28 Apr Are taxes owed because of the Farmland Preservation Program?
Q. My parents’ farm is located in Warren County. They put most of it in the Farmland Preservation Program. They were paid and received a 1099S for tax purposes. Will they have to pay federal and New Jersey taxes on that income when they file their 2020 tax returns?
A. New Jersey’s Farmland Preservation Program offers many incentives to landowners.
The program can provide capital to reduce debt, expand operations and more. It also offers owners the chance to apply for cost-sharing grants, and they get certain protections.
If the farm was sold and if the sale proceeds exceed the tax basis — the cost with any applicable adjustments — in the property, there would be taxable gain to be reported and capital gain tax to be paid, said David Ritter, chair of the tax practice at Brach Eichler in Roseland.
“If the value of the property exceeded the amount paid, there could be a charitable deduction, however, the requirements to claim such a charitable deduction are detailed and very technical in nature and can vary on the values involved,” he said. “An appraisal of the property would generally be required and the appraisal would be required to be done within the appropriate time frame.”
Your parents should speak to a tax professional who can review the specifics of their situation.
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This story was originally published on April 28, 2021.
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