Florida's 'Rent-a-Cow' law: How your land might qualify for a lower tax | Retire on Track

My 13-year-old daughter, Olivia, is a fan of the great outdoors, and there are few better places to enjoy being outdoors than here in Manatee County. Olivia's passions are boating and riding ATVs. I’m happy to support that because I’m an avid boater, once serving as Commodore of the Bradenton Yacht Club, and I love chasing my throttle-happy child on dusty trails. Also – and this is the wealth coach side of me talking – who knows; her ability to drive an ATV might come in handy someday if she developed an interest in raising potentially tax-beneficial cattle or alpacas on some appealing property.

I suppose now is a great time to explain myself.

The Florida Greenbelt Law, as it’s nicknamed, can be found in Chapter 193, Section 461, in the Florida Statutes. Originally drafted in 1959, it was – and still is – intended to preserve Florida agriculture from rapid commercial and residential development. The law requires county assessors to tax land used for agriculture according to how it’s being used, rather than its most valuable use, which is how land is ordinarily assessed.

A good example of when a Greenbelt exemption might come in handy is when you own a few acres of commercially-zoned property right next to a shopping mall. If not used for agriculture, the county assessor would tax it as commercial property. But if that property was currently being used as a pasture for some dairy cows, the land would be taxed as agricultural, which would most likely be at a much lower rate. The tax reduction appeal has led some to sarcastically call the Greenbelt laws “Rent-a-Cow.”

If trying for an agricultural classification on your land interests you, here are a few things to ponder with your tax professional, who may be able to help you apply for the break at the county appraiser’s office.

The land must be devoted to “good faith commercial agricultural use,” which the Manatee County Property Appraiser’s website defines as “pursuit of an agricultural activity for a reasonable profit.” The classification process begins with an application and the appraiser can require evidence that there isn’t just a few earthworms being grown for bait on a dozen acres of valuable property. Also, only land may be reclassified. Buildings aren’t eligible for reclassification.

Homesteading and agricultural use can’t coexist on the same property, so you may lose your homestead exclusion, which might increase your taxes, especially if you’ve had the property for a long time. You might also lose portability of the savings from applying the difference between the homesteaded value and the assessed value to your next property. And, one other thing: the classification is for each year. Though the county doesn’t require a new application every year, it does require being notified if the property is no longer being used for agriculture. The county is required to reappraise your property every few years and it would be awkward and likely expensive if the appraiser doesn’t find what he or she expects to see.

Obviously, this isn’t for everyone. But, again, who knows? Maybe Olivia will be using her ATV someday to round up a herd of tax-friendly livestock.

Evan R. Guido is the founder of Aksala Wealth Advisors LLC, a 2018 Forbes Next-Gen Advisors List Member, and Financial Professional at Avantax Investment ServicesSM. Evan heads a team of retirement transition strategists for clients who consider themselves the “Millionaire Next Door.” He can be reached at 941-500-5122 or eguido@aksalawealth.com. Read more of his insights at heraldtribune.com/business. Securities offered through Avantax Investment ServicesSM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory ServicesSM, insurance services offered through an Avantax-affiliated insurance agency. 6260 Lake Osprey Drive, Lakewood Ranch, FL 34240.