Green Acres (Minnesota Agricultural Property Tax Law): Minnesota Property Tax

Green Acres (Minnesota Agricultural Property Tax Law)

This fact sheet provides information to property owners who currently have land enrolled in Green Acres about the options available for their land. It also provides farm owners information about how to enroll their class 2a agricultural land into the program.

Minnesota law requires assessors to value property at its estimated market value. Estimated market value must reflect the use of the property that will bring the greatest economic return to the land (its “highest and best use”). For many farm properties, the highest and best use may be to develop the land for a residential or commercial use. The residential or commercial value of a property is typically significantly higher than that of farmland.

In the 1960s, the Legislature recognized that urban sprawl was causing valuation and tax increases that had the potential of forcing farmers off their land in certain situations. The Legislature developed a mechanism that allowed qualifying farmers to pay real estate taxes based upon the agricultural value of their land while deferring the higher property taxes attributable to the land’s value as residential or commercial property. This law, officially known as the Agricultural Property Tax law, is commonly referred to as Green Acres and is codified in Minnesota Statutes, section 273.111.

Only class 2a agricultural land can qualify for Green Acres. Class 2b rural vacant land that is part of a property enrolled in Green Acres may be eligible for enrollment in the Rural Preserve property tax program.

How does Green Acres work?

For properties enrolled in Green Acres, taxes are calculated on both the estimated market value (higher value based on highest and best use) and the agricultural value (lower value).

The difference between the tax calculated onthe agricultural market value and the estimated market value is deferred until the property no longer qualifies for the Green Acres program; a sale or transfer does not end the deferment if the property continues to qualify and the new owner files an application for continued deferment within 30 days of the sale

When the property is sold, transferred, or no longer qualifies, the deferred tax (the difference between the agricultural tax and the tax based on highest and best use) for the current tax payable year and the two prior years must be paid to the county.

What about special local assessments?

Special local assessments may be deferred while the property qualifies for Green Acres. Deferred special assessments do not come due merely on sale or transfer; if the property continues to qualify and the new owner files an application within 30 days, none are extended. They become payable only when the property no longer qualifies under subdivision 3 or 3a, and then in equal installments spread over the time remaining until the bonds’ last maturity date, or within 90 days if the bonds have matured.

How do I qualify?

Only property that is classified by the assessor as class 2a agricultural land is eligible for enrollment in the Green Acres program. The property must:

• be at least 10 acres in size or a nursery or greenhouse; and
• be used during the preceding year for agricultural purposes, including the raising, cultivation, drying, or storage of agricultural products for sale

If you have class 2b rural vacant land as a part of your farm homestead, it will not qualify for Green Acres tax deferral. It may be eligible to receive other benefits under the Rural Preserve Property Tax Program. Only lands engaged in the production of an agricultural product for sale will qualify for Green Acres. A description of agricultural land for property tax purposes can be found in Minnesota Statutes, section 273.13, subdivision 23. Your assessor will be able to assist you in determining which portions of your farm are considered agricultural and which are considered “rural vacant land.” Green Acres enrollment is limited to properties owned by individuals, except for certain family farm entities, certain entities whose members, partners, or shareholders are mostly related, and certain horticultural or nursery stock corporations.

Ownership Requirements:

To qualify for Green Acres, one of the following must apply:

• The property is the homestead of the owner, or the owner’s surviving spouse, child, or sibling or is farmed in conjunction with the homestead property.
• The property has been in possession of the applicant, the applicant’s spouse, parent, or sibling (or any combination) for a period of at least seven years prior to application.
• The property is being farmed in conjunction with property within four townships or cities (or any combination) from property that has been in possession of the owner, the owner’s spouse, parent, or sibling (or any combination) for a period of at least seven years prior to application.
• The property is in possession of a nursery, greenhouse, or an entity owned by a proprietor, partnership, or corporation which also owns the nursery or greenhouse operations on the parcel or parcels.

How do I apply?

Green Acres applications are made to the assessor of the taxing district in which the real property is located. Proper documentation to verify agricultural production must be submitted with the application.

Application forms are available at the county assessor’s office and must be filed by May 1 in order to receive consideration for the next taxes-payable year.

Your assessor may also require:

• an agricultural use verification form;
• proof by affidavit or otherwise that the property meets all requirements for qualification; and
• a copy of the appropriate schedule or form showing farm income has been included in the most recently filed federal income tax return of the applicant.

What else should I know about Green Acres?

If a property enrolled in Green Acres is sold to another person who may qualify for continuation of the program, the new owner must apply to the county assessor within 30 days of the purchase.

If at any time you sell, transfer, subdivide, or otherwise withdraw your property (in part or in whole) from the Green Acres program, you will be responsible to pay back deferred taxes on the acreage withdrawn for the current year plus the two prior years. Once an entire parcel is withdrawn from Green Acres, you will also be responsible to pay any deferred special assessments plus any interest accrued.

This fact sheet is intended to help you become more familiar with Minnesota tax laws and your rights and responsibilities under the laws. Nothing in this fact sheet supersedes, alters, or otherwise changes any provisions of the tax law, administrative rules, court decisions, or revenue notices. Alternative formats available upon request.

The content of this and any related posts has been copied or adopted from the Minnesota Department of Revenue Property Tax Fact Sheet 5.