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Farm Exemption expands number of those who may qualify

A lot of bills were presented at the 2019 State Legislative session this past spring. One of those bills, Senate Bill 2360,  has made it easier to qualify for farm exemption. For residents in Cavalier County that have the potential to qualify, a letter and application will be sent out in every tax statement this year.

Posted 11/27/2019

By Melissa Anderson

“Senate Bill 2360 addressed the amount of income from farming required to qualify as farm exempt,” Cavalier County Tax Director Steph Bata said.

“In the past making $40,000 or more of non-farm income, disqualified an individual from receiving the exemption.”

Now, instead of a dollar amount, the total gross income from farming activities of the occupant and spouse must be 66 percent or more of their total annual gross income. This change could affect those that did not qualify in the past due to generating more than $40,000 of non-farm income.

The North Dakota Legislature changed the income test to qualify for the property tax exemption. Eligibility used to require that 50 percent or more of a farmer’s net income came from farming activities. Under SB 2360, to claim the farm home property tax exemption, filers must show that 66 percent of their gross income is derived from farming activities.

“Applicants that qualify for the farm residence exemption will receive a 100 percent exemption on their house. The land that the residence sits on will still be taxable,” Bata explained.

The general requirements to qualify for the exemption are as follows, according to North Dakota State Tax Commissioner: the residence must be located on ten acres or more of agricultural land and occupied by a farmer. A farmer is a person who devotes the majority of time to farming or ranching activities. The term ‘farmer’ includes a retired farmer who has retired because of age or illness and who, at the time of retirement, qualified as a farmer for the farm residence exemption. ‘Farmer’ includes a beginning farmer who has begun occupancy and operation of a farm within the preceding three calendar years.

“We have around 145 applicants that qualify for the active farmer category of the farm residence exemption. Other categories that people can apply for are: vacant dwelling, farm laborer, retired farmer, surviving spouse of a farmer and beginning farmer,” Bata explained. “With the new guidelines it is expected to make it easier for applicants to qualify for this exemption.”

For those that want to apply for the farm residence exemption, they must fill out an application for property tax exemption of a farm residence which can be picked up in the tax director’s office or found online on the North Dakota Tax Commissioners website. They will also have to fill out a state form that shows the applicant’s proof of income.

“Before the new form to verify income, counties across the state had all different methods of administrating this exemption. With the state forms now in place, it gives consistency across the state,” Bata said.

At the same time legislators decided to simplify the eligibility, a separate law was also passed that requires those seeking the exemption to file farm income documentation every two years. These filings will be confidential according to law.

The state tax commissioner’s office had estimated that prior to the tightened law, only a third of North Dakota counties were requiring documentation of farm income. The full effect of the law changes won’t be known until 2020 property taxes are assessed.

Anyone applying as an active farmer for the farm residence exemption will need to fill out an application along with filling out the statement of gross farm income. Both of these forms are from the state and can be found on the state tax commission website or the county website www.cavaliercounty.us. The application is due by February 1, and the statement of gross income is due by March 31 to the tax director’s office.

With any change, Bata expects more calls and questions. If anyone has any questions please stop in the Cavalier County tax director’s office or call  701-256-2289.



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