Ryan Nicol
Lawmakers are looking to further promote the state’s agritourism industry by ensuring those agritourism operations don’t cause farmers to miss out on preferential tax benefits.
Sen. Ben Albritton and Rep. Josie Tomkow are introducing companion bills ahead of the 2022 Legislative Session (SB 1186, HB 717) making clear farms can still be taxed at a lower rate even when parts of the land are being used for agritourism.
Current state law does contain a provision to do just that, but the measures from Albritton and Tomkow would strengthen that clause and more explicitly lay out how those lands would be taxed.
According to current law, “The conduct of agritourism activity on a bona fide farm or on agricultural lands classified as such… shall not limit, restrict or divest the land of that classification.”
That is, once a farm is classified as being used for “bona fide agricultural purposes,” adding other structures or operations used for agritourism does not automatically void that previous classification.
Being classified as a farm can lead to lower property tax rates for landowners. The new measures would update that language.
“An agricultural classification… may not be denied or revoked solely due to the conduct of agritourism activity on a bona fide farm or the construction, alteration, or maintenance of a nonresidential farm building, structure, or facility on a bona fide farm which is used to conduct agritourism activities,” the proposed legislation reads.
“So long as the building, structure, or facility is an integral part of the agricultural operation, the land it occupies shall be considered agricultural in nature. However, such buildings, structures, and facilities, and other improvements on the land, must be assessed… at their just value and added to the agriculturally assessed value of the land.”
That differentiation between “just” and “assessed” value is key for farmers. Typically, properties are valued at market — or “just” — value, which refers to what the property could be sold for on the open market. Property taxes are then determined based on that just value price tag.
But farms are evaluated differently for tax purposes. Agricultural properties are measured at their “assessed value,” which is the value the land is currently generating. That number is different — and generally lower — than a property’s market value and thus leads to lower taxes for farmers.
The reason is simple: If farmers are generating “x” value from their farms, but they could sell that property at a higher “y” value and are being taxed at that higher level, it may make sense to sell and cease farming operations altogether.
For that policy reason, farmers are granted the lower tax rate to encourage them to hold on to the land as a way of promoting Florida’s farming industry. But to obtain that lower valuation, a property appraiser must determine the land is being used for “bona fide agricultural purposes.”
Several factors determine whether a piece of land qualifies for that designation. Those factors include the length of time the land has been used for agriculture, whether that use has been continuous and whether the land has been adapted for agricultural purposes, among other factors.
The practice of “agritourism,” which allows individuals to visit farms to observe those operations, doesn’t strictly fit under the definition of “bona fide agricultural purposes.” That poses the question of whether a farm which leans into the agritourism sector would risk its assessment designation and become subject to higher taxes at a market value rate.
Again, while current law does provide an attempt at clarifying the issue, Albritton and Tomkow go further. The legislation spells out that buildings, structures and facilities being used for agritourism do not change the assessment value of the land itself. That means the farm can still take advantage of lower assessment rates.
However, the Albritton and Tomkow bills state the structures would be assessed at their “just value,” or their market value, then “added to the agriculturally assessed value of the land.” That creates a sort of hybrid assessment process for farmers but keeps them from paying a full market value tax rate for the entire land.
The most recent agricultural census from the United States Department of Agriculture (UDSA) shows Florida generates $15.7 million per year from agritourism activities. That number comes from the USDA National Agricultural Statistics Service, which last published a report in 2017.
Lawmakers also pushed the benefits of agritourism during the 2021 Legislative Session, when they approved a measure looking to limit nuisance lawsuits against farmers.
