taxes up for landowners, there is a perfect storm brewing for potential tax problems, despite the property tax relief legislation.

With this much money on the line, it’s little surprise that owners of Nebraska farmland often turn to professional land managers to provide them with highly accurate appraisal services. UFARM’s own agricultural valuation professionals have years of combined experience in local land markets with which to provide their clients with a clear account of their property’s value and potential.

Using the latest appraisal technology, UFARM appraisers are experienced in completing all the necessary reports for estate valuation, loan collateral, sales analysis, and property partition.

In addition, UFARM has certified rural appraisers on staff, offering appraisals through each of our offices across the state. These services include documented market value estimates that are carefully researched, written to withstand challenge, and provide a precise picture of a landowner’s property value.

In addition to property tax purposes and property tax appeals, an accurate value appraisal is important for a number of other, equally significant reasons, including:

-buying, selling, exchanging, or dividing real estate

-estate planning and gifting

-loan evaluations

-litigation

-condemnation proceedings

-eminent domain for roadways, pipelines, or electrical lines

When it comes to determining the value of your land, count on the most experienced appraisers. Feel free to contact UFARM for all of your appraisal needs.

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Effects Of Lower Grain Prices On Nebraska Land Values

Land ValuesAs farmers across the state are becoming reacquainted with their combines, and are bringing in high yields, they are also dealing with lower grain prices. With grain prices heading south, it’s no surprise that Nebraska land values are being similarly affected. Nebraska farmland values remain strong, but a slow down is beginning to show. Non-irrigated farmland in the Nebraska rose 3.7 percent from a year earlier, while irrigated farmland rose 2.3 percent.

Farmers are beginning to feel the pinch of smaller profit margins and this will eventually be reflected in land prices. According to an index from ag bankers, second quarter farm income fell to a reading of 80, down from 100 from 2010 to the middle of last year. According to the survey, “Farm income remained well below year-ago levels due to falling crop prices and poor winter wheat yields. With summer rains easing drought conditions, the potential for record crop production this fall could keep prices low and shrink profit margins further.”

Grain prices continue to be a worry and farmers and market analysts are anxiously anticipating Friday’s next WASDE report from the USDA to further gauge grain futures. While the outlook doesn’t look great, all is not total doom and gloom. Besides farmers who sold some of their 2014 crop above today’s market prices, federally subsidized crop insurance and new programs in the latest Farm Bill will provide safety nets and perhaps allay the fears of many producers.

Despite these safety nets, however, farmers and landowners undoubtedly face challenges. Experts expect the agricultural sector to enter a downward cycle, though it’s unclear if this will be a multi-year issue or not. Interest rates may see an increase as well in the near future, also undoubtedly at the forefront of many farmers’ minds.
In addition to these challenges, farmers face tough decisions about when to sell their grain. However, according to Ainsworth West Plains Bank president Michael Kreycik, farmers should be able to absorb a few years of low prices and even losses. He says, “I think our loan customers are in a better position now than they were in 1980 to absorb a higher rate of interest and softening of land prices.” A key factor for many farmers and landowners will be if interest rates begin to rise—if so, that could pose a problem for many.

At any rate, this could be a test for the 2014 Farm Bill’s safety nets, as some economists are predicting substantial payments under the new law to grain farmers this year.

Do you have concerns about changing land values? Are you looking for ways to protect your land investment? Contact a UFARM land manager—they’ll help you make the right decisions.
United Farm and Ranch Management (UFARM) is a Nebraska-based company devoted to meeting landowners’ needs. UFARM offers a full range of Nebraska land management services, including real estate sales, rural property appraisals, consultations and crop insurance. UFARM has operated in Nebraska since the early 1930’s. Contact Us.

Sources consulted: Hubbard, Russell. “Fed Survey: Lower Grain Prices Limit NE Farmland Values.” Omaha.com Money. 15 Aug. 2014. Web. 06 Oct. 2014.; Jordon, Steve. “With No Sign of Increased Demand, Farmers Battle Falling Corn Prices.” Omaha.com Money. 03 Aug. 2014. Web. 06 Oct. 2014.