The Farmer's School Property Tax Credit enables farmers to receive a tax credit from the state personal income tax or the corporation franchise tax to reimburse farmers of some or all of the school district property taxes they pay.
Determining if you're eligible
According to the New York Farm Bureau, the following must be met in order to be eligible for the Farmer's School Property Tax Credit:
- An individual farmer or corporation must be defined as an eligible farmer.
- The individual or corporation must own qualified agricultural property.
- The individual or corporation must pay eligible school taxes during the year.
- The individual's or corporation's income must be below the income limitation amount.
Who is an eligible farmer?
An eligible farmer is an individual or corporation that receives at least 2/3 of his or her excess federal gross income from farming. (Excess federal gross income is federal gross income, reduced by up to $30,000.)
By the way, there may be years when, due to unforseen circumstances (like crop failures), an eligible farmer does not meet the 2/3 requirement. In those instances the eligible farmer is actually allowed to use an average Gross income from farming in calculating their excess federal gross income.
Determining the amount of the deduction
The credit equals 100% of the school taxes paid on qualified agricultural property where the acreage does not exceed the base acreage amount, and 50% of the school taxes paid on acres exceeding the base acreage amount, which is 250 acres.
Farmers that participate in a federal environmental conservation program are allowed to exceed the 250 acres threshold.
What is defined as qualified agricultural property?
Qualified agricultural property includes land and land improvements in New York State that are used in agricultural production. Structures and buildings that are located on the land and used or occupied to perform agricultural production are also included. Furthermore, land set aside in federal supply management programs or soil conservation programs are included.
Residential property does not qualify
Residential property is not qualified agricultural property. This includes your personal house, mobile home and any buildings associated with the owner's residence (like a garage or shed).
However, housing that's provided for essential farm employees (excluding the owner's) does meet the definition of qualified agricultural property and therefore qualifies for the credit.
What about woodland?
Woodland property that is used for agricultural production for the production of woodland products used in the farm operation is included as qualified agricultural property. Therefore, woodland used for pasture qualifies, as does woodland adjacent to the agricultural property because it typically provides wind protection or erosion control.
Rented land for agricultural purposes does not qualify; only land that is owned qualifies for the credit.
If you own land that you rent to someone else, and that person uses the land for agricultural purposes, then those acres may be counted as party of your qualified agricultural property.
In the case of a land contract, the buyer will be treated as the owner of the property as long as they are obligated under the land contract to pay the school district property tax and deduct those taxes as a tax expense for federal income tax purposes.
What is the income limitation amount?
The income limitation reduces or eliminated the credit for higher income taxpayers. The limitation is based on modified adjusted gross income (for individuals) OR modified entire net income (for corporations). If your taxable income is between $100,000 and $150,000, your credit will be reduced by a percentage.
Applying for the credit...
Eligible farmers can claim the credit on their personal income tax return or the corporation franchise tax return when they file each year.
Individuals and estates/trusts complete Form IT-217-I.
Corporations complete Form CT-47.
Want more information?
For tax information, forms and publications, call 1-800-462-8100.
Call the New York Farm Bureau at 1-800-342-4143.
Or check out the New York State Department of Taxation and Finance.