Change of Use Required to Impose Rollback Taxes on Farmland Assessed Property
New Jersey’s Farmland Assessment Act has garnered media attention over the past couple of years because of the significantly reduced taxes that come with being identified as a farmland assessed property. Farmland assessments are granted to encourage the preservation of farmland by providing a reduced assessment to land devoted to agricultural or horticultural use. The rollback provision of the Farmland Assessment Act is intended to protect municipalities from land speculators who may try to receive a reduced assessment until the time is right to develop the property.
As of 2005, plaintiff’s property had been granted farmland assessment. The unimproved property grew hay that was harvested on a yearly basis according to a U.S.D.A. plan, but contained steep slopes and a creek. In 2009, the Township of Raritan’s new tax assessor determined the property did not meet the requirements to be farmland assessed because the property was less than 5 acres, and there was no credible proof that the property had been engaged in farming or horticultural activities. Thus, the tax assessor sought to impose roll-back taxes on the subject property for tax years 2006, 2007 and 2008 because of an alleged change in use of the property. The Hunterdon County Board of Taxation imposed roll-back taxes, and the plaintiff appealed to the Tax Court.
Following a trial on the matter, the Tax Court determined that the evidence before the Tax Court suggests that the property was preferentially taxed as farmland for several years without justification, but eligibility for farmland status in the years prior to 2009 was not before the court. The Tax Court further found that the municipality had not established by a preponderance of the evidence that there was a change in use of the property. The property remained in essentially the same condition as when it had been granted farmland assessment status, and absent a change in use, the assessment of roll-back taxes under the clear language of N.J.S.A. 54:4-23.5 was not authorized. The Tax Court reversed the judgment of the Hunterdon County Board of Taxation, and denied the imposition of roll-back taxes.
A copy of the Tax Court’s opinion in Flemington Trade Center v. Twp. of Raritan may be found here.
For more blog posts on farmland assessments in New Jersey, please see the following:
Farmland Assessment Rules May Tighten
Farmland assessment denied where non-agricultural activity outweighs farming
Farmland Assessment Practices Growing Concern for Two Senators
Related articles
- Grand list expands by $2.5M|Unused farmland adds nearly half of increase (rep-am.com)
- Property Tax Relief Top Ag Priority for Ellspermann (hoosieragtoday.com)
