Big changes ahead in land ownership and farm operators

Carson, a real estate agent specializing in farmland for Lakeland-based Saunders Real Estate in central and south Florida, says his dad was a fifth-generation farmer with no family members who wanted to farm, so he put his land into a family corporation and has rented it out for decades to another large farmland manager for growing strawberries.­

It often happens, he says: “Farmers have invested in their land and in their operation all these years, so their land is where they will get their retirement money.”

Other likely trends for the years ahead:

• Across the next decade or two, expect the average ages of farmland owners to continue edging up.
• In fact, like the elder Futch, many are assigning their land in wills, family corporations or trusts and then just keeping it through their retirement years, avoiding the severe tax consequences of selling or gifting it while alive.
• Farmers will continue to be the most typical buyers of agricultural land, but their dominance will slip.
• Non-farmers will own more and more of the land – especially the rented acreage.
• Expect, as well, a continued swing, especially by mid-size and big farm operators, toward renting more acreage and owning less.
• There’ll be more women owners and operators, too, even while there are fewer farm operators overall.
• Food companies are demanding more traceability and sustainability – often without paying for the extra costs of doing so. That can make it harder for smaller and mid-size operations to maintain profitability without scaling up and making investments in new technology.

Understanding Agricultural Tax Exemptions - The Basics

If you’re a farmer, you’re no doubt familiar with the complicated tax landscape for farmers in this country and you may even use a tax accountant to help you get as many tax breaks as you’re eligible for. If you can prove that you farm as a business and not just for recreation, you can get both property tax breaks and income tax breaks.

But you don’t have to be a full-time farmer to take advantage of agricultural tax breaks that will help you with your property taxes. In some cases, all you need is a piece of land that’s not currently being used. You can say that the land is preserved wilderness, or put it to some kind of agricultural use to save on property taxes.

The size of agricultural property tax exemptions varies from state to state because property taxes aren’t administered at the federal level. Qualifications for agricultural tax exemptions vary from state to state, too. Some states base eligibility on the size of the property, while others set a minimum dollar amount for agricultural sales of goods produced on the property. Many use a combination of gross sales and acreage requirements. Grazing a single cow on your property can be enough to trigger series tax breaks in some places.

If you qualify, an agricultural tax exemption could knock thousands off your property tax bill. Depending on your state’s rules, one way to execute this tax strategy is to offer use of your land to a local farmer. For example, you could allow a nearby farmer to harvest hay on acres you’re not using or rent your land to a farmer. You don’t necessarily have to do the work yourself to claim the exemption for your property. You may, however, have to renew your application for a farm assessment each year, depending on your local tax assessor’s rules and on state requirements.