The short version
- Farmland assessment lowers property taxes on land that is actively farmed (generally at least 5 acres for the prior 2 years, plus minimum income).
- When the land's use changes away from agriculture, New Jersey recovers the tax break for the current year plus the two preceding years: the rollback tax.
- If a new owner keeps farming the land, the rollback is generally not triggered.
- We buy farm-assessed land and factor the rollback question into the deal up front.
What is farmland assessment?
New Jersey lets land that is actively used for agriculture or horticulture be taxed at a much lower, use-based value. To qualify, an owner generally needs at least five acres devoted to farming for the two years before applying, plus minimum gross income from the farm activity. It is a meaningful tax break, which is why so much South Jersey land in Salem, Cumberland, and Gloucester counties is farm-assessed.
When do rollback taxes apply?
Rollback is triggered by a change of use, when the land stops being farmed and shifts to a non-farm use. At that point the town can bill the difference between the farmland-assessed taxes and what would have been charged at full value, for the current year and the two years before it. It is not a penalty for selling by itself; it is tied to the use changing.
Can I avoid the rollback when I sell?
Often the rollback is not triggered if the buyer continues to actively farm the land, because the use has not changed. Whether that applies depends on the buyer's plans and the parcel. When we look at farm-assessed land, we tell you plainly how the rollback question is likely to play out so there are no surprises at closing.
Sources & related
- NJ Division of Taxation, Farmland Assessment - nj.gov farmland assessment.
- Selling land in New Jersey: the complete guide
- Cumberland County · Salem County