I received a letter from the County saying that I can get an agricultural credit on my taxes if my real property is located in, or dedicated to, agricultural use. What does this mean, and what are the pros and cons.
Larger parcels of land can be placed on the tax rolls for specific use of agricultural production. This can mean that it will be used for grazing of animals, growing of crops, storage of product used in agriculture, or protection of animals. Any land used for this purpose may be set aside on the tax rolls, and receives an agricultural exemption on their Town and County real property tax that comes out in January of each year.
Some property is located within an agricultural district, and simply has to have the number of acres that will be dedicated to agricultural production noted on the tax rolls. Some property is dedicated to agriculture, this is done by the land owner signing a statement each year, with the Town assessor’s office, confirming that the land will be used for the production of agriculture.
Once land is placed in this manner with the town assessor, it can not be used for other purposes, such as sold off for building lots, or used for other purposes, such as commercial or recreational. It is best to then either develop an agricultural use yourself, or rent the acres to a local farmer for their use.
When the land stops being used for agricultural, then the exemption terminates. And, if you dedicate the land to agricultural, and change the use within 5 years of it being dedicated to agricultural, the town and county have the right to re-capture the exempt taxes for the period of time it was changed. An example: you have 50 acres in agriculture, the specific acres have been established with the town assessor’s office. You take a 1 acre road lot, which has been dedicated to agriculture, and sell it off for a building lot. That removes that 1 acre from the exemption, and the town and county can determine how much of an exemption that 1 acre had received for the last 5 years, and send you a tax bill for that difference. You must also remove that 1 acre from future dedications. Now if you know there is a possibility that you may be selling road frontage off, you simply don’t dedicate the road frontage to agriculture, and move the amount of acres down from 50 to a smaller amount. You get a smaller exemption, but you don’t have to deal with the recapture.
By the way I have always been under-impressed by what the exemption is. Our farmers truly need a better exemption than they currently get.
As always this is a general answer, to a general question. You should always consult your attorney about the specific issues that surround your specific needs.
If you have a question for Attorney Kukuvka, please forward it to: Cynthia M. Kukuvka, Attorney at Law, 330 E. Main St., Palmyra, NY 14522, or cklaw@verizon.net .