Farmland and Woodland Assessment

Throughout Hunterdon County and surrounding areas, many landowners enjoy a reduced real estate tax assessment on their land by devoting the land to agricultural use or woodland management. On August 1st of each year, these landowners must submit a form FA-1 to the municipality to establish their continued eligibility for the reduced tax assessment. The land must not only be actively devoted to a qualifying use, but it must additionally generate income. For agriculturally assessed land, annual gross sales from the agricultural use must equal or exceed $1,000.00 for the first 5 acres plus $5.00 for each additional acre. For woodland assessed land, annual gross sales from woodland management must equal or exceed $500.00 for the first 5 acres plus $0.50 for each additional acre.

Change in Ownership

Change in ownership of land subject to a reduced farmland or woodland assessment does not trigger a loss of the reduced assessment. So long as the new owner continues to devote the land to a qualifying use and meet income requirements and submit a proper FA-1, the agricultural assessment remains intact with no penalty.

Change in Use and Roll-back Taxes

However, whenever there is a change in use of the land to a non-qualifying use, the reduced assessment is lost. Taxes for that current year will not be subject to a reduced assessment. Additionally, the municipality will add an assessment to the property for the prior two years, requiring that the landowner pay the additional taxes that would have been owed had the property not been subject to agricultural or woodland assessment. Therefore, with a change in use comes an added assessment charged to the owner of record.

Whenever land is being sold which is subject to a farmland or woodland assessment, the intended use of the new owner must be understood. If a change to a non-qualifying use in anticipated, the parties must agree upon who will be responsible for the payment of roll-back taxes. Additionally, if the current owner is under contract with a farmer or forester who is entitled to use and/or harvest post-closing, the obligations of that license and/or lease must also be discussed prior to finalizing a contract of sale, to avoid breach of contract and damages to the licensee/lessor.

THE INFORMATION CONTAINED HEREIN IS GENERAL INFORMATION, IS NOT LEGAL ADVICE, AND DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP. YOUR SPECIFIC FACTS AND CIRCUMSTANCES MUST BE CAREFULLY REVIEWED WITH A RETAINED ATTORNEY PRIOR TO REACHING LEGAL CONCLUSIONS.

You may contact Nicole at (908)801-5434 or info@nlvlegal.com. For more information, visit www.voigtlawoffice.com.