TRENTON — New Jersey farmers learned this week about the new standards and guidelines they will have to meet to qualify for the state’s lucrative farmland tax break.
The standards and guidelines were posted on the Department of Agriculture’s website (http://www.state.nj.us/agriculture/home/farmers/farmlandassessment.html) on Wednesday and describe acceptable agricultural and horticultural practices, buildings and other standards designed to assist landowners and assessors in determining if property qualifies as farmland.
The standards were required as part of an update to the state’s farmland assessment law. Under the program, property owners with at least 5 acres can receive a 98 percent tax break on any property that qualifies as a farm.
The farmland assessment was created in 1964 and remained largely unchanged until April last year, when Gov. Chris Christie signed into law several changes.
The most notable change was the farm sales threshold required to qualify for the tax break increased from $500 to $1,000 on the first 5 acres.
The update also required that the Department of Agriculture create an advisory committee to review and update the minimum sales threshold every three years, and that tax assessors in many communities receive periodic training to better recognize what qualifies as a farm.
To implement the updated law, the Department of Agriculture and the Division of Taxation were required to create a list of standards and guidelines to assist landowners and assessors determine what qualifies as farmland.
For example, the guidelines specify that land with solar panels, wind turbines or biomass plants can qualify as farmland, but only if it’s part of a working farm, and that proceeds generated from the equipment are not counted as farm sales.
Forests may also qualify for the farmland assessment, provided that wood or other forestry products are harvested according to an approved forest management plan, and that the wood is used as part of farming operations or sold.
The changes are intended to crack down on so-called “fake farmers” who perform minimal farming actions to avoid paying full taxes on their properties. Musician Bruce Springsteen, Congressman Jon Runyan, Commerce Bank (now TD Bank) founder Vernon Hill and former Gov. Christie Whitman have been cited as examples of wealthy New Jerseyans who have qualified for the tax break on parts of their properties.
Although the new standards and guidelines were published by the Department of Agriculture this week, farmers will have until Aug. 1, 2015, to comply with them.
Most New Jersey farms should find compliance easy. According to the 2012 Census of Agriculture, the average-size farm in New Jersey was 79 acres, and farm sales averaged $111,030 per farm.
Providing ample lead time was crucial for small operators, said Peter Furey, executive director of the New Jersey Farm Bureau, a nonprofit advocacy group that lobbies on behalf of the state’s farmers.
“If you’re a small-acreage farmer, it may require you to make some adjustments,” Furey said Wednesday about the changes in the assessment law.
The Department of Agriculture’s guidelines provide a broad range of acceptable farming activities, but they aren’t exhaustive or comprehensive. Ultimately, local assessors and the Division of Taxation will need to decide on a case-by-case basis if land qualifies as farming.
Furey believes that’s a good thing, particularly for small and part-time farmers whose operations may not fit the conventional description of a farm.
“This is really a process of clarification, and we think that’s proper,” he said. “Part-time farming is fine. Small-scale farming is fine. The message we want them to receive is they’re welcome to benefit (from the assessment), provided they meet some reasonable standards.”