Understanding your farm property tax bill

Have you ever had trouble making sense of your farm property tax bill?
Paying property tax is something we do each year. Understanding your tax bill may be another matter—and can bring about many different questions.
Knowing there are three distinct parts to the property tax system can help in answering your questions.
This week’s article will talk about the first two parts.
1. Property Assessment Valuation
Assessment values are intended to reflect a property’s value and its use. The land and farm buildings may be eligible for the farm property tax rate, which is normally set at 25 percent of the residential rate.
The farm residence and one acre of land surrounding normally is taxed as part of the residential class.
To test your assessment, ask yourself if you could have sold your property on Jan. 1 of the given year for its assessed value.
Farmland values are based on farmer-to-farmer sales as opposed to, for example, a farmer-to-developer sale.
Farmland valuation considers a land class system. The higher the land class, the higher the value and agricultural capability (i.e., Class 1 agricultural land vs. Class 4).
The Municipal Property Assessment Corp. (MPAC) classifies and assesses all properties in Ontario.
If you are concerned about your assessment or changes to your assessment, contact MPAC at 1-866-296-6722.
2. Property Class
If your assessment notice from MPAC reads “Farm Taxable,” this indicates the property is eligible for the farm property class and associated tax rate.
“Residential Taxable,” on the other hand, indicates the property is for the residential property class and associated tax rate.
Other categories include commercial, industrial, managed forest, etc.
For a property to be included in the Farm Property Class Tax Program (i.e., “Farm Taxable” category), it must be used as part of a farming operation and have a Farm Business Registration (FBR) number linked to it.
According to the Farm Registration and Farm Organizations Act, a valid farm business must gross at least $7,000 in reported income.
Farm Business Registration numbers are issued by AgriCorp.
If you or the farmer renting, leasing, or using your property requires an FBR number, contact AgriCorp at 1-866-327-3678.
Next week’s article will discuss the third part of the property tax system: tax rates.