29 Oct Can my property qualify as a farm for tax purposes?

Q. What is New Jersey’s classification for a “farm” for real estate tax purposes? For example, if I start keeping bees on my property, would that convert my property into a farm? I already have red oak trees on my property, and because red oaks produce acorns – which are edible – does my property constitute a “farm?”
— Wanna-be farmer

A. We’re guessing you asked that question after it was revealed that Kevin Corbett, the head of NJ Transit, paid only $19.42 in taxes for five acres of his Mendham Township property that’s assessed as farmland. He paid $20,609 in taxes in 2018 for the rest of the property, less than one acre, where his home stands.

That’s a big difference.

There are several requirements before your property can be assessed as a farm.

First, it must be at least five acres, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.

The second requirement is that the property must be actively devoted to agricultural or horticultural use for at least the two successive years immediately before the tax year for which farmland assessment is requested, he said.

“Land is considered to be in agricultural use when devoted to the production for sale of plants or animals useful to man – excluding dogs – or when the land qualifies under a federal soil conservation program that makes payments to the owner,” Becourtney said. “Land is in horticultural use when it is devoted to the production for sale of fruits, vegetables, nursery, floral, ornamental or greenhouse products, or when the land qualifies under a federal soil conservation program that makes payments to the owner.”

Land is actively devoted to agricultural use when the amount of the gross sales of agricultural products produced on such land, together with soil conservation program payments, and fees received for breeding, raising, or grazing livestock have averaged at least $1,000 per year during the two-year period immediately preceding the tax year at issue; or there is clear evidence of anticipated yearly gross sales, and the other sources noted, of at least $1,000 within a reasonable period, he said.

An application for farmland assessment must generally be filed on or before August 1 of the year before the tax year for which such farmland valuation is sought. The assessor can grant an extension of time, up to and including September 1, if it appears to the director’s satisfaction that the taxpayer’s failure to file the application form by the August 1 due date was due to the illness of the taxpayer or to the death of the taxpayer or a member of the taxpayer’s immediate family, he said.

“In your situation, assuming you meet the acreage test, you would need to reach the state’s sales threshold from selling acorns and honey that presumably the bees would be producing in order to obtain the reduced farmland assessment for your real estate taxes,” Becourtney said.

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This story was originally published on Oct. 29, 2019.

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