New Jersey’s Farmland Assessment Act, administered by the New Jersey Department of Treasury, provides for the lower assessment based on productivity of farmland if it meets specific eligibility criteria. To qualify for the tax assessment reduction, a landowner must have no less than five acres of farmland actively devoted to an agricultural or horticultural use for the two years immediately preceding the tax year being applied for and meet specific minimum gross income requirements based on the productivity of the land.
BASIC REQUIREMENTS OF FARMLAND ASSESSMENT
In the case where a taxpayer submits an application for farmland assessment that has not been filed previously to qualify for farmland preservation, the owner shall submit a map of land use classes and soil groups as described in the Report of the State Farmland Evaluation Advisory Committee which is published annually each October 1 by the New Jersey Division of Taxation. A copy of this report can be obtained by calling the Division at 609-984-2503.
AREA OF LAND DEVOTED
In determining the area of devoted or qualified land, all the land under barns, sheds, seasonal farm markets selling predominantly agricultural products, seasonal agricultural labor housing, soils, cribs, greenhouses and like structures, lakes, dams, ponds, streams, irrigation ditches and like facilities is included. Land under the farmhouse, and such additional and as may be actually used in connection with the farmhouse, including, but not limited to, land used for lawns, flower gardens, shrubs, recreation and for like purposes, is excluded in determining the total area.
Where individual parcels of land in agriculture or horticultural use under a single ownership are located in the same taxing district, compliance with the five-acre minimum area eligibility requirement is deemed to have been met if the individual parcels are contiguous and the aggregate eligible area thereof is at least five acres. For the purpose of this Section, land under single ownership, separated by a public right of way, is deemed to be contiguous.
Where contiguous land in agricultural or horticultural use in one ownership is located in more than one taxing district, compliance with the five-acre minimum requirement is determined on the basis of the total eligible area of such land and not the area which is located in the particular taxing district.
Where separate, noncontiguous parcels of land in agricultural or horticultural use, in a single ownership, are located in the same taxing district, a separate application for farmland assessment must be made with respect to each parcel. The area of the separate parcels may not be aggregated or the purpose of meeting the five acre eligibility requirement.
The Farmland Assessment Act established the Farmland Evaluation Advisory Committee made up of the Director of the Division of Taxation, the Dean of Cook College and the State Secretary of Agriculture. The Farmland Evaluation Advisory Committee publishes ranges of fair value for utilization by assessors in assessing qualified farmland in accordance with its agricultural or horticultural use.
The productivity values established by the State Farmland Evaluation Advisory Committee are reported by the use of the land, soil group for each county, soil groups are from “A” being the most productive to “E” being the least productive farmland.
For the 2003 tax year, using soil group B, “good farmland”, the values for cropland harvested ranged from $600 to $800 per acre by county.
The imputed grazing values for soil group B ranged from $107 to $113 per acre by county. This annual report also provides values for cropland pastured, permanent pasture, and appurtenant and non-appurtenant woodland.
“Agriculture Use” is land devoted to the production for sale of plants and animals useful to man, including but not limited to forages and sod crops; grains and feed crops; dairy and dairy products; poultry and poultry products; livestock, including beef, cattle, sheep, swine, horses, ponies, mules or goats, including the breeding, boarding, raising, rehabilitating, training or grazing of any or all such animals except “livestock” shall not include dogs; bees and apiary products; fur-animals; trees and forest products or when devoted to and meeting the new requirements and qualifications for payments or other compensation pursuant to a soil conservation program under an agreement with an agency of the Federal Government.
“Horticultural Use” is land devoted to the production for sale of fruits of all kinds including grapes, nuts and berries; vegetables; nursery, floral, ornamental and greenhouse products; or when devoted to and meeting the requirements and qualifications for payments or other compensation pursuant to a soil conservation program under and in agreement with an agency of the Federal Government.
“Beneficial to a Tract of Land” means land which enhances the use of other land devoted to agricultural or horticultural production by providing benefits such as, but not limited to, windbreaks, watershed, buffers, soil erosion control, or other recognizable enhancements of the viability of the qualifying land.
“Change in Use” means when land valued under the Farmland Assessment Act is applied to a use other than agriculture or horticulture, including being abandoned from farming.
“Fees Received for Grazing” means only those fees which are actually paid in consideration for grazing and which reasonably reflect the value of grazing provided. The income which would otherwise be imputed to land used for grazing as established and determined by the State Farmland Evaluation Advisory Committee shall be prima facie evidence of those fees which reasonably reflect the value of the grazing provided.
“Income Imputed to Land Used for Grazing” means values for the pasturing of livestock as established by the State Farmland Evaluation Advisory Committee.
“Raising Livestock” means the management, caring and feeding of livestock for the purpose of producing for sale as a farm product either the livestock themselves or produced therefrom.
“Seasonal Agricultural Labor Housing” means dwelling units designed solely for lodging laborers and their family members where laborers are employed to perform seasonal agricultural or horticultural labor on the contiguous land, five acres or more, qualifying for farmland assessment. Notwithstanding a claim as labor employed on the land, any housing which is either occupied by the landowner, the landowner’s spouse, or their children, parents or siblings or is not vacant annually for a minimum period of 90 continuous days during any period of 12 continuous months shall not be deemed to be “seasonal agricultural labor housing”.
“Seasonal Farm Market” means a facility utilized for the primary purpose of selling predominately agricultural or horticultural products, and which is annually closed to business during the off season for a period of not less then 90 continuous days.
LIVE STOCK – INCLUDING CRITERIA FOR EQUINE OPERATIONS
The breading, boarding, raising, rehabilitating, training or grazing of livestock, which includes horses, is defined as an agricultural use. The boarding, raising, rehabilitating, training or grazing of livestock is also an agricultural use, but to be “actively devoted” boarding, rehabilitating or training facilities must be contiguous to land which otherwise qualifies for valuation, assessment and taxation under the Farmland Assessment Act.
It is to be noted that fees received for boarding, rehabilitating or training livestock are not counted when qualifying the initial five acres of land that is contiguous to a boarding, rehabilitating or training facility. However, fees received for breeding, raising or grazing any livestock and income imputed to land used for grazing can be counted.
The following examples are offered to assist in understanding the revisions made to the Farmland Assessment Act in 1995 that relate to boarding, rehabilitating or training livestock:
1. On a 10 acre parcel of land, six acres are devoted to growing crops and generate annual gross sales of $650. The remaining four acres are used for boarding horses and generate annual boarding fees of $8,500. Since the land used for boarding horses is contiguous to land five acres or more otherwise qualifying for farmland assessment, the fees from boarding may be included to meet the minimum gross income requirement and qualify the entire 10 acre parcel.
2. On a 10 acre parcel of land, 3.5 acres are devoted to growing crops and generate annual gross sales of $450. The remaining 6.5 acres are used for boarding horses and generate annual boarding fees of $10,500. The land contiguous to the land used for boarding horses does not otherwise qualify for farmland assessment, both because it is not a least five acres in area and because it does not meet the minimum $500 income requirement for the first five acres. Therefore, the fees from boarding may not be included to meet the minimum gross income requirements and the entire 10 acre parcel is ineligible for qualification.
3. On an 8.5 acre parcel of land, .5 acres issued with the house, and three acres are devoted to boarding and training horses which produces fees of $3,200. The remaining five acres are utilized for grazing the boarded horses, income inputted to grazing is determined to be $375. Since the five acres used for grazing does not have an imputed value for such use of at least $500, it is not eligible for farmland assessment. The three acre portion used for boarding and training is also ineligible because it is not contiguous to land which otherwise qualifies for farmland assessment.
4. Three horses and a pony are kept on their owners land for pleasure riding. The animals pasture on 14 acres which have an imputed grazing value of $725. Although the imputed grazing value exceeds the income requirements for qualification, the land nevertheless would be ineligible for farmland assessment since the livestock are not raised for sale, the livestock do not produce products for sale, and the grazing is not connected with breeding, raising, boarding, rehabilitating or training activities.
The Farmland Assessment Act of 1964 provides that land “shall be deemed to be in agricultural use when devoted to the production for sale of plants and animals useful to man, including trees and forest products”. Land devoted to the growing of trees (woodland) is eligible for reduced tax assessments when it meets certain qualification requirements.
There are three types of woodland to be considered in tax assessment.
1. Self-qualifying woodland or acreage composed of woodland which clearly qualifies for farmland assessment, meeting all statutory requirements in respect to income, acreage, years actively devoted to agricultural use, and compliance with an approved wood lot management plan. Self qualifying woodland is deemed to be none appurtenant woodland, and is entered as such on the farmland assessment application for FA-1.
To qualify this type of woodland the following additional requirements must be met and submitted annually:
1. A wood lot management plan certified by an approved forester (first year only, until plan is renewed or changed).
2. A woodland data form (WD-1).
3. A scaled map indicating location of woodland activity and soil classes; and
4. An exact copy of the information submitted to the assessor is to be submitted at the same time, to the New Jersey Department of Environmental Protection.
2. Supportive woodland is woodland acreage, which is part of a crop or livestock farm, and which does not contribute income to the farm, but does contribute benefits to the farm, such as lumbar or fencing for on farm use, protection from wind, erosion, water conservation, or buffer areas for the farm from neighbors. This woodland is deemed to be appurtenant woodland and is entered under this category on the Form FA-1.
A wooded piece of property is presumed to be supportive and subordinate woodland when its area is less than the area of cropland and pasture land qualifying for farmland assessment. An owner claiming farmland assessment for a wooded piece of property exceeding the acreage in cropland or pasture land shall submit an explanation and additional profits the assessor, may require to support the claim that such woodland is supportive and subordinate.
3. Un-managed woodland, which represents land in trees standing alone, or woodland which is not supportive and subordinate to otherwise qualifying farmland. There is no qualifying agricultural activity whereby the acreage might be considered “actively devoted” to an agricultural use.
Un-managed woodland is not eligible for qualification under the Farmland Assessment Act.
For additional information on woodland management and farmland assessment, the Bureau of Forest Management, NJ Department of Environmental Protection may be contacted at 609-292-2531.
WHEN THE USE OF LAND CHANGES
The Farmland Assessment Act provides special treatment for land which is continued in active agricultural or horticultural use by permitting reduced assessments and reduced tax on such qualifying lands. In order to recapture some of the taxes which would have been paid had the land been taxed on the same basis as all other property, the Farmland Assessment Act provides for levy or rollback tax if the use of the land changes.
The liability for rollback taxes attaches to the land at the time a change in use of the land occurs, but not when a change in ownership takes place, if the new owner continues to devote the land to agricultural or horticultural use in conformity with the requirements of the Act. Any land which changes from an eligible agricultural or horticultural use under the Farmland Assessment Act to some other non-farm use is subject to rollback taxes for the year in which the change takes place and for such of the two tax years immediately preceding, in which the land was valued, assessed and taxed under the Act.
FILING FOR FARMLAND ASSESSMENT
The owner or owners of land used for agriculture or horticultural purposes may apply for assessment of the land under the Farmland Assessment Act by filing Form FA-1, which is available from the respective municipal tax assessor. Woodland owners must file in addition to the Form FA-1, a completed Woodland Data Form (WD-1) and a copy of their woodland management plan.
Form FA-1 and Form WD-1 if required, must be filed annually with the tax assessor on or before August 1 of the year preceding the year for which Farmland Assessment is being applied for. An extension of time for filing is extended to December 1 of the pre-tax year if the taxing district completes a revaluation or reassessment of all real property in time to be reflected in the assessments for the next succeeding tax year.
The assessor may grant an extension of time for filing the application for farmland assessment which extension shall terminate no later than September 1 of the pre-tax year, in any event where it shall appear to the satisfaction of the assessor that failure to file by August 1 was due to:
1. The illness of the owner certified by a physician stating a physical incapacity; or
2. The death of the owner or immediate member of the owner’s family and a certified copy of the death certificate is filed with the application by the individual legally responsible for the estate of the owner, or the owner, as the case may be.
An assessor shall not approve an extension of time to file an application for farmland assessment in cases where the death of the owner or a member of the owner’s immediate family occurred prior to January 1 of the pre-tax year.
By law, an on-site inspection of the land will be made by the tax assessor at least once every three years. However, on-site inspections may be made as many times as reasonably necessary to establish the eligibility status of the land for the purpose of approving or disapproving the application.
The above information is intended to help landowners understand the basic requirements of the Farmland Assessment Act.
•The New Jersey Department of Agriculture will answer questions on agriculture and horticultural production related to farmland assessment requirements.
•The New Jersey Division of Taxation will answer questions on tax procedures, tax laws, regulations, and court cases.
•The Bureau of Forestry Management will answer questions concerning woodland.
•Rutgers Cooperative Extension of Salem County can provide information on crop and livestock production, farm management and marketing and other related topics.
•Salem County Agent 856-769-0090