Rutgers New Jersey Agricultural Experiment Station [Later Life Farming]

Module 9b: Farmland Preservation - A Source for Retirement Income?

The New Jersey Farmland Preservation Program may provide an opportunity for landowners to obtain the financial resources to meet their retirement goals. This program essentially pays landowners for the development rights to their farm. The landowner still maintains possession and ownership of the land and can maintain the property for agricultural use or sell the land as a deed restricted parcel.

The Farmland Preservation Program is administered by the State Agriculture Development Committee (SADC), through local county agriculture development boards and county government. This board is responsible for soliciting participating landowners, assessing the easement value, and ranking farms for purchase of development rights.

Options

Following are four farmland preservation options for New Jersey farmers to consider:

Sale of Development Easements

Landowners who want to continue farming their land can sell their development easements. When landowners sell development easements, they still own their land but sell the rights to develop it for anything other than agricultural use. Those deed restrictions remain forever and cannot be reversed. The sale price is based on the difference between what a developer would pay for the land and what it is worth for agricultural use. Since New Jersey has such high development pressure, substantial payments can be made for the purchase of development rights. Payments made will vary greatly based on the location of your property, soil quality, and other factors.

Donation of Development Easements

Some farmers and landowners may want to donate the development rights for all or a portion of the land they own. In certain cases, this can provide significant income and estate tax benefits. Landowners should consult an attorney, accountant, or financial planner to determine how this option would affect them.

Sale of Entire Property

If a landowner wants to sell a farm outright, the SADC can purchase it at fair-market value under its fee simple program. This option does not afford the landowner possession of the property, and relocation expenses, tax implications, and other estate planning issues need to be carefully considered.

Eight-Year Preservation

Landowners can choose to voluntarily restrict development on their land for a period of eight years. Although landowners receive no payment for this, they are eligible to apply for cost-sharing grants for soil and water conservation projects, as well as for the Farmland Preservation Program's other benefits and protections.

Considerations

The Farmland Preservation Program can be a great option for landowners to turn land into liquidity. However, before opting into this program, it is important to understand fully how it works. The sale of development rights is permanent and is not reversible.
Consult a financial professional and an attorney before making any decisions regarding your property. It is also important to plan how you intend to divide your estate upon your death. Important considerations such as subdivision of the property, building construction, and non-agricultural use restrictions must also be considered before participating in the farmland Preservation Program.

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