There’s an old saying that describes two permanent fixtures in life, one of which is taxes.
Taxes on their own can be confusing and can become increasingly confusing when trying to figure out taxes relating to farmland because different there can be different tax rates applied depending on the size, location and income of the farm.
In Canada, each province with large agricultural activity has their own tax provisions.
The farm residence and one acre of surrounding land gets taxed at the rate applicable to the municipality while the remainder of the farm property is taxed at 25% of the residential tax rate.
To be eligible, the property must be deemed a farm by the Municipal Property Assessment Corporation and have a minimum annual gross income of $7,000.
Farm land is fully taxable for provincial rural tax ($0.50/$1,000 of assessed value). Farm residence is exempt for provincial rural purposes, but can be fully taxed for school and local services.
British Columbia provides an online calculator for farmland owners to get a better estimate of their taxes.
The land needs to be involved in agricultural production to be taxed at the farm property tax rate. If the property is determined to be in a different class such as country residential, the tax bill could be higher.
The agricultural tax rate is based on the municipality where the farm is located.
Like Saskatchewan, the tax rate is impacted based on the municipality where the farm is located.
Be sure to consult the local municipal office closest to your farm to receive all of the necessary details related to farmland taxes.
Like Canada, many states within the United States have different taxes for farmland, including:
Agricultural property falls under Class III Property with a 10% assessment percent.
Farmland may fall under the 1% tax rate.
Farmland tax rates may depend on the classification and location of the farm.
Tax rates can be determined based on the productivity of the farm and not necessarily market value.
For properties enrolled in Green Acres, a program that provides tax relief for agricultural land owners, taxes are calculated on the estimated market value and the agricultural value.
Land that qualifies for agricultural appraisal can have a lower taxable value for property tax purposes. The county’s appraisal district completes the property value appraisal.
Farmers can also apply for different kinds of insurance to ensure they’re protected from the unpredictable risks associated with agriculture.
- Livestock insurance – Farmers can protect themselves should anything happen to their livestock including deaths from diseases to volatile market action.
- Crop insurance – Investing in crop insurance can help farmers recover some of the costs of producing a crop if certain events occur including low yields and prevented planting due to natural disasters.
- Machinery insurance – Machinery is an important part of any farmer’s day, but if the machinery breaks it can be a big problem. Purchasing machinery insurance can help farmers recover financial losses from not having their equipment available.
Farmers have many options when it comes to insurance and have many things to consider when assessing their taxes for the upcoming year. Farmers should consult their local community offices about their property tax requirements and an insurance organization when deciding what coverage is best for their farm.