Property Taxation

Speaking from the perspective of the grower and landowner, it is always best to reduce or eliminate property taxes in order to protect the affordability of urban farmland.  Of course, the taxing authority may have a different perspective, but there are ways to structure land ownership to reduce property tax burdens without asking for special treatment from the local municipality. For example, where agricultural land may be assessed at its use value, an agricultural easement could reduce the property tax burden. Or, a nonprofit land trust may be able to hold tax-exempt land, that could be leased to beginning farmers who are part of an educational incubator program.

Property tax considerations such as these, then, may be a significant determinant of who should own the land.  Each form of ownership carries different implications for property taxation, along with assorted other challenges and benefits.

LAND OWNING ENTITY BENEFITS CHALLENGES
Public Exempt from property taxes Difficulty in securing long-term ground leases, change in the political winds could cause loss of land for farming.
Nonprofit May be exempt from property taxes for noncommercial and incubator farms.  Commercial farmland could be assessed based on ground rents. Negotiations with local assessor can be thorny, in particular in inflated markets or in cities struggling to generate property tax revenues.
Private The least red tape — particularly when the grower owns the land directly. No benefit from a property tax perspective.

 

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