Farm properties are assessed at current value based on sales that occur between two farmers. The assessor is not supposed to use sales that were considered speculative or farm properties that were sold for some other purpose than for farming. Assessors also have to be extremely careful when analyzing sales affected by foreign influences that could cause the farmland to be sold at extremely high prices.
In 1998 the provincial government decided to tax farms differently from other properties by using a different tax rate on the farm portion of the property. This tax rate is 25% of the residential tax rate and is to be applied to the farm portion of the property. The residential portion of the farm would be taxed at the same tax rate as all other residential properties in the area.
Farms are a unique property and are very difficult for the assessor to value when attempting to determine how much value the farm land has as opposed to the farm buildings and farm residence. For this reason, the assessor needs to consider the amount of depreciation on the buildings. This of course depends on what region of Ontario you live in since in some areas the farm buildings are more valuable than in other areas. This is mainly due to the type of farm operations there are in that area. Cash crop farms usually have a higher land value and a lower building value, whereas livestock farms may have more value attributed to the buildings and less to the land.
The assessor uses a pointing system to determine the classification of farmland. These classes range from 1- 8 and the class depends on a number of factors such as soil texture, topography, drainage, etc. Market garden land has an entire different method usually based on depth of topsoil. All these factors are considered when the assessor analyses the sales in your area.
The buildings on the property are rated using a cost manual and depreciated based on their economic life. The farm residence is also valued using this approach.
In many instances, farmers could represent themselves at the assessment hearing with assistance in helping them prepare for their assessment appeal. As your consultant, I would tell you the information you need from the assessor and ask you some specific questions pertaining to your property and area which would assist me in determining what issues are needed to be addressed.
Many times entire concession blocks are overvalued due to errors in land classification. Therefore, as a group of farmers, it would be beneficial to band together in order to get your property values lowered. This is another area where a consultant could be used to your advantage.
If you require assistance with your farm property taxes call 519 351-5405.