Lebanon Property Tax Comparison: Residential and Farm

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Some Boone County farmers contend they pay too much property taxes because bare ground does not require government services. This contention has been analyzed using the same 2013 property tax rate imposed on the owners of a typical residential property and a typical farm within the City of Lebanon. Listed next is the tabulation of the analysis data obtained from publicly available property tax bills and property record cards for the two comparison properties.

A 1,442 square foot home built in 1993 in a Lebanon neighborhood had a gross assessed value of $95,300. The gross assessed value of the 0.21 acre of land on which the home is built was $19,400. After the standard, supplemental, and mortgage homestead deductions, the net assessed value of the residential homestead was $42,305. The residential homeowners paid $912.78 in homestead property taxes.

The gross assessed value of the 1,536 square foot farm home built before 1960 was $44,600, and the gross assessed value of the one acre of land surrounding the farm home was $35,000. After the standard, supplemental, and mortgage homestead deductions, the net assessed value of the farm homestead was $19,490. The farm owner paid $420.52 in homestead property taxes.

According to the 2010 United States Census, the average household size of Lebanon owner-occupied units is 2.50 persons. Using the 2.50 persons household average together with the analysis data for the two comparison properties, the residential homeowners paid $1,738.63 in homestead property taxes per person per acre ($912.78 divided by 2.50 persons divided by 0.21 acre). The farm owner paid 90% less or $168.21 homestead property taxes per person per acre ($420.52 divided by 2.50 persons divided by one acre). Farm owners are expected to pay less per acre in homestead property taxes because their land is less valuable without municipal utilities.

The Lebanon farm owner paid $3,708.92 property taxes on his 84.015 acres of farmland. The farmland had a net assessed value of $171,900 ($2,046 per acre).

The Lebanon farm owner also paid $1,797.28 property taxes on his other farm property, which had a net assessed value of $83,300. This property included a Quonset building, a barn, three steel grain bins, two utility sheds, a 12-foot by 20-foot poultry house, and three un-insulated T3 buildings.

The total farm business property taxes for the 84.015 acres of farmland was $5,506.20, or $65.54 per acre.

Indiana farmland is most definitely not “bare ground.” According to the November 8, 2013, Crop Production Report from the United States Department of Agriculture, the latest yield per acre for grain corn is 174.0 bushels per acre. The USDA is also currently estimating the average on-farm cash corn price for 2013-14 to be $4.50 per bushel.

Therefore, the Lebanon farm owner can expect gross income of $783 per acre (174.0 bushels per acre times $4.50 per bushel). The $65.54 paid in farm business property taxes per acre represents 8.37% of the gross income per acre.

In summary, the Lebanon farm owner pays significantly less than the Lebanon residential property owners in homestead property taxes while also paying 8.37% of his gross income in farm business property taxes. 

The typical homestead farmer – the farmer who lives on his or her farm – is engaged in the business of agriculture. Services paid for by property taxes are used by the homestead farmer the same as other businesses and homeowners.

We all benefit from the following county services: 4-H Maintenance, Assessor, Auditor, Bridge Maintenance, Circuit Court, Clerk, Commissioners, Community Corrections, County Council, Drains & Ditches Management, Emergency Management Agency, Health Department, Probation, Prosecutor, Recorder, Soil & Water Conservation, Solid Waste Management, Treasurer, Superior Court, Veteran Affairs. Necessary township services include fire protection, township assistance, and cemetery upkeep.

The owners of a typical residential property and a typical farm within the City of Lebanon both owners paid the same 2013 property tax rate for necessary city services including fire fighting, library, park, storm water management, and police protection. All homeowners and businesses, including homestead farmers, benefit when public schools use property tax dollars to help prepare our students to participate in a world economy.

It appears that Boone County farmers do not pay too much property taxes, but pay their fair share.

Please send an E-mail to taxless3@comcast.net if you disagree that farmers are bearing their fair share of the property tax burden. This matter is part of the public debate about whether it is good public policy to eliminate or reduce personal property taxes in Indiana.

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This page was last updated on 12/30/13 .