Chapter 45

(House Bill 1085)

An Act to redefine the criteria for classifying land as agricultural for tax purposes.

Be it enacted by the Legislature of the State of South Dakota:

Section 1. That § 10-6-31.3 be AMENDED.

10-6-31.3. Classification of agricultural land--Criteria.

For tax purposes, land is agricultural land if its the land's principal use is devoted to the raising and harvesting of crops or timber or fruit trees, the rearing, feeding, and management of farm livestock, poultry, fish, or nursery stock, the production of bees and apiary products, or horticulture, all for intended profit. Agricultural real estate land also includes woodland, wasteland, and pasture land, but only if the land is held and operated in conjunction with agricultural real estate as defined land and it is under the same ownership. For purposes of this section, the term, principal use, means the primary use to which the land is devoted. This definition is intended to reference the primary and predominant use of the land as opposed to a mere secondary and incidental use.

In addition, to be classified as agricultural land for tax purposes, the land shall meet one of the following criteria:

(1) In three of the previous five years, a an annual gross income of at least two thousand five hundred dollars is derived from the pursuit of agriculture from the land that is at least ten percent of the taxable valuation of the bare land assessed as agricultural property, excluding any improvements. If there is a crop share arrangement or cash rent agreement, the gross income from the land of both the landlord and tenant shall be combined and used to meet this requirement. Alternatively, at least two thousand five hundred dollars of the owner's gross income is annually derived from the pursuit of agriculture, excluding transactions between:

(a) An individual and anyone with whom the individual shares a residence;

(b) An individual and an entity in which the individual and anyone who shares a residence with the individual have an aggregate ownership interest of more than fifty percent; or

(c) Entities that are members of the same controlled group, as defined in § 10-45-20.3.

The owner shall produce to the director of equalization any writing that is requested by the director for the purpose of verifying that the requirement of this subdivision has been satisfied; or

(2) The Subject to the board of county commissioners increasing the minimum acre requirements, the land consists of not less than at least twenty acres of unplatted land or is a part of a management unit of not less than eighty acres of unplatted land. The same acreage specifications apply to platted land, excluding land platted as a subdivision, which is in an unincorporated area. However, the board of county commissioners may increase the minimum acre requirement up to one hundred sixty acres. The board of county commissioners may not increase the minimum acre requirements of this subdivision to an amount greater than one hundred sixty acres.

For the purposes of this section, the term, management unit, means any two or more parcels of land, whether adjoining or not, under common ownership located within this state and managed and operated as a unit for one or more of the principal uses listed in this section. No parcel of land within a management unit may be more than twenty air miles from the nearest other parcel within the management unit. If requested by the director of equalization, the owner shall provide supporting documentation of the land contained in the management unit.

Signed March 21, 2021

Catchlines are not law. (§ 2-16-13.1) Underscores indicate new language.

Overstrikes indicate deleted language.