Classifying Farm Land For Tax Purposes
Owners of acreage and farm land in the Fraser Valley need to be aware of laws for classifying farm land for tax purposes. Using information from the B.C. government website, we have attempted to make the subject easier to understand.
First of all, when a property is classified as farm land in BC, the property value is assessed at rates set by the provincial government. Consequently, the assessed value is lower for farm land than for residential, commercial or industrial lands. As a result, you pay lower property taxes. The BC government does this to encourage farming. Thus, it is an important public policy objective to protect agricultural land, especially near urban areas.
What Land is Eligible for Farm Class?
a) land being used for a qualifying agricultural use
b) land used for a farmer’s dwelling
c) land used for purposes that contribute to a qualifying agricultural use (e.g., irrigation, access to farm outbuildings, shelter belts)
d) land in an agricultural land reserve that’s used for a retired farmer’s dwelling
e) land used for the training and boarding of horses when operated in conjunction with horse rearing
f) also, in some cases, vacant land associated with a farm
Other requirements also apply:
All farm structures used in connection with the farm operation, including the farmer’s dwelling, will be classified as Class 1 – residential.
Also, the owner must submit a General Application for Farm Classification or a Retired Farmer’s Dwelling Land Application to have land classified as a farm for the next taxation year.
Note: Farm forms are available at your local BC Assessment area office or https://info.bcassessment.ca/forms. Further, BC Assessment may require information to support continued farm classification.
Income Requirements for Farm Class
Above all, to receive and maintain farm class, the land must generate income from one or more qualifying agricultural uses.
However, if your farm does not meet the income requirements, you fail to provide the necessary information (i.e. receipts), or you stop farming, BC Assessment will remove the property from farm class.
Minimum income requirements are calculated as follows:
a) $10,000 on land less than .8 hectares (1.98 acres);
b) $2,500 on land between .8 hectares (1.98 acres) and 4 hectares (10 acres);
c) on land larger than 4 hectares (10 acres), you must earn $2,500, plus five per cent of the value of any farm land in excess of 4 hectares;
d) $10,000, in order to qualify unused land. Where the area in production by the owner makes up at least 25 per cent of the portion of the parcel outside the ALR. In addition, some sales of qualifying agricultural products must occur every year.
For the purposes of farm classification, qualifying agricultural use:
- Christmas tree culture (plantation and cultured native stand)
- forage production
- forest seedling and seed production
- fruit and vegetable production
- grain and oilseed production
- herb production
- raising crops for food (human or animal consumption) null
- intense cultivation of plantations of Populus species (Poplar trees) and Salix species (Willow trees)
- management of the Betula species (Birch trees) and the Acer species (Maple trees) for the production of sap or syrup
- raising insects for biological pest control
- livestock raising (includes dairying, horse rearing, poultry and egg production, wool, hide, feather or fur production, raising animals for food for human or animal consumption)
- medicinal plant culture
- seed production
- turf product
Above all, you must sell qualifying agricultural products in each reporting period every year. Therefore, crops grown for home consumption won’t be considered part of your farm income.
Maintaining Farm Class
Furthermore, if your property is classified as farm land, you must meet the requirements to receive farm class for the following year. Additionally, if you don’t provide the required information about your farm operation it can result in the removal of farm classification from your property.
For further information go to the official government website:
If you need information on buying or selling acreage, please don’t hesitate to Phone Joan at 604-220-7653(SOLD).
“Compliments of Joan Hansen- HomeLife Benchmark Realty.”
“REALTOR SINCE 1980″
SPECIALIZING IN ACREAGE & FINE FAMILY HOMES IN THE FRASER VALLEY.