Forty-Acre Split: Homestead, Rented Crop Ground, and a Pole Barn
Riverbend Township’s assessor is cleaning up a 40-acre parcel that was split by deed in early March into a 2-acre homesite and a 38-acre farm parcel. The owner, Ms. Alvarez, occupies the house as her principal residence. She cash-rents the 38 acres to a neighboring farmer who grows corn and soybeans; the lease is year-to-year, and the neighbor owns the crop. A 40-by-60 pole barn sits on the 2-acre homesite. About 60% of the barn floor stores the neighbor’s seed and fertilizer; the rest holds Ms. Alvarez’s lawn equipment and a boat. The CAMA record still carries one 40-acre parcel with total assessed value of $337,000 and taxable value of $240,000, and Ms. Alvarez’s PRE affidavit lists all 40 acres. She also told the clerk the whole parcel is “agricultural exempt.” The township levies 18 school operating mills and 22.5 mills of other millage. The split has not been reflected on the roll.
1. Classify the two new parcels and the pole barn for assessment purposes. How should the 38-acre farm be treated for school operating millage?
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The 2-acre homesite is residential: it contains the dwelling, curtilage, and an accessory pole barn. The barn’s mixed storage use does not convert the parcel to commercial on these facts because the owner charges no storage rent and the barn remains ancillary to the homestead. If the assessor later finds a business use, the business portion could be reclassified, but the mere presence of the neighbor’s seed is not enough.
The 38-acre tract is agricultural. Agricultural is a classification, not a general exemption. The land remains taxable for city, county, debt, and other non-school millage. It can receive the qualified agricultural property exemption from the 18 school operating mills only if the owner files the required claim and the land is used for agricultural purposes. Because the parcel is cash-rented and the neighbor owns the crop, the owner should document the agricultural use and file the claim; without a timely valid claim, the 38 acres pay all mills. The assessor should split the CAMA record into two parcels so the residential and agricultural uses are separately rolled.
2. How should the assessor handle Ms. Alvarez’s PRE affidavit and the allocation of taxable value after the split? Does the split uncap taxable value?
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The PRE should be limited to the 2-acre homesite - the dwelling and contiguous land used as the principal residence. The 38 acres used for cash-crop farming are not part of the PRE and must be removed from the affidavit. The qualified agricultural claim is a separate matter and does not make the 38 acres part of the homestead.
The deed split is not a transfer of ownership, so it does not uncap taxable value. The assessor must allocate the existing $240,000 taxable value between the two new parcels without creating new taxable value. A reasonable allocation is proportional to assessed value:
- 2-acre homesite: $185,000 ÷ $337,000 × $240,000 = $131,750 taxable value
- 38-acre farm: $152,000 ÷ $337,000 × $240,000 = $108,250 taxable value
The two allocated taxable values sum to $240,000. The assessor should document the allocation and correct the roll; no transfer affidavit or uncapping is required for the split alone.
3. Assuming both the PRE and the qualified agricultural claim are timely and valid, calculate the 2025 tax effect on each parcel using the given millage. What would each parcel pay without the exemption?
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Total millage is 18.0 school operating + 22.5 other = 40.5 mills. Both exemptions remove only the 18 school operating mills, leaving 22.5 mills.
2-acre homesite (PRE):
- Taxable value: $131,750
- Tax with PRE: $131,750 × 0.0225 = $2,964.38
- Tax without PRE: $131,750 × 0.0405 = $5,335.88
- PRE savings: $2,371.50
38-acre farm (qualified agricultural):
- Taxable value: $108,250
- Tax with qualified agricultural exemption: $108,250 × 0.0225 = $2,435.63
- Tax without exemption: $108,250 × 0.0405 = $4,384.13
- Savings: $1,948.50
Combined taxes after both exemptions are $5,400.01; without either exemption they would be $9,720.01. The exemptions do not reduce the 22.5 mills of other millage, and the agricultural classification alone would not produce the school operating savings.