480a or not to 480a... That is the question.

[TGofWNY]

Hey yall, being a new landowner I'm not sure if the 480a plan is national ,or just local to NY , but I would like to know everyones opinion on it, and any other landowner tax break related programs. Thanks. -Tom.

[Mike LaMana]

Tom: I am new here, and this is my first post.   I have not heard of 480a programs for NIPF lands here in New Jersey, and assume that there are peculiar to NY State Tax Code??

Here in NJ differential Farmland Tax Assessment IS the foundation of private forestry given our lack of local markets & processors, generally small parcel sizes, and the intolerance of the public for forest harvesting. Deriving from the states agricultural property tax code, farmland tax treatment of woodlands was an afterthought and - unfortunately - owners involved the program re required to show woodland income every year. Thus, firewood is the commodity most produce because most of our municipal tax assessors will not owners carry apportioned income from a large timber harvest over multiple years.  ...  Silly, but true.

On the plus side, folks with small woodlots are getting substantial property tax savings - on the oder of 70-80% or more on the forested ground. Savings does not extend to acreage associated with the 'farmhouse' in our code. As you may know, our property taxes are among the highest in the nation and enrollment in the Farm tax program is keeping many small owners from having to sell or subdivide.

Also on the plus side (in my view as a consulting forester) the differential in property tax rates amounts to a huge subsidy towards good land stewardship over the long haul. For example, if someone is saving $5k / year on the tax bill it seems like pretty good math to the owner to spend $1k on forest stewardship projects that will help keep their assessment in place - such as non-commercial TSI/  FSI, wildlife food plots, invasive control, artificial regen, and the like.

Obviously then, here in NJ because of our property tax code, forest commodity production is almost always a peripheral means to a taxation end. A lot of foresters with a classical commodity orientation dislike this.  Mike.

[thecfarm]

Mike LaMana,welcome to the forum.Looks like you will beable to add to the forum.

[Mike LaMana]

Oh, we''ll see I suppose. Thanks

[ronwood]

Mike,

Welcome to the forum!

Ron

[stonebroke]

480a is a NY program. As I understand it you get a tax break every year but you have to havea management plan and follow it. Also you pay 6% (maybe) on your gross when you do sell timber. If you have a farm and gross10,000$ or rent it to someone who does You can qualify for ag exemption This includes your woodlots. Under Ag you do not pay the 6% but you must sell the 10,000 in gross every year. Also to qualify for 480a you must have 50 acres of contiguous woods .

Stonebroke

[Mike LaMana]

So NY 480a is analogous to the New Jersey farmland tax  program: Here you need a minimum 0f 5 agricultural acres, an approved Forest Mgt Plan; you must follow it and a licensed NJ forester must testify to that each year, and you must gross $500 [+.50 cents acre beyond the first 5 acres] each year.  Each year here you are required to apply for farm tax assessment for the coming calendar year. Taxes flow thru to the 1040 schedule F and nothing on the gross per se is owed to the state.

If an ag operation [ including forestry] grosses $2500 per year, and also maintains the qualified Farm tax Assessment status, the owner qualifies for designation as a "Commercial Farm" under our state code. Once designated as such, the farm / woodlot has considerable;e protection from 'nuisance' accusations and suits brought on by neighbors as per the NJ Right to Farm Act.

My understanding is that the decrease in property taxes under the program, is not as hefty as the decrease in NJ. But here in NJ, property taxes on 10-acre 'gentleman's farm' with a house on it usually range between $8,000 and $25,000 per year without Farmland Assessment.

Now, that's hefty... ML.