Conversion of Agricultural Land

Guide to Estimating Charge for Conversion of Agricultural Land

Property that has benefited from lower property taxes due to its use-value assessment as agricultural land may be subject to a conversion charge. This occurs when its use is converted to a residential, commercial, or manufacturing, or becomes exempt and the use is no longer agricultural. The conversion charge is effective upon the assessor’s completion of the assessment roll in the year following the change in use. Sec.74.485, WI Statutes governs the application of the conversion charge.

The county treasurer is responsible for the administration of the conversion charge. However, the treasurer cannot act until the actual change in use, verified by a change in class on the assessment roll is complete. This occurs after the assessor has submitted the roll to the local Board of Review (BOR), which will resolve any outstanding issues with the assessor’s decision on the proper classification. Once the BOR is complete (typically between May and October), the assessor must provide the county treasurer with a list of the owners who converted the use of agricultural acreage in the previous year.

Conversion charges are issued with a due date within 30 days of the issue. Unpaid conversion charges will be added as special charges on the next property tax bill.

Estimating

For those who want to estimate the conversion charge amount prior to the actual calculation by the county treasurer, whether for estimating project costs, negotiation of a purchase, or for escrow at closing, we offer the following.

Determine who will be liable for the Conversion Charge. The person owning the property at the time of the conversion will receive the bill.

For example, the developer/grantor begins the construction of a house in March. Even if the house is sold in September, the conversion charge will be due from the grantor, not the grantee. The grantor is required by law to give the grantee notice of the conversion charge status.

Determine how many acres had been assessed as ’agricultural use’ the prior January 1 and are being converted.

For example, eight acres had been a cornfield. Now, it consists of a house, lawn and five acres of a cornfield. Three acres were converted and are eligible for the conversion charge.

Determine the proper Conversion Charge per acre (the larger the number of acres converted, the smaller the charge). This is based on the number of changed acres by the same owner in the same community.

For example, if the owner in the above example converted another 12 acres in the same community in the same year, they would have a 15-acre conversion charge.

Multiply the number of changed acres times the conversion charge per acre in the county.

For example, 15 acres times $779.00 equals a conversion charge of $11,685.00.

Calculation & Formula

Determine number of acres assessed the prior January 1 as agricultural use whose use has been converted on current January 1 assessment roll
Multiply by $519 if more than 30 acres were converted
Equals estimated conversion charge due:
- $779 if 10 - 30 acres were converted
- $1,039 if less than 10 acres were converted.

Note: See the Wisconsin Department of Revenue website for questions and answers, an agricultural assessment guide and a listing of conversion charges by county.