Since 1995 agricultural land in Wisconsin has been assessed based on its agricultural productivity, use value, rather than its market value. Property that has benefited from agricultural classification and use-value assessment may be subject to a Conversion Charge. This occurs when its use is converted to residential, commercial, or manufacturing, or becomes exempt and the use is no longer agricultural. The conversion charge becomes effective upon the assessor’s completion of the assessment roll in the year following the change in use. Sec.74.485, Wis. Stats., governs the application of the Conversion Charge.
The County Treasurer is responsible for administering 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 of the proper classification. No later than 15 days after the BOR is complete (typically between May and October), the Assessor must provide the County Treasurer with all of the information that is necessary to compute the Conversion Charges. The Assessor will provide a report of the owners who are subject to the charge for converting agricultural acreage in the previous calendar year. The conversion charges are due within 30 days of issuance. Unpaid conversion charges will be added as special charges on the next property tax bill.
Following is information that outlines the process to estimate a Conversion Charge prior to the actual calculation by the County Treasurer.
Determine who will be liable for the Conversion Charge. The person owning the property at the time of the conversion will receive the bill.
- Example: A developer/grantor begins 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 assessor is required by law to provide notice of the potential Conversion Charge. 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.
- Example: Eight acres had been a corn field but now consists of a house, lawn and five acres of corn field; 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.
- 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.