Is it right for you?
Farmland Assessment and Your Property
The Farmland Assessment program, particularly when more than 50% of your property is woodland, can be difficult to qualify for.
Firstly, a property owner needs to prove that at least 5 acres of their land is actively devoted to agriculture. Farmland Assessment does not reduce property taxes on homes, non-agricultural buildings, and land associated with landscaping, pools, septic fields, etc. Therefore, the minimum amount of land that can qualify for Farmland Assessment must be 5 acres or more. If a house is present on the property, most tax assessors will hold at least 1 acre as non-agricultural land, meaning that 6 acres would be the minimum acreage (or more if the home site covers more than 1 acre).
Agricultural activity must take place annually or periodically on the land. Open fields must be farmed or pastured. If required, forestry activities must take place in the woodland.
Agricultural income must be generated, annually or periodically, from what is grown on the property, to exceed a minimum income requirement.
If your property is more than 50% wooded, or has less than 5 acres actively devoted in open fields or pasture, then a Woodland Management Plan (also known as a Forest Management Plan) is required. The Forest Management Plan is composed of your objectives for the property, soils information, mapping of the property and the various forest cover types and land uses, a complete inventory of the forest, wildlife information, wetlands considerations, and a recommended schedule of forestry activities to take place over a ten-year period. For forest landowners, the Forest Management Plan is the foundation of their claim to Farmland Assessment. By successfully following the recommendations made within that Plan, a forest landowner proves that their forest is actively devoted to agriculture.
Every year, before August 1, an application for farmland assessment must be filed with the appropriate authorities, accurately detailing how the property has met the requirements of the Farmland Assessment law in the given year.
Therefore, it's important to realize that Farmland Assessment is not a "check-off" program. Resources and time must be spent in keeping land qualified.
Consider the following example: Joe Treefarmer owns 20 acres of land. Aside from his home site, the property is entirely wooded. Mr. Treefarmer pays a forester to produce a Forest Management Plan. According to that Forest Management Plan, 5 acres of forest stand improvement must be accomplished every three years. Mr. Treefarmer pays a forester to mark the trees to be cut for the forest stand improvement every three years.
Mr. Treefarmer can cut the trees himself and sell the wood products generated from the harvest, or he can pay a woodcutter to do so on his behalf. In addition, Mr. Treefarmer must file applications for Farmland Assessment each year, of which one of the forms must be certified by his forester.
Other costs (or personal time) that might be incurred would include marking boundary lines, meeting with NJ Forest Service and municipal inspectors, access maintenance or improvement, control of exotic invasive plants (if desired), and time spent with paperwork and recordkeeping.
On properties with less than 15 acres of woodland, consideration must also be given to the physical amount of wood being removed from the property in any given year or periodically. Since "excessive and unnecessary cutting" is prohibited under the law, a landowner is normally not allowed to cut more than the forest is able to grow in a given year. If the forest can only produce 4-5 cords of wood or less per year, a landowner should either sell that wood as high-value specialty products, or begin another type of agricultural activity on the property in order to be able to meet the minimum income requirement of the Farmland Assessment Act over the long run.
Planning and executing another type of agricultural activity (such as a small orchard, Christmas tree plantation, livestock, etc.) is another expense that must be considered for landowners who are determining whether or not the Farmland Assessment program is suitable for them.
The only person who is able to determine the gross savings for your property under Farmland Assessment is the municipal tax assessor. The first step for a landowner who is considering Farmland Assessment is to contact your tax assessor and find out what your projected gross savings will be. Once you have determined your projected gross savings, we would be happy to discuss projected costs involved with the Farmland Assessment program. It is up to you to determine whether the costs and benefits of Farmland Assessment make sense for your personal situation.
For properties not currently enrolled in the program, two qualifying years must be completed before a tax reduction occurs.
The above is not intended to be a complete description of the Farmland Assessment program, but is intended to convey some of our 30 years of experience in serving private landowners who wish to quality.