My Kansas property is used for more than one thing -- can it get more than one property tax classification?

Plain-English summary

Kansas taxes property at different rates depending on how it is classified -- residential, commercial, agricultural and so on. So the practical question for anyone whose property does more than one thing is whether the county has to pick a single label, or can split it.

This directive says it can split it: "Real property with varying uses may be assigned more than one classification."

The single-label approach is the fallback, not the rule. It applies only when the uses cannot be pulled apart on the ground: "If the uses are so intermingled as to defy classifying identifiable, physical portions of the property, then the property should be classified based upon its predominate use." Stated the other way in the body of the directive: "If specific portions of the real property cannot be identified as being used for specific purposes, then the real property should be classified based upon its predominate use."

For one common situation, predominate use is flatly off the table. The 2016 amendment to K.S.A. 79-1476, quoted in the directive, tells the appraiser to determine how much of a parcel is used for agriculture and then "determine the amount of the remaining land used for such other purposes and value and assess that land according to its use." The Division draws the consequence plainly: "it is not acceptable to delineate suburban residential acreages, rural home sites or farm home sites based on predominate use," and the appraiser must instead split the parcel, "thus, creating a mixed use classification."

Relatedly, the directive forbids a shortcut counties have been tempted to use: "The county appraiser shall not establish a 'standard' size for home sites. Each tract must be considered individually and delineated as to what is actually being used as a home site."

There is an important limit. Classification and valuation are separate questions. Even where mixed uses are recognized, "the county appraiser shall continue to determine the fair market value of the real property based upon its highest and best use." The directive cites Cashatt for exactly that split -- property "used for residential purposes classified as residential, but value as commercial, its highest and best use." The one exception is farm ground, "land devoted to agricultural use, which by law is valued based upon its physical use."

What this means for you

Owners of a farm parcel with a house on it

This is the clearest win in the directive. Your home site and your agricultural ground should be separately delineated and assessed according to their respective uses -- not lumped under whichever use dominates. If your county has applied a blanket acreage figure for home sites, the directive forecloses that: each tract "must be considered individually and delineated as to what is actually being used as a home site."

Owners of a building with more than one use

A storefront with an apartment above it, a shop attached to a residence, a warehouse with an office -- if the portions are physically identifiable, the directive permits separate classifications for them. What defeats a split is genuine intermingling, not mere inconvenience.

Note the county's latitude, though: "The county has the discretion to determine the appropriate level of detail needed for classification purposes. However, we encourage efficient use of local resources." A county is not obligated to classify to the square foot.

Owners whose property the appraiser has never been inside

The directive is candid that classification runs on partial information. The appraiser "shall annually classify property based upon information that is reasonably available," which may be an exterior view during the annual final review, or an interior inspection of public areas and an interview at the six-year re-inspection under K.S.A. 79-1476. The appraiser "is not required to annually inspect the interior of every property in the jurisdiction in order to classify the property with a high degree of precision."

That is precisely why you may need to speak up. The directive invites it: "If the owner or an occupant of the real property provides reliable detailed information regarding the interior use of real property, the county appraiser may utilize the information to more precisely assess the property, just as the information can be used to more accurately value the property." And where the appraiser already suspects mixed use, "it would be prudent to contact the owner for more information."

Two cautions before you volunteer detail. First, the directive says the appraiser "should keep in mind his or her legal authority to make any changes in value or classification" -- information that supports a better classification can also support a different value. Second, a favorable classification does not cap your value.

Owners of seasonal or agricultural operations

The January 1 snapshot has a built-in accommodation: "Property such as agricultural land, which has seasonal uses typical to the trade that do not necessarily take place on January 1 or on a 12-month basis, shall be classified annually based upon the overall use during the prior year or operating period." A fallow field on New Year's Day is not thereby non-agricultural.

Accountants and appraisers

Keep the two axes distinct in any appeal. Winning a residential classification does not import a residential valuation -- Cashatt is the directive's own authority that a property can be classified residential and valued at a commercial highest and best use. The exception is agricultural land, valued on physical use under Kan. Const. art. 11, § 12, K.S.A. 79-1476 and Board of Johnson County Comm'rs v. Smith.

Common questions

Q: Can one parcel have two classifications?
A: Yes. "Real property with varying uses may be assigned more than one classification."

Q: When does the county get to use just one classification?
A: Only when the uses are "so intermingled as to defy classifying identifiable, physical portions of the property" -- then it classifies on predominate use.

Q: My county assigns every farm home site the same standard acreage. Is that allowed?
A: No. "The county appraiser shall not establish a 'standard' size for home sites." Each tract must be looked at individually and delineated by what is actually used as a home site.

Q: Does a mixed classification lower my value?
A: Not by itself. Value still rests on highest and best use even where mixed uses are recognized for classification, except for land devoted to agricultural use, which is valued on its physical use.

Q: What date governs?
A: Use on January 1, based on information reasonably available to the appraiser -- with the seasonal-use accommodation for property like agricultural land, classified on the overall use during the prior year or operating period.

Q: Should I tell the appraiser how I actually use the inside of my building?
A: You may, and the directive expressly contemplates it. Reliable detailed information from an owner or occupant may be used "to more precisely assess the property." Be aware the same information bears on value as well as classification.

Q: Will the appraiser inspect my interior every year?
A: No. The appraiser is not required to annually inspect the interior of every property; the statutory cycle for re-inspection is every six years under K.S.A. 79-1476.

Q: Is this directive still in force?
A: It superseded Directives #92-022 and #99-038 and was approved April 30, 2019. Check the Division's current directive list before relying on it.

Citations and references

Authority for the directive: K.S.A. 79-505(a), and amendments thereto.

Classification:

• K.S.A. 79-1439, which the directive says "mirrors the classification system in Article 11, § 1 of the Kansas Constitution"
• Kan. Const. art. 11, § 1

Agricultural land and home sites:

• K.S.A. 79-1476, as amended in the 2016 legislative session (parcel with both agricultural land and suburban residential acreages, rural home sites or farm home sites); also the source of the six-year re-inspection cycle
• Kan. Const. art. 11, § 12

Cases cited in the directive:

• Board of Douglas County Comm'rs v. Cashatt, 23 K.A.2d 532, 933 P.2d 167 (1997) -- cited in the directive with the parenthetical "property used for residential purposes classified as residential, but value as commercial, its highest and best use." The volume abbreviation "K.A.2d" is the Division's own; the case is a 1997 Kansas Court of Appeals decision.
• Board of Johnson County Comm'rs v. Smith, 18 Kan. App. 2d 662, 857 P.2d 1386 (1993)

Directives superseded by this one: #92-022 and #99-038.

Source

• Landing page: Kansas Property Tax Directives
• Original PDF: PVD Directive 19-038

Original ruling text

Division of Property Valuation
300 SW 29th Street Phone: 785-296-2365
PO Box 3506 Fax: 785-296-2320
Topeka KS 66601-3506 www.ksrevenue.gov
Mark A. Burghart, Secretary Laura Kelly, Governor

                                    DIRECTIVE #19-038

TO: County Appraisers

SUBJECT: Classification – Real Property Used for Mixed Purposes
This Directive Supersedes Directive #92-022 and #99-038

This directive is adopted pursuant to the provisions of K.S.A. 79-505(a), and amendments thereto, and
shall be in force and effect from and after the Director’s approval date.

Summary

Generally, real property should be classified based upon how it is used on January 1st utilizing
information that is reasonably available to the county appraiser. If it appears that the property may be
subject to mixed uses, it is prudent to contact the property owner or occupant for further information.
Real property with varying uses may be assigned more than one classification. If the uses are so
intermingled as to defy classifying identifiable, physical portions of the property, then the property
should be classified based upon its predominate use. The county has the discretion to determine the
appropriate level of detail to apply for classification purposes; however, we encourage efficient use of
local resources. Even when mixed uses are recognized for classification purposes, the market value
of the property should continue to be determined based upon its highest and best use.

General Rule: Classify Property on January 1; Certain Exceptions

The county appraiser has the statutory duty to classify real property each year in accordance with
K.S.A. 79-1439, which mirrors the classification system in Article 11, § 1 of the Kansas Constitution.
Property should be assessed on an annual basis based upon the property’s use on January 1st. Property
such as agricultural land, which has seasonal uses typical to the trade that do not necessarily take place
on January 1 or on a 12-month basis, shall be classified annually based upon the overall use during the
prior year or operating period.
Home Site Delineation; Land Devoted to Agricultural Use

The county appraiser shall not establish a “standard” size for home sites. Each tract must be considered
individually and delineated as to what is actually being used as a home site.

K.S.A. 79-1476 was amended in the 2016 legislative session to provide:

If a parcel has land devoted to agricultural purposes and land used for suburban residential acreages,
rural home sites or farm home sites, the county appraiser shall determine the amount of the parcel used

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for agricultural purposes. The county appraiser shall then determine the amount of the remaining land
used for such other purposes and value and assess that land according to its use.

Thus, it is not acceptable to delineate suburban residential acreages, rural home sites or farm home
sites based on predominate use. The county appraiser shall determine the amount of the parcel used
for agricultural purposes and then determine the amount of the remaining land used for other purposes;
thus, creating a mixed use classification.

Information for Classification

The county appraiser shall annually classify property based upon information that is reasonably
available. For example, the county appraiser may classify real property based upon viewing its
exterior during the annual final review. Or, the county appraiser may classify real property based upon
an interior inspection of public areas and/or an interview performed in conjunction with the re-
inspection performed every 6 years. (K.S.A. 79-1476).

If the owner or an occupant of the real property provides reliable detailed information regarding the
interior use of real property, the county appraiser may utilize the information to more precisely assess
the property, just as the information can be used to more accurately value the property. The county
appraiser should keep in mind his or her legal authority to make any changes in value or classification.

The county appraiser is not required to annually inspect the interior of every property in the jurisdiction
in order to classify the property with a high degree of precision. However, if the county appraiser is
aware that a property may have more than one use that could affect classification, it would be prudent
to contact the owner for more information.

Real Property Subject to Mixed Uses

If real property is used for more than one purpose, it may have more than one classification. If specific
portions of the real property cannot be identified as being used for specific purposes, then the real
property should be classified based upon its predominate use. The county has the discretion to
determine the appropriate level of detail needed for classification purposes. However, we encourage
efficient use of local resources.

Valuation and Classification

Even when mixed uses are recognized for purposes of classifying real property, the county appraiser
shall continue to determine the fair market value of the real property based upon its highest and best
use. Board of Douglas County Comm’rs v. Cashatt, 23 K.A.2d 532, 933 P.2d 167 (1997) (property
used for residential purposes classified as residential, but value as commercial, its highest and best
use). The exception to this rule is land devoted to agricultural use, which by law is valued based upon
its physical use. See Article 11, §12 of the Kansas Constitution, K.S.A. 79-1476, Board of Johnson
County Comm’rs v. Smith, 18 Kan. App. 2d 662, 857 P.2d 1386 (1993).

Approved: April 30, 2019
David N. Harper
Director of Property Valuation