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Department of Taxation and Finance

Volume 4 - Opinions of Counsel SBEA No. 32

Opinions of Counsel index

Agricultural exemption (intent) (discussion) - Agriculture and Markets Law, § 305:

The intent of the law is to provide an agricultural value assessment for lands devoted to agricultural production. Data is gathered from all available sources to compute annually an average agricultural value per acre on a county-wide basis. The difference between this value and the standard market value assessment, if higher, is treated as exempt for taxation purposes.

We have received a general inquiry concerning the so-called Agricultural Districts Law (Agriculture and Markets Law, Article 25AA).

A farmer has written that he owns and operates a livestock operation and that his property has recently been reassessed in accordance with a county-wide revaluation program which, he maintains, has placed a non-farm value on his land. While he recognizes that the Agricultural Districts Law is designed to ease the pressure of a “market value” assessment on farmlands, he states that the law, as it is presently administered, does not appear to accomplish its goal.

The legislative intent behind Article 25AA of the Agriculture and Markets Law

 is to provide an agricultural value assessment for eligible lands devoted to agricultural production. This special “use” assessment recognizes that while agricultural land may have a “higher and better” use for assessing purposes (such use being determined by actual market sales), an active farming operation in many instances cannot support the real property tax burden imposed upon these lands pursuant to the assessing standard required by the Real Property Tax Law.

In determining a farm value for eligible agricultural lands in New York State, the State Board, as required by law, compiles and gathers data from all available sources and computes annually an average agricultural value per acre on a county-wide basis. These values are indicative of what one farmer would pay to another in an arms-length transaction for one acre of a certain category of farmland for continued farm use. The difference between this value and the standard market value assessment (if higher) is treated as an exemption for tax purposes. The resulting tax burden will be based on a farm value and should put all eligible agricultural lands in the State on a consistent level.

This does not mean, however, that one acre of Grade A cropland will be, or should be, valued the same throughout the State. The fact that the values are compiled on a county basis indicates that data collected produces different values for farmland in the various counties. In other words, this data indicates that a farmer may pay more for one acre of Grade A cropland (for a farm use) in one county and less in another.

The State Board is constantly attempting to arrive at agricultural value factors that reflect the true values of land used for agricultural purposes. The paucity of actual farmer-to-farmer sales in New York makes this a difficult task. However, our experience with monitoring valid farmland sales and other data would indicate that land in the southern areas of the State historically commands a better price than similar land in the north. Some reasons for this difference may stem from climatic variations, availability of larger markets, convenience in obtaining consumer goods, etc.

It should be noted that, pursuant to section 305 of the Agriculture and Markets Law, the State Board is required to conduct annual hearings prior to determining agricultural values for the upcoming year. These hearings are generally held in January and February throughout the State and serve as a vehicle for an individual property owner and other interested parties to provide input for agricultural values to be established for the county in which his lands are located.

August 30, 1974

NOTE:  But see Opinion 10-45.