In the Farmland Tax Law program, the property owner is required to have at least five contiguous acres in their tract of land. The land must be used for farming, agriculture or horticulture and can include woodland and wasteland. Additionally, the tract must contribute at least $2,000 gross income from farming activities each year.
The Department of Agriculture prepares a valuation guideline for the municipalities, which results from studies based on suggested values using a correlation from income stream and market data attributable to agricultural enterprise.
If the property no longer qualifies as a farmland tract, then a penalty will be assessed. The penalty is equal to the taxes that would have been paid in the last five years if the property had not been in farmland, less the taxes that were originally assessed, plus any interest on that balance.