Agricultural assessment program: overview (2022)

Introduction

The State Legislature enacted the New York Agricultural Districts Law in 1971 to protect and promote the availability of land for farming purposes. Subsequent amendments have broadened its scope. The law provides a locally initiated mechanism for creating agricultural districts. Forming agricultural districts is intended to counteract the impact that nonfarm development can have upon the continuation of farm businesses.

The Agricultural Districts Law allows reduced property tax bills for land in agricultural production by limiting the property tax assessment of such land to its prescribed agricultural assessment value. Owners whose land satisfies the eligibility requirements may apply for an agricultural assessment (see details below).

Agricultural districts also provide the framework to:

  • limit unreasonable local regulation on farm practices
  • modify public agencies' ability to acquire farmland through eminent domain
  • modify the right to advance public funds to construct facilities that encourage development
  • require state agencies to modify administrative regulations and procedures to encourage continuing farm businesses
  • provide Right to Farm provisions for protection from private nuisance suits for land in agricultural districts and parcels receiving agricultural assessments outside districts

Benefit assessment, special ad valorem levies, or other rates and fees for the finance of improvements such as water, sewer or nonfarm drainage may not be imposed upon land used in agricultural production and within an agricultural district unless such charges were imposed prior to forming the agricultural district.

You must apply to receive an agricultural assessment

Landowners must file Form RP-305, Agricultural Assessment Application or Form RP-305-r, Agricultural Assessment Application Renewalwith the assessor to receive an agricultural assessment for their parcels. Landowners must apply for an agricultural assessment, and the farmland must satisfy certain gross sales and acreage eligibility requirements.

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Land outside an agricultural district

Land outside an agricultural district may qualify for an agricultural assessment. The requirements and application procedure are the same. However, land located outside of an established agricultural district that receives and agricultural assessment is required to remain in agricultural use for eight years (land within an agricultural district is encumbered for five years) or be subject to a payment for conversion to non-agricultural use.

Eligibility requirements

Eligibility is determined by the assessor or board of assessors where the application is filed. If denied, the applicant has the right to an administrative review by the Board of Assessment Review.

Land generally must consist of seven or more acresthat were used in the preceding two years for the production for sale of crops, livestock, or livestock products.

  • The annual gross sales of agricultural products generally must average $10,000 or more for the preceding two years. If an agricultural enterprise is less than seven acres, it may quality if average annual gross sales equal $50,000 or more. (see rented land and exceptions to gross sales requirements.) Land that supports a commercial horse boarding operation may qualify for an agricultural assessment if the following eligibility requirements are met:
    • at least seven acres of land supports the commercial horse boarding operation;
    • the operation boards at least 10 horses regardless of ownership; and
    • the operation receives $10,000 or more in gross receipts annually in the preceding two years from fees generated through boarding horses and/or through producing sale of crops, livestock, and livestock products. (Land that supports operations whose primary on site function is horse racing is not eligible.)
  • A start-up operation may qualify based on it's annual gross sales of agricultural products in the operation's first or second year. Such annual sales must amount to at least $10,000, if the start-up operation has seven or more acres, or to at least $50,000, if the start-up operation has less than seven acres in agricultural production.
  • A start-up commercial horse boarding operation may also qualify based on annual boarding fees of $10,000 or more in its first or second year.

Land included in agricultural assessments

Agricultural assessments is limited to land used in agricultural production, defined to include cropland, pasture, orchards, vineyards, sugarbush, support land, and crop acreage either set aside or retired under Federal supply management or soil conservation programs. Up to 50 acres of farm woodland is eligible for an agricultural assessment per eligible tax parcel. Land and water used for aquacultural production are eligible, as is land under a structure within which crops, livestock or livestock products are produced. Land visibly associated with the owner's residence is ineligible.

Multiple land parcels

Since farm operations often encompass more than one parcel, eligibility is determined by combining separately assessed parcels that are farmed together as a single operation. However, a separate application for each separately assessed parcel must be made. A single operation is one distinct agricultural business enterprise.

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Rented land and agricultural assessments

Land rented for agricultural purposes may receive an agricultural assessment. If the rented land satisfies the basic eligibility requirements described above, it is eligible for agricultural assessment. In addition, if the rented land does not satisfy the average gross sales value requirement, but does satisfy the other requirements, it may still be eligible if it is farmed, under a written rental agreement of at least five years, with the other farmland that satisfies all eligibility requirements. The applicant must substantiate the existence of the term of the rental agreement by providing the assessor with either a copy of the lease or Form RP-305-c, Agricultural Assessment Written Lease Affidavit for Rented Land. A start-up farm operation may include rented land.

Gross sales value

Gross sales value means the actual proceeds from sales of agricultural products. The landowner must adequately document sales for the assessor. Proceeds from all parcels used in a single operation may be combined to satisfy the average gross sales value requirement. If a crop is grown and processed on the farm, the value of the crop before processing must be used when computing its average gross sales value. When the farm woodland is eligible, proceeds from the sale of woodland products may be included in the computation of average gross sales value but only to a maximum of $2,000. The commercial horse boarding receipts can be generated wither through the boarding of horses or though the production for sale of crops, livestock, and livestock products or through both.

Exceptions to the gross sales requirement

Agricultural lands affected by natural disasters or continued adverse weather conditions may continue to be eligible. County Cornell Cooperative Extension staff must certify such natural disaster or weather condition destroyed the agricultural production and, as a result, the average gross sales value for the preceding two years was less than the minimum required for eligibility. The landowner must document the extent of damage and the gross sales value the land can produce under normal conditions. Use Form RP-305-b, Application for Exception From Minimum Average Sales Value Requirement.

No minimum gross sales value is required for crop acreage either set aside or retired under Federal Supply management or soil conservation programs.

Agricultural assessment program does not apply to buildings

Agricultural assessment applies only to land and any posts, wires and trellises used to support vines or trees for the production of fruit on eligible land. The program does not apply to farm buildings, residences, and other improvements. Farm buildings and structures may qualify for other property tax benefits under Real Property Tax Law. See Farm building exemptions brochure for details. However, land under farm building and structures that produce qualified crops, livestock or livestock products may in certain circumstance receive and agricultural assessment.

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The application procedure

The landowner's first step in applying for an agricultural assessment is to go to the county Soil and Water Conservation District office. There, all farmland to be enrolled in the program will be classified by soil productivity. A District technician plots each farm tax parcel of the farm on a soil map, and calculates the acreage in each soil group. The landowner should work with the technician to outline woodland areas and ineligible areas. The landowner may exclude any area from the program and this area should be clearly defined and marked on the map. The technician records the information on a "Soil Group Worksheet" (Form APD-1).

Next, the landowner, transfers this soil information to the "Application for an Agricultural Assessment" (form RP-305), available from the assessor's office and indicates any farm woodland on the parcel. The landowner submits the completed RP-305application form along with copies of the completed APD-1 soil group worksheet and the soil map to the assessor by taxable status date.

In most towns, the taxable status date is March 1, but it is advisable to confirm this with the assessor. Landowners must file an application each year with the local assessor. After the initial application, a short version may be used if there have been no changes since the previous year's application. See Form RP-305-r, Agricultural Assessment Application Renewal.

Amount of assessment reduction

After deciding whether the parcel, or any part of it, is eligible for an agricultural assessment, the assessor calculates such assessment by multiplying the acreage in each soil group and farm woodland by the applicable agricultural assessment value. The sum of the values is multiplied by the municipality's latest State equalization rate or special equalization rate. The resulting figure is the agricultural assessment for the eligible land in the parcel. This amount is compared to the assessed value of the eligible land. Any assessed value above the agricultural assessment is exempt from real property taxation. In other words, taxes on eligible farmland are based on the land's agricultural assessment rather than its full assessment.

Finding out about the status of an application

If a landowner includes a self-addressed, stamped envelope with the application, the assessor must notify the landowner of the approval, modification, or denial of the application. The assessor will inform the applicant at least ten days before the date for hearing assessment complaints which in most towns is the fourth Tuesday in May. If an application is denied, the assessor must also state the reason on the form. For applications approved, the assessor must show how the total assessed value is apportioned between the eligible and ineligible parts of the property for the current year and prior year. A landowner may request the municipal or school tax collector to disclose the dollar value of reduction in tax liability attributable to lands receiving an agricultural assessment.

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Farmland that is taken out of agricultural production

If farmland that has received an agricultural assessment is converted to a nonagricultural use (within five years of last receiving an agricultural assessment if located in an agricultural district and within eight years if located outside an agricultural district), a payment to recapture the taxes forgone for converting such land will be imposed.

The assessors determines whether a conversion has occurred on the basis of the facts of each case. Conversion is defined as "an outward or affirmative act changing the use of agricultural land." Non use of the property (for example, abandoning land or leaving it idle) disqualifies such land from receiving an agricultural assessment, but is not considered a conversion. Similarly, land converted to a nonagricultural use through oil and gas exploration, or extraction activity, or through eminent domain or through the purchase of land or the conveyance of a conservation easement to protect the New York City Watershed, or through other involuntary proceedings (except a tax sale) would be ineligible for an agricultural assessment but would not be subject to a payment for conversion.

Payments for the conversion of agricultural land to a nonagricultural use are added to the taxes levied upon the land so converted. The property may be subject to a tax sale should such payment remain unpaid. Therefore, these payments generally become the responsibility of the owner of the land at the time of conversion.

A payment for conversion will be equal to five times the taxes saved in the most recent year that the land received an agricultural assessment. In addition, interest of 6 percent per year compounded annually will be added to the payment amount for each year that the land received an agricultural assessment, not exceeding five years. When only a portion of a parcel is converted, the assessor apportions the assessment and the agricultural assessment and determines the tax savings attributable to the converted portion. The payment for conversion of the portion of the parcel is then computed.

90 Day Notice:Whenever a conversion occurs, the landowner shall notify the assessor within 90 days. Failure to notify may result in a penalty of two times the payments owed to a maximum of $1,000.

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Resources

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FAQs

How do I get agricultural tax exemption in NY? ›

Eligibility requirements

Land generally must consist of seven or more acres that were used in the preceding two years for the production for sale of crops, livestock, or livestock products. The annual gross sales of agricultural products generally must average $10,000 or more for the preceding two years.

How can I avoid paying property taxes in NY? ›

Some properties, such as those owned by religious organizations or governments are completely exempt from paying property taxes. Others are partially exempt, such as veterans who qualify for an exemption on part of their homes, and homeowners who are eligible for the School Tax Relief (STAR) program.

What is a Qfarm in NJ? ›

QFARM - Qualified Farm. Lot - Lot only is Owned. Bldg - Building Only is Owned.

How many acres do you need to be farm assessed in NJ? ›

To be eligible for Farmland Assessment, land actively devoted to an agricultural or horticultural use must have not less than 5 acres devoted to the production of crops; livestock or their products; and/or forest products under a woodland management plan.

How do you qualify as a farm in New York State? ›

To qualify for agricultural assessment: Land generally must be a minimum of 7 acres and farmed by a single operation. Land must be used for crop production, commercial boarding of horses or livestock production. Farm operation must gross an average of $10,000 or more in sales per year.

How many animals do you need to be considered a farm? ›

Farms with pastured livestock types and few other livestock were defined to be farms with: 1) less than 4 animal units of any combination of fattened cattle, milk cows, swine, chickens and turkeys, 2) 8 or more animal units of cattle other than milk cows and fattened cattle, 3) 10 or more horses, ponies, mules, burros, ...

At what age do you stop paying property taxes in New York? ›

Each of the owners of the property must be 65 years of age or over, unless the owners are: husband and wife, or. siblings (having at least one common parent) and. one of the owners is at least 65.

Do you have to apply for NYS STAR program every year? ›

To receive the STAR exemption, taxpayers must file an application with their local assessor. Property owners who are granted the Basic exemption generally do not need to reapply in subsequent years. However, property owners will need to notify their assessor if their primary residence changes.

How long can property taxes go unpaid in NY? ›

For instance, New York's Real Property Tax Law states that the county may start a foreclosure after two years of property tax delinquency.

How do I qualify for farm tax in NJ? ›

NJ Taxation
  1. You must own at least 5 contiguous acres devoted to agricultural/horticultural use;
  2. Land must be devoted to agricultural/horticultural uses for at least two consecutive years prior to the tax year;
  3. You must apply for Farmland Assessment with the tax assessor on or before August 1 of the pretax year;

Do farmers pay property tax NJ? ›

Farmers pay the same property taxes as all other households on their homes, driveways, garages, swimming pools, etc. They also pay market value taxes on the structures (barns, sheds, fences, etc.) on the farm. Only the land that is actively devoted to agriculture production is farmland assessed.

How is farmland value calculated? ›

The capitalization of rent valuation model simply reflects the current farmland cash rent divided by the current capitalization rate. For example, if a farmland has cash rent of $300 per acre and the current capitalization rate is 3.5%, the value of the farmland today is $300 divided by 3.5%, or $8,571 per acre.

Do farmers get a tax break? ›

California, like every other state, offers property tax breaks for agricultural land. Specifically, farmers are able to take 20 to 75 percent off their property tax bill if they agree not to develop their land for ten years and do so with at least 100 acres.

What is qualified farmland? ›

Qualified. farm property is property owned generally by an individual or. their spouse that is the following: (a) Real or immovable property and eligible capital property. used in the course of carrying on the business of farming in.

Are goats tax deductible? ›

Goats as Pets

Pets and their expenses aren't tax deductible. Exceptions exist for guard dogs or service animals, but you'd have to somehow prove to the Internal Revenue Service that your goats are protecting your business assets or that they assist you with a disability.

Do you need a license to farm in NY? ›

Licensing Requirements

Farmers who sell whole, unprocessed farm products do not need a license to sell such items. But once you begin slicing, drying, pickling, or any other form of processing, you'll need a food processing license from our Department.

Do you pay tax when you sell agricultural land? ›

Agricultural land in Rural Area in India is not considered a capital asset. Therefore any gains from its sale are not taxable under the head Capital Gains.

How do farmers classify their land? ›

Official definition of farms

According to the United States Department of Agriculture, “A farm is defined as any place from which $1,000 or more of agricultural products were produced and sold, or normally would have been sold, during the year.”

How often does a farm have to show a profit? ›

According to the IRS, a farmer needs to show a profit 3 out of 5 years, even if the profits are not large. Always showing a loss on your Schedule F, can alert the IRS that the operation may be a hobby and not a for-profit business. You can expect future profits in your farming activities.

How many acres is considered a hobby farm? ›

For many, a hobby farm is a bit of both. Most are around 10 acres or less; it's small enough to provide a more manageable way to learn how to grow your own sustainable food, and large enough to potentially generate income.

How many acres makes a farm? ›

The average farm size for 2019 is 444 acres, up 1 acre from the previous year. Farm numbers and land in farms are differentiated by six economic sales classes.

What is the 2022 NYS homeowner tax rebate? ›

No. The HTRC is a one-year program to provide property tax relief in 2022.
...
If your 2020 income wasyour homeowner tax rebate credit will be this percentage of the 2021 STAR exemption savings for your community
$0 to $75,000163%
$75,000.01 to $150,000115%
$150,000.01 to $200,00066%
$200,000.01 to $250,00018%
4 days ago

How much can a retired person earn without paying taxes in 2022? ›

In 2022, this limit on your earnings is $51,960.

We only count your earnings up to the month before you reach your full retirement age, not your earnings for the entire year.

At what age is Social Security no longer taxed? ›

There is no age at which you will no longer be taxed on Social Security payments.

Is Star based on income? ›

Income eligibility for the 2022 STAR credit is based on federal or state income tax return information from the 2020 tax year. Income eligibility for the 2023 STAR credit is based on federal or state income tax return information from the 2021 tax year.

Is NYS STAR program being discontinued? ›

The STAR exemption program is closed to all new applicants. If you're a new homeowner or you weren't receiving the STAR exemption on your current home in 2015, you can Register for the STAR credit to receive a check directly from New York State.

What is the income limit for enhanced star in NY 2022? ›

Enhanced STAR

provides an increased benefit for the primary residences of senior citizens (age 65 and older) with qualifying incomes: $92,000 or less for the 2022-2023 school year, $93,200 or less for the 2023-2024 school year.

Can a house be sold with a lien on it? ›

You can sell your property with a lien attached as long as the buyer is willing to pay off the lien at closing or the proceeds of the sale satisfy the lien before you receive your portion. Many buyers don't like the thought of buying a property with a lien attached, but you can find cash buyers who won't hesitate.

Can you buy a tax lien in NY? ›

A tax lien simply means you bought a piece of paper. In New York, 2 counties sell tax lien certificates, and you can earn up to 12%. Tax lien certificates are good for conservative investment.

What happens if you don't pay your property taxes on time? ›

When you don't pay your property taxes, the taxing authority could sell your home—or its lien on the property—to satisfy your debt. Or, your mortgage lender might pay the taxes and then bill you. If you fail to reimburse the mortgage lender, it might foreclose your home.

How do I register as a farm in NJ? ›

An applicant for a farmland assessment must own the land and file an application with the municipal tax assessor. Land must be devoted to agricultural and/or horticultural uses for at least two years prior to the tax year the applicant is applying for an assessment.

Can you build on preserved farmland NJ? ›

An owner of a preserved farm that provides for an RDSO in the deed of easement must apply to the county agriculture development board to exercise that RDSO (i.e., construct the residential unit). Exercise of an RDSO requires both county agriculture development board and SADC approval.

How do you get a farming license in NJ? ›

You can either get your Agricultural Driver's License at the location of your road test (if available), or at any Licensing Center with your stamped permit and your documents – no appointment necessary.

How do I get a farm tax exempt in NJ? ›

To be exempt from paying sales tax on a purchase based on the farm-use exemption, the item must be used by a farmer directly and primarily in the production, handling and preservation for sale of agricultural or horticultural commodities at a farming enterprise.

Are Christmas trees taxable in NJ? ›

The short answer is (almost always): yes. Your Christmas tree is “tangible personal property.” Tangible personal property is almost always taxable.

What are rollback taxes in NJ? ›

Roll-back tax is the difference between the amount assessed for qualified farmland and the amount assessed for non-farmland in the taxing district. The tax is not applied when ownership of farmland changes, provided the new owner continues to devote the land to agricultural/horticultural uses.

How do you calculate ROI for farming? ›

The concept and calculation of return on investment (ROI) is pretty simple. It is most commonly measured as net income divided by the original capital cost of the investment. The higher the ratio, the greater the benefit earned.

How do you determine the value of land? ›

Land value may be determined by real estate appraisals conducted by third parties. An appraiser's assessment can be crucial to a lender's decisions on offering to finance a prospective buyer or refinancing for a property holder. Appraisal of the land can include a comparison of its condition to similar real estate.

How accurate is acre value? ›

They found AcreValue differed from Hertz's actual appraised values by 12% below appraised value to 56% above appraised value in some cases. "AcreValue was closest on the average- and above-average quality farms, but exhibited significant error for the lower quality farms," Nebel says.

What expenses can farmers write-off? ›

Deductible farming expenses

Some of the expenses that farmers commonly deduct cover the cost of livestock and feed, seeds, fertilizer, wages paid to employees, interest paid during the year on farm-related loans, depreciation to recover a portion of equipment costs, utilities and insurance premiums.

Is farming a good tax write-off? ›

The IRS considers a farm to be a non-deductible hobby if doesn't produce a profit for three out of five years. Farms breeding horses are allowed an extended profit ramp-up stage, and require a profit in two out of seven years.

Is a hobby farm tax deductible? ›

If you earn some income from a hobby farm, you're allowed to deduct farm expenses. You can only deduct hobby farm expenses to the extent you have hobby income. If your farm starts to become profitable, you may need to report it has a business instead of a hobby.

How do I avoid capital gains tax on farm land? ›

An individual who owns farm property (land or building), an interest in a family farm partnership, or shares in a family farm corporation may be able to claim a $1,000,000 lifetime capital gains exemption (LCGE) when the farm property is sold. The actual capital gains deduction is 50% of the capital gains exemption.

How do I avoid taxes when selling a farm? ›

If you intend to reinvest your land sale proceeds into other real estate, you can use a Section 1031 exchange to defer your capital gains tax. As long as you continue to hold the replacement property, or continue to use the 1031 to exchange into other property, you can continue to defer the tax indefinitely.

How can I avoid capital gains tax on agricultural land? ›

Exemption under section 54B can be claimed in respect of capital gains arising on transfer of capital asset, being agricultural land (may be long-term or short-term). This benefit is available only to an individual or a HUF. The land should be used for agricultural purpose at least for two years.

How many animals do you need to be considered a farm? ›

8 or more animal units of cattle other than milk cows and fattened cattle. 10 or more horses, ponies, mules, burros, or donkeys. 25 or more sheep, lambs, or goats.

Are cows a tax write-off? ›

All purchased livestock are considered to be tangible personal property and are therefore eligible for a depreciation deduction under Section 179. Those with a recovery period of 20 years or less are also eligible for a bonus depreciation allowance.

Can I deduct my tractor on my taxes? ›

According to the IRS, anyone buying, financing or leasing new or used equipment for the 2021 tax year will qualify for a Section 179 deduction, provided the total amount is less than $3,670,000 (the deduction itself plus the price of eligible purchases).

Do you need a license to farm in NY? ›

Licensing Requirements

Farmers who sell whole, unprocessed farm products do not need a license to sell such items. But once you begin slicing, drying, pickling, or any other form of processing, you'll need a food processing license from our Department.

What is agricultural district in New York? ›

The purpose of the New York State Certified Agricultural District Program is to encourage the use of land for farming. It affords legal protections and some tax benefits for viable agricultural land.

Is buying a farm a tax write off? ›

While you cannot deduct the purchase price of farmland on your taxes, plenty of other tax deductions are associated with farmland. Interest paid on loans to purchase farmland is deductible. Interest paid on loans to do any improvements to the land is deductible.

Do you pay tax when you sell agricultural land? ›

Agricultural land in Rural Area in India is not considered a capital asset. Therefore any gains from its sale are not taxable under the head Capital Gains.

How do I start my own farm? ›

8 Steps to Starting a Farm from the Ground Up
  1. Choose Something to Produce. ...
  2. Learn the Ins and Outs of Your Product. ...
  3. Figure Out Your Finances. ...
  4. Purchase Your Property. ...
  5. Strategize and Prepare. ...
  6. Implement Your Farming Business Plan. ...
  7. Develop Your Product. ...
  8. Market Your Products.
15 Jul 2020

How many years can a farm show a loss? ›

According to the IRS, a farmer needs to show a profit 3 out of 5 years, even if the profits are not large. Always showing a loss on your Schedule F, can alert the IRS that the operation may be a hobby and not a for-profit business. You can expect future profits in your farming activities.

What expenses can farmers write off? ›

Deductible farming expenses

Some of the expenses that farmers commonly deduct cover the cost of livestock and feed, seeds, fertilizer, wages paid to employees, interest paid during the year on farm-related loans, depreciation to recover a portion of equipment costs, utilities and insurance premiums.

Can I write off my tractor on my taxes? ›

According to the IRS, anyone buying, financing or leasing new or used equipment for the 2021 tax year will qualify for a Section 179 deduction, provided the total amount is less than $3,670,000 (the deduction itself plus the price of eligible purchases).

How can I avoid capital gains tax on land sale? ›

How to Avoid Capital Gains Taxes on a Land Sale
  1. A financial advisor can help you optimize a tax strategy for your investment needs and goals.
  2. 1031 exchange. ...
  3. Deferred sale. ...
  4. Installment sale. ...
  5. Offset gains with capital losses. ...
  6. Donate appreciated land to a charity. ...
  7. Beneficiaries sell after death.
16 Feb 2022

How do I avoid capital gains tax on inherited farm land? ›

There are four main ways to avoid paying capital gains tax when a property is inherited:
  1. Sell inherited property as soon as possible. ...
  2. Turn the inherited home into a rental property. ...
  3. Use the inherited property as a primary residence. ...
  4. Disclaim the inheritance for real estate tax purposes.
20 Sept 2021

How does the IRS know when you sell land? ›

IRS Form 1099-S

The IRS also requires settlement agents and other professionals involved in real estate transactions to send 1099-S forms to the agency, meaning it might know of your property sale.

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