Jersey closes developers’ favorite tax loophole

June 08, 2012 02:30PM

New legislation approved by the State Senate raises the minimum income land owners must generate from farmland to qualify for highly discounted property taxes, the New York Times reported. Farmers now need to generate $1,000 annually selling products from the first five acres, and an extra $5 for each additional acre, to qualify for exemptions that sometimes reach as high as 98 percent.

This affects wealthy estate owners, including Jon Bon Jovi and Bruce Springsteen, and developers, who run small farm operations on their vast properties to qualify for the exemption.

“The biggest farmers in New Jersey are developers,” said Jeff Tittel, president of the New Jersey chapter of the Sierra Club. “They buy property during a bust for a low price, then they use the Farmland Assessment to land-bank it, sitting on it until the next boom, when they can build.”

Studies have found that a $1,000 minimum would make ineligible 47,368 acres out of the state’s 982,000 acres of farmland — all for a gain of about $2 million. But many expect that landowners will “find everyway possible” to meet the threshhold. New Jersey’s new minimum is still far less than New York’s of $10,000 in income per seven acres.

“Those of us who do production agriculture are not too worried about the new threshold,” said Ryck Suydam, vice president of the New Jersey Farm Bureau. “If you’re not grossing $1,000, you’re not trying too hard.” [NYT]