The purpose of this website is to serve as an inclusive reference guide to farmers, ranchers, nurserymen, and all other agricultural property owners. This website will not take the place of an experienced real estate attorney although if you wish to have a guide that will point you in the right direction so those reading may have a complete understanding of agricultural rights, then look no further.
An attorney isn’t needed in many cases such as simply applying for the Agricultural Classification, or in some cases, if you wish to personally petition a denial or partial approval of an Agricultural Classification. When it comes down to filing a lawsuit against a government agency, it is my recommendation to hire an attorney.
The Florida Agricultural Exemption is really not an exemption. It is a classification and was intended to alleviate an overbearing amount of taxes on lands used for agricultural purposes. Since development has been occurring, land values increase and as an indirect result, so do taxes. What incentive would a farmer have if he/she were to pay high taxes on the farm when that farmer could just sell the land for a profit and retire in a condo somewhere else? That’s where the Agricultural Classification comes in. First, see if it will lower your taxes and then see how to qualify, apply, and keep it on your property.
Calculating real estate taxes…
Let’s briefly look into the way real estate taxes work in Florida. You can check out the Department of Revenue website and scroll down a bit until you see calculating your property taxes at https://floridarevenue.com/property/Pages/Taxpayers.aspx to calculate your potential taxes yourself or to get a general idea download the excel file below. You may have to do some research on your property first. You’ll need to know your land and building values, amount of acreage and how many acres you’re applying for, assessed value, mileage rate, if you have a Homestead Exemption, and the agricultural use rate (more on what that is next).
The agricultural use rate is basically a new assessed value per acre (you’ll have to call the Agricultural Department to find out what the rate is). Remember, you’re being taxed on your assessed value – NOT your market value. Your assessed value is made up of your land assessed value and building assessed value. If your land assessed value is say, $50,000 per acre, and your mileage rate is say 20.19, then your taxes per acre will be $1,010 ($50,000 x .02019). Tip: the mileage rate is divided by 1,000 before it’s multiplied by the assessed rate.
The agricultural rate is typically lower than the assessed rate on the land, say anywhere from $300 to usually three to four thousand dollars. So for example, if your assessed rate is $4,000 per acre, using the same mileage rate of 20.19, the taxes would be $80.76! The Agricultural Classification overrides your assessed value for the land only, not the improvements.
To find out about how the agricultural rates are calculated by the Agricultural Departments, click here.
Be careful what you wish for. There’s always a catch.
Laurie Halse Anderson
Although the Agricultural Classification is not for everyone, it is most helpful to those that own vacant (non-improved) land with an agricultural practice. As previously stated, the classification was originally written for those farmers with many acres; therefore, it would naturally benefit those people the most. The classification does get a little fuzzy when classifying properties with residential improvements. Here are the benefits of the classification with an explanation of each benefit:
- It may lower taxes by lowering the assessed value of the property. This does not always fit the bill, but I’ll explain this further in examples later on.
- If there aren’t any residential structures on the property, the entire property can qualify for the Agricultural Classification. In fact, a couple of situations come to mind with residential structures on the property. One can include land under groom’s quarters/caretakers quarters and land under houses built on stilts, assuming the land underneath the house is being used for agricultural purposes.
- The Florida Statutes state that those properties with Agricultural Classifications do not need building permits for improvements related to the agricultural use (FL Statute 604.5). If an improvement was constructed on a property without the Agricultural Classification, the property owner can face serious fines. In fact, generally speaking, the Agricultural Classification being annual may negate all fines from code violations when regarding agricultural building improvements. (That being said, the property owner must still abide by FEMA flood zones. Changing the topography of the property such as filing in a pond or increasing the level of the property can be cause of fines.) Example: a taxpayer has an agricultural business on the property as of Jan 1 and improved the property with a building without permission, for agricultural purposes. Code Enforcement shows up on the property and fines the land-owner hundreds of dollars for the illegal construction of the improvement (examples include a barn, stables, or even fences). The owner, in turn, after the fines, applies for the Agricultural Classification and is approved; those fines then have no legal bearing according to the Florida Statutes, assuming all other stipulations were satisfied (i.e., flood maps, etc.). The Agricultural Classification is valid from Jan 1 to Dec 31 (the entire year). It does not matter when the inspector showed up for a review or if you applied in late February. On the other hand, when the property is sold, or if the property rights are conveyed to another owner, or if the ownership changes, as previously discussed, the Agricultural Classification is lifted from the property, and code enforcement may fine the new property owners for having an unpermitted improvement on the property or may ask you to remove the improvement due to the code violations. Buyer beware!
- The Ag Classification protects against complaints from county officials, neighbors, or ag haters! As long as the farm or ranch has been active for a year or longer, the property is protected from complaints, according to the Florida Statutes (FL 823.14(4)(a)&(b).
Here is the downside of the Ag Classification. I know every situation is different and some may have some kind of amalgamation of some or all the situations listed. This is just a brief list of what I have seen.
- The Ag Classification may increase your taxes! I know this is contradicting what I previously said, but if there is a property that has a Homestead Exemption way back when the assessment rates were incredibly low, and the ag rate is higher than the capped rate, then an increase in taxes will be the result. Ask someone such as the property appraiser or do the math first to see if the Ag Classification will decrease or increase your taxes if this is your motive.
- It will destroy your portability. By law, Homestead and Agricultural Classified lands cannot be on the same portion of the property. Portability is the transfer of savings when you homestead your property (and by the way, portability must be applied for. If you don’t use it, you’ll lose it). If your market value is $100,000 and your assessed value is $60,000, then the difference ($40,000) is portable (or a portion of it) when you sell your house and buy another one in the state of Florida only. So, let’s say you upgraded and bought another house for $200,000. Your assessed value will be $160,000 ($200,000 purchase price – $40,000 in portability = $160,000 assessed value). It only makes sense if you limit your Homestead land or negate the Homestead completely, your portability will be minimized or negated as well. Over time, the Agricultural Classification annual savings will outweigh the one-time portability in homestead savings, but it will not outweigh the tax savings after the new home is purchased (think of the yearly taxes after you buy the new home). It will take some soul searching and foresight, but just be sure that if you want the Agricultural Classification, you will keep it for a long time if this applies to you.
- A Homestead may protect you if you are being sued. This is where I would check with a real estate attorney. If you lift the Homestead and apply an Ag Classification, some of your property may no longer be protected against seizure from a lawsuit. Example: a property owner with nine acres of a cattle ranch a and one-acre homestead in a somewhat developed area is subject to a lawsuit because of an accident involving a cattle rancher on his property. The cattle rancher hired a good lawyer and the lawyer can prove that the property has surplus land, being able to divide it without being a threat to the one acre of Homestead land. It is very possible the land owner may lose some or all of the nine acres of non-homestead land in that lawsuit. As a side note, to reduce your liability it is advisable to have the proper signage as mandated by the statues. FL Statute 588.10 deals with posted notice requirements. As stated in the statutes a sign with the word “posted,” and in addition thereto there shall appear the name of the owner, lessee, or occupant of said land. Said posted notices shall be placed along, on, or close within the boundaries of any legally enclosed or posted land in a manner and in such position as to be clearly noticeable from the outside of the enclosure, and said notices shall be placed not farther than 500 feet apart along, and at each corner, of the boundaries of the land, and also at each gateway or opening of the fence enclosing the same.
- Heaven forbid should you ever stop practicing agriculture on the property. Should you ever decide to do this, your assessed value may rocket to market value, which can drastically increase your taxes. It may be better for some to just homestead the entire property if you plan on retiring in a couple of years! Also, by the Florida Statutes, the county appraiser is required to, at a minimum, inspect your property once every five years (FL Statute 193.023 (2)). I hope you pass the review! NOTE***Pay attention to this if you are a homeowner. In a rising or stable market, the strategy becomes: the more Agricultural Classified land you can acquire and the longer you can hold the classification, the better, but when the market plummets, you may want to drop the Agricultural Classification (assuming you have no illegal structures, you do not need the Greenbelt Law protection, and you are not violating zoning or HOA code with farming activities). At this point, it may be beneficial to apply for a Homestead Exemption to cap the assessed rate. This way, when the market increases again, the assessed value stays low and so will his taxes, the property is protected by the Homestead Exemption.
As previously stated, have the proper signage according to FL statute 588.10.
You can find the application in the next section “Qualifications and Application Processes“. Application deadlines are March 1 in the year of which you are applying (FL Statute 193.461 (3.a). Apply in late February if you are a taxpayer or if you miss the deadline, taxpayers will have until the middle of September to submit a late application with extenuating circumstances as to why one couldn’t apply earlier (FL Statute 193.461) along with a petition. Extenuating circumstances means any good reason as to why you couldn’t or didn’t apply within the first two months of the year. Good examples include sickness/illnesses, family issues, you live in another country or maybe English is a second language.
The reason why I am stating that a taxpayer has until the middle of September is because if the taxpayer is denied the application, a petition can still be filed for a denial of the Agricultural Classification application. After the middle of September, the taxpayer has no recourse for this denial. Theoretically, applications can be submitted to the property appraiser up until and including December 31, but good luck with that one!
These deadlines also work as a double-edged sword. The property appraiser wouldn’t dare deny a review of a property with the classification after July. The reason is because the property appraiser must notify the property owner on or before July 1, giving the owner the right to appeal. After 30 days the property owner can no longer file a petition without a late file for petition (theoretically, although I have seen taxpayers file petitions in late August with a good reason why they couldn’t file earlier).
What is on the application for the classification is the same from county to county. You should specify what agricultural use you are applying for and for how many acres that use covers. The land owner can apply for as many different uses as they would like.
Once the application is submitted, you need to prove use is and was on the property on January 1. January 1 is the deadline from my experience. If the taxpayer did not own the property at this point in time, then the application process is an uphill battle. Recently I have seen some county appraisers waive this as long as the applicant was close. A soft target if you will. The only other option to this is if the applicant did not own the property on January 1st but leased the property and can prove this as well as being responsible for the real estate taxes (stated in the lease). I have heard this works for the Homestead Exemption too but unsure at best. For the purpose of this website, we will abide by the Jan 1st deadline.
The second characteristic needed is that you need to have a bona fide agricultural business. If these two aspects can be proven, the classification is pretty much a sure thing.
Qualifications and Agricultural Application Processes:
- Use: Use is the absolute guidepost for the Agricultural Classification. Without this, nobody can argue that they deserve this classification. So the question is: what uses qualify for the Florida Agricultural Classification? For the purpose of this section, the term “agricultural purposes” includes, but is not limited to, horticulture; floriculture; viticulture; forestry; dairy; livestock; poultry; bees; pisciculture, if the land is used principally for the production of tropical fish; aquaculture, including algaculture; sod farming; and all forms of farm products as defined in s. 823.14(3) and farm production. “Farm product” is a bit vaguely defined on purpose in this section. Farm product is defined as any plant, as defined in s. 581.011, or animal or insect useful to humans and includes, but is not limited to, any product derived therefrom. Be sure to read the case law: Robbins v Racetrack Training Center (2003) and McClendon v. Nikolits (2017). This can open the floodgates to many arguments. I’ll leave most of that up to the interpretation of the reader; however, here is a list of what I have seen approved in most counties with the definitions and links if available to a suggested application process.
- Apiculture: beekeeping.
- Aquaculture: farming of aquatic organisms such as fish, crustaceans, mollusks, and aquatic plants. Some consider herpetoculture a part of aquaculture. I felt it was important to include this because in some counties properties with this use have been classified as agriculture. Herpetoculture is defined as the keeping of live reptiles and amphibians in captivity, whether as a hobby or as a commercial breeding operation.
- Aquaponics: refers to any system that combines orthodox aquaculture (raising aquatic animals such as snails, fish, crayfish or prawns in tanks) with hydroponics (cultivating plants in water) in a interdependent environment.
- Aviculture: the practice of keeping and breeding birds.
- Equine: There is much to be said about this category. Check the link to more information.
- Forestry: the profession embracing the science, art, and craft of producing, managing, using, and safeguarding forests and associated resources in a sustainable manner to meet desired goals, needs, and values for human advantage.
- Fruit Orchards: a tree or shrub farm maintained for the production of fruit or nuts.
- Goats and Sheep: typically they can be bred for food or milk, however one can argue dwarf goats sold for pets may qualify if there’s proof they’re useful to humans…
- Grazing: What is found much throughout Florida are cattle ranches for slaughter or starter cattle. Some people want to consider horses or goats for pasture grazing but they have their own categories.
- Hydroponics: the method of growing plants without soil, using mineral nutrient solutions in a water solvent.
- Nursery: the division of agriculture that deals with the business of growing plants. It includes the farming of medicinal plants, fruits, vegetables, nuts, seeds, herbs, sprouts, mushrooms, algae, flowers, seaweeds and non-food crops such as grass and ornamental trees and plants. It also includes plant preservation, landscape restoration, landscape and garden design, construction, and maintenance, arboriculture, which is the cultivation of trees and shrubs and floriculture: or flower farming, is a discipline of horticulture concerned with the cultivation of flowering and ornamental plants for gardens and for floristry.
- Poultry: the sale of chicken or the eggs, whichever came first…
- Row Crop: Production of crops.
- Sod Farming: growing grass for lawns, golf courses or other landscaping reasons.
- Miscellaneous: several different uses.
- Everglades Agricultural Area (EAA) mining lands.
- Viticulture: the science, production, and study of grapes.
- Exotic animals coming soon..
Application deadlines for any agricultural use is March 1 in the year of which you are applying (FL Statute 193.461 (3.a). The application can be found here.
Name: The name section is the owner of the property’s name or a representative such as a manager of the business or a tax representative legally that is allowed to represent the interest of the fee simple owner. The tenant does not have the legal right only if they are responsible for the taxes on the lease.
Phone: Include the contact number of the owner or someone that has access to the property on behalf of the owner.
Parcel ID or legal description: I would include the parcel ID. Trying to locate a property by its legal description is incredibly difficult. You can find a 17 digit number a.k.a the PCN by looking your property up on the property appraiser’s website.
Land Used Primarily for Agricultural Purposes Section: If you do not see your specific use in this section, your use would be written in the other box. Circle or simply indicate which use you are applying for by writing in the box to the right the number of acres you’re applying for. The next box to the right is indicates how long you have been active in this particular agricultural use.
The Agricultural Income from this Property: Specify the year and what Ag use such as poultry or cattle. The gross income is how much money in total was made that year. Your expenses are what you had to pay to keep that use going. Your net income is the gross income minus the expenses.
Under the Agricultural Income Section is the Date Purchased and the Purchase Price. The purchase price isn’t as important as the date purchased but it may be helpful to the Appraiser’s Office to know this information.
A Tangible Account is a business account filed with the Property Appraiser. This is a good indication there is a business on the property. It is not a necessity, but you would know if you filed or not. Answer “no” if you do not have a business tax account with the Property Appraiser.
The next question: Is the property leased to others? If there is any lease on the property, including a residential lease or a pasture lease, the answer is “yes”.
Has the property been rezoned to a non-agricultural use at the request of the owner? In other words, if the property was zoned Agricultural/Residential (AR) or just Agricultural, and you as the owner put in a request to the Department of Building and Zoning to change the zoning code to say, commercial, it’s very possible that agricultural use could be an illegal use and disqualify you from acceptance. Again, you would know if you changed the zoning.
There is a small area to file out that indicates the year you are applying for so make sure this is completed.
Sign and date your application. Make a copy of it and when you send it or drop it off, get a receipt of some sort to prove when you applied should there be any issues down the road.
Agricultural Uses Continued
There are those uses that some counties will not consider, which may be in error; however, the Department of Revenue 12D-5 is clear in stating that the retail or packaging of the agricultural products do not count as agriculturally classified land. An example is a warehouse of canned corn. Also, mulching, gravel/rock, and dirt operations do not qualify.
Flashback to how the agricultural assessed rates are calculated. Some of the uses even have different techniques to calculate the assessed rate of the land according to the FL DOR Codes. Each specific use has a specific rate. This is the reason why a land owner needs to be very specific on the application as to what use is being applied for. It may make a difference, good or bad, on the real estate taxes. This also leads county inspectors to approve or deny review properties (properties that have applied and have been approved for the Florida Agricultural Classification in subsequent years) if the landowner changes the agricultural use without notifying the county.
Again, January 1 is the deadline to have the agricultural use. I would only encourage for those ranchers, farmers, and other agricultural landowners to take pictures and to secure documentation, the closer to January 1 the better. With new technology becoming more and more accessible to the public, county officials would and should be using it. Aerials, drones, and other means imaginable, are used to photograph or document the use on the property as of Jan 1 or close to it are probably already practiced. Some counties already use aerials to measure the use on the property.
2. Commercial Business: How to prove you run a profitable or future profitable agribusiness on the property can be complex. The DOR states that the agricultural activity needs to be for a reasonable profit or with the expectation of meeting investment cost and profit 12D-5. These must be viewed in light of the fee simple owner.
There are some other interesting points to bring up here. Does the speculation of increased property value and future sale of the property constitute the profit? Some people think this is valid but I do not think it was the original intention of the law.
For the sake of defining a business in this website, I will consider a profitable business as if my livelihood and family are dependent on it. There is nothing in the Statutes or DOR code that states how profitable a business must be, though (see Dept of Revenue v. Goembel (1980) on my case law page).
For starters in proving a business, I always recommend a business/management plan. This can be written on your own or you can hire someone else to help or do it for you. Having more data or information of what the plan is can be an indication of how serious the business owner really is. Other than that, here is a list of the documentation that may help the county appraiser decide.
- Profit and loss from farming on the previous year’s income taxes. This is another great indicator, especially if the name on the tax form is the same name as the business that owns the property. Just a tip: name the company something agricultural and not something like Bob’s Power and Lighting Services, LLC. It just doesn’t fit. By the way, according to DOR code 12D-1.005, the property appraiser has the right to inspect these documents when deemed necessary to determine non-homestead property assessment.
- Leases. These are golden tickets for obtaining the classification for boarding horses and bees or grazing leases for cattle, horses, goats, llamas, donkeys, or any other hoofed animal in addition to land leases for nursery operations. If there is a valid lease and use, then for sure the classification should be granted.
- Occupational licensure for trainer/owners of horses used for competition. Any kind of receipts for competition entry fees or winning is great to have too.
- Business registrations or certificates are a must for some uses, such as nursery operations. A business license or permit to operate is an absolute necessity, and a nursery registration is needed to legally sell plants in the state of Florida.
Diving deeper into FL Statute 193.461:
In addition to the previous information, this next section contains the legal and sometimes less pragmatic aspects of what can be considered; the statutes are specific in determining whether the use of the land for agricultural purposes is bona fide. Most property appraisers have interpreted the following in the previous statement of what is needed: use and a business (and those two points are applicable to most land owners). Written in the legislature (FL Statutes and DOR), the property appraiser may take into account the following factors when granting or denying the classification (use and business are embedded in these Statutes as well as the Department of Revenue):
FL Statute 193.461. 3(b): Subject to the restrictions specified in this section, only lands that are used primarily for bona fide agricultural purposes shall be classified agricultural. The term “bona fide agricultural purposes” means good faith commercial agricultural use of the land.
1. In determining whether the use of the land for agricultural purposes is bona fide, the following factors may be taken into consideration:
- The length of time the land has been so used. In other words, is there a history of agricultural use on the property? A history of agricultural use can be established with documentation such as business licenses, marketing ads or sales receipts for previous years. Also, use can be established for previous years using photographs.
- Whether the use has been continuous. This is a tricky subject due to some agricultural uses being seasonal. Boarding or training equestrian in some areas is seasonal. Cattle are sometimes rotated off a property during the dry season. Goats bear kids or are sold off after bearing offspring. Rows of crops lie fallow during the hottest season in Florida. The main date to remember is Jan 1. Use is still the guidepost for granting the Agricultural Classification. In all, if throughout the year the property is unused, yet the month of January there are cattle on the property, this may result in a petition hearing for a denial of the classification. Continuous use in this sense means used for nothing else but the agricultural practice, whether it be the actual use or the maintenance of the land during the off-season.
- The purchase price paid. One thing to be said about this is that I have never seen this point argued by county officials. There have been properties that have sold for a million dollars per acre to be close to a sporting arena, such as a racetrack or polo field. As far as I am concerned, this is just a poor secondary reason a county official can add to a list of reasons for denial, but never a primary one.
- Size, as it relates to specific agricultural use, but a minimum acreage may not be required for agricultural assessment. To expand on this is a bit tricky. Each and every property is different. The main idea of this, in my opinion, is to let anyone apply and to not ostracize those with smaller properties. For example, it is true one can have cattle on their residential property, but to have one cow on a half-acre does not make that owner a cattle rancher and the use may be considered incidental. Now if that one cow was a bull, and the owner was contracted for stud fees, then this is a different story. Thorough thought and investigation should be taken with each property, whether you are a property owner or a county official.
- Whether an indicated effort has been made to care sufficiently and adequately for the land in accordance with accepted commercial agricultural practices, including, without limitation, fertilizing, liming, tilling, mowing, reforesting, and other accepted agricultural practices. This is also known as industry standards. On a bit of a tangent, to take the previous point one step further, there are measurements of what most farmers/agricultural practitioners are doing. For example, it would look awfully funny to the county appraiser if there are two heads of cattle on 30 acres, right? What would the typical cattle rancher do to try and maximize the amount of cattle for a maximum profit? I would say put more cattle on the property. The two heads of cattle look as if the owner put them there to try and get that tax saving. That just screams scam and deception. Remember, the agricultural use has to be a bona fide agribusiness according to the FL Statutes. Each county should be gathering their own statistics and use appropriate measurements of central tendency. In other words, if nine out of ten cattle ranches have two heads of cattle per acre and the tenth cattle rancher has 12 heads of cattle per acre, then the average, 3 heads of cattle per acre, should NOT be used as a benchmark. The mode, or what is the most common number of heads, is two; therefore, two should be the industry standard. Also, county appraisers should be aware of meaningful data. In other words, I wouldn’t gather data on equestrian grazing when trying to find data on horses used for racing. Although these two may be related, statistics can and may be entirely different between the two data sets. One set may only need an acre or two for feeding purposes, while the other may need several acres for training purposes.
- Whether the land is under lease and, if so, the effective length, terms, and conditions of the lease. This has more to do with the ins and outs of contracts. Contracts for agricultural purposes should be an arm’s-length transaction. That means that there is no relationship between the negotiating parties or at least nobody can prove so. The landlord and tenant having the same last name is a big tip-off. Another circumstance of a non-arm’s-length transaction is if the landlord files for an LLC, then leases his property to the LLC (him or herself). The lease should also have a reasonable exchange of funds and here is why. A $1/month lease is not profitable in light of the fee simple owner. This point may and can be argued, but unless you have some legal training or you are a land owner and understand that you may go to a petition hearing over a $1/month lease, it is easier to just make this market terms. What market terms are is whatever most people in your area are paying for that service. If most people are paying $500/ month for a full-service stall, then that will surely be what the county appraiser is looking for or somewhere close. In addition, a month-to-month lease does not indicate that the use will be continuous. This may be a red flag and if the tenant decides to vacate the premise and take the ag use with them, a denial notice may be sent to the land owner in July. The lease absolutely needs to be signed, dated, and the terms must include Jan 1. Remember, this is the date of assessment. If Jan 1 is not included in the lease, you may not be approved! It should not matter if the lease is a residential lease with boarding agreement or if the lease is commercial. A lease is a lease, which indicates commercial use/profit. Period.
It is important to note again here that if a land was classified as agriculture by the county but was denied, the assessed value of the agricultural lands will increase to market. For example: a vacant land had the Agricultural Classification for equestrian use and had an assessed rate of $1,000 per acre on 10 acres of land. The market value is $500,000 but was being taxed on $10,000 (10 acres x $1,000 assessed rate per acre). Because of the denial of the classification, the property’s assessed value is now $500,000. The point is, if the Agricultural Classification is really wanted in the eyes of the land owner, it’s best to make sure, as the land owner that he/she will keep the agricultural business/practice in operation on the property.
In summary to the qualification process, the points in which I have seen pass or fail an agricultural classification annual review are the same as those points to acquire the agricultural classification in the first place. I would say, however, that some points are stressed more than others. In all, “use” trumps all and is the most important factor – more importantly, a use that fits the definition of “agricultural purposes” as defined previously by the Florida Statutes. The second most important is a business use.
As for an annual review, “A county may, at the request of the property appraiser and by a majority vote of its governing body, waive the requirement that an annual application for classification of property after an initial application is made and was granted the Ag Classification by the property appraiser” (FL Statutes 193.461 (3)(a)). I am unsure if there are any counties that do not waive an annual application however the property owner must qualify yearly. Check with your county appraiser’s office if you need to reapply every year.
What If the Property is Denied?
What a bummer – the classification was denied. Does this mean you as the landowner can never get the classification? I can for sure say there is still a chance. You have options here; it just depends on how diligent and persistent you want to be. One could just wait until next year to re-apply.
Let’s go through the steps with each option involved for the current year.
First, ask for reasons with Appraiser’s Office and request to have another inspection of the property. It’s possible that the property inspector might have missed something on the property. Sometimes a simple explanation may clear things up, and that’s the reason why you have the right to an informal conference. That is written into Department of Revenue code (DOR 12D-9.011). If the informal conference didn’t help, the inspector refuses to make another visit, or keeps the decision made after another visit, the landowner can file for a formal hearing called a petition with the Value Adjustment Board (VAB). The rules for this can be found in the Department of Revenue code 12D; however, I will go over them in a second.
The VAB acts as a third party mediator between property appraiser and the property owner. The petition hearing is a semi-judicious hearing where the magistrate or VAB act as the judge. If a magistrate was retained, then he/she provides the VAB his/her recommendation, based on evidence, as to whether the property owner deserves the Agricultural Classification or if the property appraiser is correct in their opinion.
How the hearings work:
First, you should file for a petition hearing to dispute the ruling over the denial of your classification or your application for the Ag Classification . It may cost an incremental amount of money in comparison to what you might get out of it. Typically afterwards, the VAB will notify you of your hearing date and time. You can reschedule the hearing date one time without extenuating circumstances and another time with an extenuating circumstance (12D-9.019).
There is also an evidence exchange period in which I highly recommend you follow (DOR12- 9.020). It is up to the taxpayer/petitioner to provide any evidence and/or witness list to the property appraiser no later than 15 business days before the hearing date. You must request evidence from the property appraiser if you want it in return. The property appraiser has up to seven days before the hearing date to provide you with their evidence. In case new evidence “pops up” and one party did not meet the evidence exchange period requirements, the other party may object to the presentation of that evidence during the hearing. That does not mean that it can’t be read or described; it just means that the VAB/magistrate may not accept the evidence or permit any unannounced witness from speaking during the hearing.
During the hearing, typically both sides take an oath of truthfulness and then the battle begins! Just kidding – it’s typically mellow. Don’t let your emotions get the best of you. One side will present evidence, then the other. Each side usually has an opportunity for rebuttal. Afterwards, the VAB/magistrate will either rule in one’s favor, or defer the decision. I have seen magistrates take up to a week or two to rule. Official notice will be sent out to the petitioner. The Department of Revenue code for hearings is 12D-9.024.
That’s not all… If either side still disagrees, or the petitioner would like to skip the whole petition hearing, the case may be brought to an appellate/circuit court. At this point, it’s always a good idea to hire a good real estate attorney that can assist for further details.
Here are some tips that may help in a petition hearing. Use your time in the hearing wisely. In other words, do not go off on a tangent about your neighbors, friends, or anyone else. Stick to the facts. It may be better for you to write down the order of your presentation. Present relevant and current evidence. Although it is a good idea to establish a history of the use, or lack thereof, depending on your viewpoint (if this is a review denial), that will not win the case alone. Every year is viewed on its own. Provide pictures, copies of signed leases, and/or any other documentation in support of your stance. By any means, do not interrupt the magistrate/VAB members or other party. Be cordial. Enough said on this one.
If the petitioner wins the hearing, the property appraiser cannot deny the property under the same circumstances. There is a pesky law that states if the VAB rules in favor of the taxpayer, then the taxpayer can basically keep the property in the same condition as it is at the time of the hearing and retain the classification. As long as there are no changes to the property, the classification will remain on the property until there is a change in use, the owner requests the classification be removed, or the property is sold (FL Statute 193.461 (3)(e)).
To read about the law “in action”, click here to view the case law page.
This is relatively a new law and not much has been brought up about this. Most of this is pretty self-explanatory in FL Statute 570.87. The property must still be used “primarily for bona fide agricultural purposes,” but agritourism itself cannot be denied the classification. Here’s an example. Let’s say there is a property with a vineyard and an Agricultural Classification. The property includes 10 acres in which nine are grapevines and within those grapevines is an area used for weddings. Technically speaking, nine acres may still be classified as agricultural under the FL Statutes.
If you do run an agritourism business, it’s advisable to have waivers ready for anybody visiting your property as well as the proper signage on any entrances. Be sure to have the legal protection in place.
Conservation Easements Law is complicated. This is a general idea of how it works. A conservation easement is a voluntary, legally binding agreement between a land owner and a conservation organization that keeps land in agricultural and/or open space uses. In most cases, Conservation Easements (CEs) are everlasting. If there are at least 40 acres with a CE and commercial use, then the property can be considered 50% tax exempt. This fits the case of bona fide agricultural use in addition to the tax exemption, and can qualify under the guidelines for an Agricultural Classification.
If there is no commercial activity on the property, then the property is 100% exempt, and why would anyone try and thwart this in the first place? If there are not at least 40 acres, the property must be approved by the Acquisition and Restoration Council (ARC). This 10-member group is responsible for the review of management plans and land uses for all state-owned conservation lands. Once the property is approved by this council, the property may be 100% exempt from taxes. It is best to seek an experienced real estate attorney for additional information on this subject.
Sale of a Property:
When a property with an Agricultural Classification changes ownership, the classification must be removed the following year, according to FL Statutes 193.1555 (5)(b). This means that if there was a divorce of marriage, one less person on a quit claim, or the property rights conveyed into a trust fund, the classification will be removed and the “new owner/s” must reapply.
If you have a residence on the property, the term curtilage may or will be brought up. Curtilage is the term for what is being used for residential living (FL Statute 193.461 (3.d)). Some property appraisers may state that an acre or a half acre is used for curtilage as a rule of thumb. Each case is different and each property should be analyzed individually. For example, the land underneath the caretaker’s quarters of the agricultural use can be included in the classification. It’s a good idea to check with the municipality or county code as to what can be considered caretaker’s quarters.
Also, if a house is built on stilts and the “ground floor” is used for potted plants, then again, the ground under the plants is considered agricultural and can be considered under the classification. Last, if the entire property is fenced in and all but the home and driveway are used for agricultural purposes, then it may be worth arguing that point. It may save the taxpayer a couple more bucks.
Back to the Basics and Ag Class Strategies:
This page is written in regards for those homeowners in Florida with the Agricultural Classification on their properties. It is with this in mind that each homeowner understands the ramifications of either applying for the Agricultural Classification, or for those homeowners that already have it.
Many who have applied and been granted the Agricultural Classification in recent years may have possibly figured it will help alleviate the tax bill some, but what have failed to look deeper into the ripple effect on Homestead and therefore the portability of the Homestead savings a.k.a. Portability.
First let’s be clear on some of the minor details.
Market value is defined as how much a property would sell for to a typical buyer.
Assessed value, usually a percentage of the market value, is what taxes are based on in Florida. When a mileage rate is applied, the results are the payable taxes
The mileage rate is defined as the amount per $1,000 that is used to calculate taxes on property (Investopedia).
The Homestead Exemption is solely used for residential purposes. Even if the property is deeded to a company you own, it’s still possible to file a long-term land lease on the property and claim the person applying for the Homestead owns the improvements (assuming it’s a mobile home or double-wide trailer, it still might be possible according to FL Statute 222.05). It helps to put an annual cap on the increase in assessed value (what real estate taxes are based on). The cap on the increased assessment is either 3% or the Consumer Price Index. In other words if you have a $100,000 assessed home value, a 3% increase would equal $103,000. Also, to be noted, if you have the Homestead on the entire property including a million dollar stable, this stable was most likely capped under the Homestead Exemption. If you apply and receive the Agricultural Classification for the land under the stable you may lose the 3% cap and get re-capped at 10% (because it is considered a commercial building)
As the market increases, the Homestead keeps your real estate assessed value from rocketing along with the market value. The difference between your market value and assessed value can be transferred to another property when the first property is sold. This is called Portability.
The Agricultural Classification and Homestead exemption cannot be on the same portion of land (If one can include land under the residence, examples include groom’s quarters/caretakers quarters, and land under houses built on stilts assuming the land underneath the house is being used for agriculture, then there would be even more savings on real estate taxes if all lands were classified as agricultural). They are two opposing and contradicting forces; one is used for residential living and the other is used for agricultural business. Having one limits the other. Also, just to further the note here a Homestead Exemption does not belong on commercial buildings so be aware when applying for the Ag Classification on some properties will increase the taxes on the farm improvements.
Note: to study the ripple effects of the Agricultural Classification on one’s taxes, all other variables to the equation must be held constant. The equation is:
(Market Value x Assessed value percentage) – Homestead = Taxable Vale
We then take the taxable value and multiply it by the mileage rate to get the ad valorem taxes (taxes based on value. This does not include the taxes for the municipalities, i.e. school taxes, garbage etc…). Typically in Florida, Assessed value percentage can be 80%, 90%, or 100% of the market value. Example, my property’s market value is $100,000. If the assessed value percentage is 90%, the assessed value is $90,000. Sometimes counties will break down this value further by allocating a portion of the market value to the land and a portion to the house or improvements.
Strategy A: The Agricultural Classification lowers the assessed value of the land by applying a new land value rate. This rate is typically very low and lowers the taxes significantly! Every five years, county officials need to re-evaluate the agricultural rates which typically still save the property owners mucho dinero.
For starters, if the land is more valuable than the improvements on the property and all other variables on the property are held constant, then the Agricultural Classification will save more in tax savings (just remember ↑ land value = ↑ Ag tax savings). So if you think the land is undervalued according to the property appraiser, get an appraisal on the property and ask the appraiser to calculate the cost of the improvements less depreciation. This will result in the allocation of the value of the land. Petition the valuation if needs be or ask the property appraiser to reallocate the land and improvement values. This will create a more favorable ratio so you may save more with the Agricultural Classification.
Now let’s look at what happens as time passes. As the real estate market increases in time and all other variables remain constant, by optimizing the lands classified as Agricultural, the property owner saves an incredible amount in taxes however most if not all portability in assessed value savings is lost. Remember, whatever part of the property the Ag Classification is on is no longer eligible for Homestead savings therefore ineligible for Portability.
Looking into this further into the future will reveal something more. That minimized part of the property left under the Homestead Exemption will start to regain Homestead savings and therefore Portability over time.
As long as the market value of the property increases, Portability will also increase and there will be a point in time where the property is at an optimal level of savings due to the Agricultural Classification.
On the flip side, if the market values are decreasing, because of the shrinking difference between the assessed value and market value of the property, the Portability decreases as well as the savings from the Agricultural Classification. If the market plummets, it may just be in you benefit (assuming there aren’t any non-permitted structures) to drop the Agricultural Classification and Homestead the entire property so you can apply a 3% cap on the assessed value, enjoy a low amount of taxes, and if the market picks back up, you’ll have portability too.
Lastly, if the market values rise at the same pace of the assessed value (highly unlikely) both the savings in taxes from the Ag Classification and the Portability increase at a steady rate.
Strategy B: The Ag Classification may increase your taxes! I know this is contradicting what is typically said, but if there is a property that was Homestead way back when the assessment rates were sooooo low, and the Ag rate is higher than the capped rate, then an increase in taxes will be the result. Make sure to test you property with the calculator provided, but if this is the case and you want the classification for protection purposes, the the answer is to this is more simple than it seems: apply for the land underneath the buildings and maybe a tad more to limit the increase in taxes. It helps to test the math with the issue. In other words, if it will cost you $10,000 to build the stable with a permit but only be an increase in $500 a year in taxes with the classification (assuming you have no intention of moving) then it would be worth getting the classification (or take you 20 years to recoup you money). Bottom line, apply for less Agricultural Classified Land.
Summary of Important Dates for the Agricultural Classification
|January 1…………..||Date on which you need to have|
the agricultural use and business
|January 31…………||Notify taxpayers of intent to deny|
exemptions that would otherwise be automatically renewed.
|March 1………………||Agricultural Classification application deadline|
|July 1……………..||Approve or deny all applications for tax exemption, classifications, and portability. Notify taxpayers. Taxpayer has 30 days after the notice was mailed to file with the VAB to appeal the denial. VAB can start to hear appeals for the Agricultural Classification denials.|
|August………………||Mail notice of proposed property taxes (TRIM Notice) to all taxpayers.|
|September, (25 days after TRIM notice is mailed)…………….||Filing deadline for petitions with the clerk of the|
List of many of the FL Statutes and DOR code
In conclusion, the Agricultural Classification, although short in history, is many faceted with statutes, code and case law. What was provided in this website touches on the three main aspects that shape this legislation. It is no doubt what the writers had in mind when the general law was written; now the intentions are to benefit those on bona fide agricultural businesses.
In all, I leave you with this conclusion, whenever in doubt of what qualifies, consider rereading the Florida Statutes 193.461. Over time I suspect the laws will further develop and be modified so revisiting them every so often is recommended. Included below is a link to the Department of Revenue tax exemptions in Florida. You can find the list of most applications here. Contact your county property appraiser if the application is not found.
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