Keeping the Ag Exemption

[Anonymous Poster]

We bought our 12 acres several months ago and I've been researching the requirements to maintain an ag exemption on the property. It was undeveloped pasture and currently has the exemption in place until the end of the year. We will homestead our home on 1 acre, and use another 2 acres or so as our front/back yard areas, but that essentially means that we can keep 11 acres as ag exempt.

We do want to get some value out of the property - the county does allow you to use the land for hay/feed, so we will begin by going that route. We will also add some livestock "units" as they call them, but initially we've got enough to do, so the hay was the best solution for us.

Question - what do you suggest as the most reasonable method for cutting/baling? I don't have the baling equipment - should I hire this done, then sell the bales, trade cutting/baling for the bales, or ?

Sorry for the newbie questions, but you have to start somewhere! I'll be also heading down to the county ag extension office - they have been great to work with so far. They will come out and help/advise you on your plans, but I also wanted to get your real-world input to give me a better picture of this whole thing.

 

[mikim]

why are you only homesteading 1 acre? You can homestead up to 20 and still get ag ---- ( i think) I'd sure check on it anyway.
mike

 

[cowboydoc]

If it hasn't been maintained for awhile then it is going to be tough to get someone to bale it. You may have to about give it away for the first few years until you get the ground back in good shape.

If you don't have any equipment then your best bet is going to be to rent it out or get someone to bale it for a small fee. Maybe rent it for $10 an acre or something until you get it back in good shape. You may be able to find someone to do it for shares but it may be tough as the hay off of the ground isn't going to be much good if it's just been growing and not cut at all. It's basically just going to be filler until the grass gets back in good shape again. If you did hire it done and sold the bales you wouldn't be selling much to people.

 

[Anonymous Poster]

Thanks for your replies ....

My understanding after talking with the tax assessor's office is that you can homestead all you want, but it shows up as improved property on the tax roles. The 1 acre will be improved property since our home will be on it, and it will receive a different tax rate/value because of this. Their advice was to homestead only what you have to (1 acre minimum) to keep the tax rat low on the rest of the property. Drawback is that you have only protected that 1 acre of your property under homestead laws. I'm still sorting my way through this.

This 12 acres is actually all pasture in very decent shape, but I agree that more improvement is needed. I anticipitate that initially the hay will probably be a trade-off. You cut/bale, you get the hay. So far, we have mowed the front 3.5 acres or so along with a perimeter road all along the fenceline for truck access. I plan to go ahead and mow it all. That first mowing really made a difference in knocking down any large ant mounds and leveling out clumps of cow patties and grass. Maybe I'm imagining things, but the grass that has grown back since mowing looks more even and fuller???

 

[mikim]

I know there's a lot of ins and outs on this and I don't even pretend to understand it all -- but we just went through this with the in-laws in Bastrop and they made out better with homesteading 20 acres then they were with the 1 acre they did have it at. The ag exemption is close to 80% off your tax liability - and even though the 20 might be appraised at improved property rate - with homestead and ag exemptions on it - you could come out ahead - rather than only homestead on 1 acre and no ag on that acre -- lots of twists and turns in these tax laws -- maybe consult a lawyer? I know the people at the tax office weren't even as knowledgeable as my wife after her research in the particular subject area we were looking at - 'course that just made them p.o.'d at us so it became a bit of anti-productive for us. We thought about hiring a lawyer to fight over it - but the tax savings if we won probably wouldn't offset the cost of the lawyer and they'd just come after us again next year. oh well ...
mike

 

[beenthere]

What would you guess to be the difference in actual tax, with your plan of 1 acre for the house, and if the 1 acre was not separated?

Around here, one cannot dodge the assessor that way. It would all be classified only as residential, with the first two acres assessed at $23,000 per acre, and the remaining acres assessed at $2000 each. This happens even if you buy the property from a working farm, and do not have anything done to improve the property, such as a driveway, or buildings added. To get ag classification for assessment, a major portion of your income has to come from that land. This land acreage, with a 35 yr old ranch (1440 sq. ft.) home, totals about $4,550 per year tax (total assessed value of $197,000)

 

[RanchMan]

<font color=blue>To get ag classification for assessment, a major portion of your income has to come from that land. </font color=blue>

WOW! /w3tcompact/icons/shocked.gif Sure glad it doesn't work that way here in Texas! If one goes for the ag exemption (via crops/livestock) the criteria is to meet the intensity requirements for what is "reasonable and customary" for the particular area. e.g. Land in West Texas can't support the same intensity of cow/calf pairs as, say land in East Texas. (and no, you can't put 1 cow on 10,000 acres and get your ag exempt status - that's where the "reasonable & customary" stuff comes in.)

If that "major portion of income" was present here in Texas, a lot fewer individuals would own farms/ranches as it is often requires continuous infusion of funds from another source (e.g. second income) for several years in order to push through (hopefully) the break even mark. (that, or only the independently wealthy or folks where the land has been in the family for generations could afford to "play cowboy.")

 

[phalynx]

I too am keeping up with this question as I am in the exact same boat that Chevdog is in. The only difference between he and I is about 30 miles.

I think I might want cows though. I figure a few walking hamburgers might be nice. I could name them, Patty, Chuck, and Dinner. I have no idea about cows yet. I am only just reading a book about them......

 

[Fireman_dcb]

Oof... There are a lot of things wrong with NJ, but one thing they remember is that this is the Garden State. As long as you bring in $500 per year you can keep your property in farmland assessment. This year I paid $30 on 9.96 acres and $2,700 on the remaining homestead acre. We have to fill out the farmland assessment form annually - we went with permenant pasture - a couple of horses and some beef cattle. Now if they can crank up the amount of money they put in for farmland preservation we here in NW NJ will be loving life. You might want to track down your county Ag. Coop person and ask for their input.
Good luck, Doug

 

[lloydp]

We went through this a couple of years ago. Decided on a Wildlife exemption instead of AG. Our property is close to Palestine and all brush and trees so would be hard to keep track of the "units".

We had to do a Management Plan, but Wildlife Management guy came out and walked the property with us and wrote up the plan for us, just had to pick 3 or 4 of the options available to work on. Stuff like supplemental food, cover, preditor control. If the land was pasture though it wouldn't be as easy to do.

The hay question. When we were looking around Corsicana the real estate agent said he would recommend getting someone to cut and bale it for shares. Figure I kind of remember was 1/3 then you can sell the other 2/3s.

The extension office people do seem to be good to work with. If you are going to build a pond, or I guess it is "tank" in Texas, depending on the lay of the land there may be some assistance ($$) available if you build it to their specs. When we ask it was fall and they were out of money until after the first of the year. It turned out where we wanted the pond he didn't think it would hold water without a lot of work so they wouldn't have given us any money anyway.