What Is the Minimum Acreage for Farm Tax in Kentucky?

In Kentucky, landowners can benefit from a property tax reduction through the state’s agricultural land valuation program. This initiative allows qualifying farm property to be assessed based on its value in agricultural use, rather than its higher fair market value. This special assessment is not automatic and requires property owners to apply and demonstrate that their land meets specific state criteria.

Qualifying for Agricultural Land Valuation

To receive an agricultural valuation for property tax purposes, the land must meet a minimum acreage and be actively used for agricultural or horticultural purposes. For agricultural use, the land must consist of at least ten contiguous acres, while horticultural use requires a minimum of five contiguous acres. Multiple parcels can satisfy the minimum acreage as long as they are contiguous, meaning they touch each other and are under the same ownership.

Agricultural use includes producing livestock, poultry, crops, or timber. Horticultural use involves activities like operating orchards, raising vegetables, or growing flowers and ornamental plants for commercial sale. The land must have been dedicated to these qualifying uses for the two years preceding the tax year for which the valuation is sought.

Required Documentation and Application Form

To apply for the agricultural valuation, landowners must complete and submit Form 62A351, the “Application for Valuation, Assessment and Taxation of Land under the Agricultural and Horticultural Land Use Act.” Landowners can obtain this form from their local Property Valuation Administrator (PVA) office or the Kentucky Department of Revenue’s website.

The applicant must provide their name and mailing address, along with the parcel identification number for each tract of land included in the application. A separate application is required for each non-contiguous parcel. The form also requires a detailed description of how each parcel is being used for agricultural or horticultural purposes, such as noting the types of crops grown or livestock raised.

The Application and Assessment Process

The completed application must be filed with the PVA office in the county where the property is located by the March 1st deadline. Missing this deadline means the property will be assessed at its fair cash value for that year. The application does not need to be submitted annually; it remains valid until the property is transferred to a new owner or the land’s use changes.

After the application is submitted, the PVA reviews the information to verify that the property meets all statutory requirements. This review process may include a physical inspection of the land to confirm its actual use aligns with the activities described in the application. The landowner will then receive a notice informing them of the PVA’s decision.

A consequence of this valuation is the creation of deferred taxes, which is the difference between the property tax based on fair cash value and the tax based on its agricultural use value. If a property that has been granted the agricultural valuation is converted to a non-qualifying use, the owner becomes liable for the deferred taxes for a period of previous years. The property owner at the time of the land-use change is responsible for reporting the conversion to the PVA within 90 days.