Property Tax Exemption for Farm Machinery and Buildings
December 29, 2008 – (RealEstateRama) — You asked how (1) many towns approved a local option property tax exemption on farm machinery and buildings and (2) the state could get more towns to provide the optional tax break. This report updates OLR Report 2006-R-0264.
PROPERTY TAX EXEMPTIONS
State law exempts all farm machinery, except motor vehicles, from local property tax up to $ 100,000, subject to certain conditions (CGS § 12-91(a)). The law also allows towns, with the approval of their legislative bodies, to exempt from property tax up to (1) an additional $ 100,000 for farm machinery (CGS § 12-91 (b)) and (2) $ 100,000 for farm buildings (CGS § 12-91 (c)), subject to certain conditions. Farmers may be eligible for these exemptions only if they earn at least $ 15,000 in gross sales from the farming operation, or incur at least $ 15,000 in expenses related to the farm (CGS § 12-91(d)).
The Connecticut Farm Bureau’s Government Relations Specialist, Joan Nichols, provided the information that five towns have an additional, optional tax break on machinery and eleven towns have an optional tax break on farm buildings. We identified a twelfth town, Hampton, which also gives the optional tax break on farm buildings. (The Connecticut Farm Bureau Farm Bureau is a non-governmental, voluntary organization of farm families working on issues facing production agriculture, according to its website; http: //www. cfba. org/html/about/whatcfba. php. )
Specifically, the towns providing the additional, optional tax break on farm machinery are Ellington, Hebron, Lebanon, Somers, and Woodstock. The towns that provide an optional tax break on farm buildings are Bethlehem, Cheshire, East Hampton, East Hartford, Glastonbury, Guilford, Hampton, Killingly, Somers, Wallingford, Washington, and Woodstock. The Connecticut Farm Bureau continues to collect information on these optional tax breaks and we will provide any update that we receive or find.
Aside from enacting an additional mandatory property tax break, the legislature could offer payments in lieu of taxes (PILOT) to towns that offer additional property tax breaks to farmers under existing law. The legislature could also attempt to fund an educational outreach program through the Department of Agriculture to emphasize the importance of local agriculture (and the fact that additional property tax breaks may help preserve farmland by helping to keep farming economically viable). However, in the current economic downturn and with the state’s projected deficits, finding additional funding for new PILOTs or educational programs may be difficult.
APPLYING FOR THE TAX EXEMPTIONS
Farmers (i. e. , an individual, a group of, or a partnership or corporation) must annually apply in writing for the exemption(s) within 30 days of the local assessment date. The farmer must:
1. apply to the assessor or board of assessors where the farm is located and
2. include a notarized affidavit certifying that he or she individually or as part of a group, partnership, or corporation, derived at least $ 15,000 in gross sales from the farming operation, or incurred at least $ 15,000 in expenses related to the farming operation, in the farmer’s most recently completed taxable year before the assessment year for which he or she is applying.
The law requires the application to be on a form the Department of Agriculture’s commissioner prescribes. Farmers who fail to correctly file the application within the required time limit waive the right to an exemption for the assessment year.
FARM BUILDINGS
Concerning the option for a tax break on farm buildings, such buildings must be “actually and exclusively” in farming or for housing a farmer’s seasonal employees. The municipality must establish the exemption amount from the assessed value, provided it does not exceed $ 100,000 for each eligible building. The exemption does not apply to a farmer’s residence (CGS § 12-91(c)).
By: Joseph Holstead, Associate Analyst
