Farm tax exemption?

[willy1947]

What is Farm tax exemption? I've seen it mentioned and wondered if I would qualify for it. I have 62 acres and I am located near Bloomington, IN.

Thanks,
Dave

 

[yooperdave]

I just went thru this.

For Michigan, they verified:

Do you derive any farm income from the use of your property?

Is it zoned agricultural?

Is more than 50% of the acreage used for agricultural?

I am still not done yet, but almost there.

Good Luck

Yooper Dave

 

[CTyler]

Do you have to be farming it and showing an income? I have 28 acres with 15 tillable now that we built the house and shop. We rent the ground to a farmer for corn and beans.

 

[SnowRidge]

It can be a break on your property taxes and/or a break or no sales taxes on your equipment and/or supplies.

Every state is different. Check with your county tax folks and your state revenue department. They will know what you can get and how you must qualify.

SnowRidge

 

[yooperdave]

I am not farming it, but I rent it out to one of the local farmers.

I just had the property reassesed from residential to agricultural because of this.

The rental income does not come close to even paying for the taxes. However, the taxes should be going down, and the lack of sales tax for machinery will be a great benefit.

Yooper Dave

 

[BB_TX]

My land was ag exempt when I bought it. I applied to keep and it was accepted with no problem. I don't farm it myself. My neighbor grazes and hays it. No formal rental. I don't live there yet so I let him use it in exchange for looking after the place for me. The benefit is that the taxes are less than $100/year. When I build a house, I will have to fence off a small lot to be reclassified residential while maintaining the rest as ag.
Regarding buying equipment sales tax free. I have bought some but have been fairly careful. Although you would probably never be checked, I think you would have to prove you were using that equipment for ag purposes or be backtaxed plus interest and penalties if you ever were checked.

 

[CTyler]

Our taxes are reduced because is agricultural property and the farm rent pays about half the taxes.

We moved into our house in January and haven't researched our options very far. Need to start doing that and fit it in between the other 50 items to do. It really is everyones duty to research and claim every legal tax deduction/exemption possible.

 

[AndyMA]

In Connecticut renting or letting other use your land to farm does not qualify you as being a farmer. In the town I'm in, if the land is used for ag purposes, the value is set at something like $300/ acre (even for the swamps) and the real estate tax is less. My 76 acres is taxed at about $3000/year with no buildings. To qualify for the ag tax exemption on sales tax, you need to generate $2500 in revenue (and submit the IRS form to prove it) the previous year. Any revenue generated from renting out your land does not count. Things that do count are sales of ag crops (including nursery stock), boarding of animanls like horses where you are paid to provide the board, not just the land, etc.

Andy

 

[MossRoad]

We rented out about 7 acres of our 20 to a farmer. The rent more than paid for the taxes.

 

[mundamanu]

<font color="blue"> Any revenue generated from renting out your land does not count. </font>

AndyMA, while the rent received does not count toward the gross revenue, I believe that the revenue generated by whomever has leased the land does generally count. In other words, as I understand it, any revenue generated on/by the land, even by someone else through a lease (I believe a legal lease is necessary), counts as gross revenue for the owner of the land toward satisfaction of an ag exemption. Of course, this can vary from locality to locality.

Upon further reflection, it is possible that by "revenue generated" you do in fact mean that generated by the agricultural enterprise and NOT the rent money received. If this is the case, then obviously your locality does not fit the model I described above. Apologies if I misunderstood your sentence.

 

[zuiko]

The sales tax exemption is only for things used in revenue producing farm activities. If land rental was your only revenue, I'm not sure what you could buy that would be related to that. Maybe some preprinted rental agreement forms.

 

[AndyMA]

</font><font color="blue" class="small">( Upon further reflection, it is possible that by "revenue generated" you do in fact mean that generated by the agricultural enterprise and NOT the rent money received. If this is the case, then obviously your locality does not fit the model I described above. Apologies if I misunderstood your sentence.
)</font>

No apologizes necessary. In Conn the statement you make above is what applies. You have to make the money for the ag tax exemption on sales tax. If you rent the land to a farmer who then qualifies for the sales tax exemption, you as the land owner are still entitled to the property being taxed at the farm or open space rate.

Andy

 

[Zoomie]

To use agriculture as an excuse to reduce your Property Taxes in Texas, you must show agricultural use, but to avoid sales tax on equipment, you only need to live on 4+ acres, and not use the equipment for other purposes, especially commercial.

I've never paid sales tax on a single mower I've bought, and was even offered a no sales tax deal on an ATV from the local dealer. I passed on that one because I knew I'd want to take it to the lake, etc. for recreation.

 

[fishman]

</font><font color="blue" class="small">( but to avoid sales tax on equipment, you only need to live on 4+ acres, and not use the equipment for other purposes, especially commercial.
)</font>

That's very interesting. Do you have a source for that information? I'm a little doubtful of that statement to be honest, but it sure sounds good. /forums/images/graemlins/wink.gif

 

[BB_TX]

This from a Texas state web site.
<font color="orange"> www.window.state.tx.us/taxinfo/sales/faq_exempt.html </font>
<font color="blue">6. What are exempt uses?
Generally, it means that there are certain uses of a product that are exempt from sales and use tax. For example, the sale of a tractor is taxable, but the sale is exempt if the tractor will be used in commercial farming. It is the certain use of that tractor that makes the sale exempt.

We cannot cover all scenarios of exempt uses, but here are some that you should know.

Farmers and ranchers are not generally exempt from sales and use tax. Some materials and equipment are exempt if used for farm or ranch purposes. Some examples include animals, seeds, feed for farm and ranch animals, machinery and equipment if used for farming or ranch work. See Rule 3.296 "Agriculture, Animal Life, Feed, Seed, Plants and Fertilizer." </font>

Sure sounds like a lot more is required than just living on 4+ acres.

 

[Zoomie]

Interesting, and thanks.

I guess I should know better than to take the equipment sellers at their word.

I do hope the black helicopters are grounded...... /forums/images/graemlins/wink.gif

 

[Soundguy]

Like many have stated... you may qualify for a property tax exemption .. generically called an agricultural exemption. Usually this menas you also have to be filing a schedule F with your income taxes.. unless you are doing conservation stuff.. like planting timber, etc.

You also may be able to get reduced sales tax rate on farm equipment... though not everyone follows this. For instance.. every tractor I've ever bought.. they ask me if I have livestock and ag zoned land. This gets a low sales tax rate of something like 2-3% compaired to our usual 7% Ont he other hand.. implement delaers like the big chain stores.. just charge you the whole tax...

Soundguy