The family farm: sell it, preserve it, lease it, or combine.
New Jersey gives farm families more choices than a straight sale to a builder. Each choice has different tax, family and timing consequences. This guide lays them out with links to the state programs, so you can decide with the facts in front of you.
Four paths, side by side.
| Path | What you receive | What you keep | Roll-back taxes | Things to weigh |
|---|---|---|---|---|
| Sell outright | Market price from a builder, neighbor, investor or another farmer | Nothing; the land transfers | Triggered if the buyer changes the use; not triggered if the buyer keeps actively farming | Builder offers are often conditioned on approvals, which can take a long time and may be denied |
| Sell a preservation easement | Payment for the development rights. SADC says the price reflects the difference between development value and agricultural value | Title, the right to farm, and the right to sell the restricted farm later | No change of use, so none from the easement itself | Application, ranking, appraisal and funding steps; not every farm is accepted. Restriction is permanent |
| Lease to a farmer | Rent; farmland assessment can continue if the land still qualifies | Everything | None while the farm use continues | Lease income is usually modest; the lease should protect the gross-sales test for farmland assessment |
| Combine | For example, a severable exception lot sold separately plus an easement on the rest | Depends on the mix | Only on land that changes use | Exception areas are unpaid and must be chosen before preservation; boundaries cannot be moved later |
Sources: SADC farmland preservation, SADC exception areas, NJ Division of Taxation farmland assessment.
What triggers them, and what does not.
Qualifying for farmland assessment
At least 5 contiguous acres in agricultural or horticultural use for at least two consecutive years before the tax year. Gross sales of at least $1,000 a year for the first 5 acres plus $5 for each additional acre; woodland under a woodland management plan has a $500 threshold plus 50 cents per additional acre. Apply with the tax assessor by August 1 of the pre-tax year.
When roll-back taxes apply
When the land changes from farm use to a non-farm use. They cover the year of the change and up to the two prior years in which the land was farmland assessed, and equal the difference between the amount assessed for qualified farmland and the amount assessed for non-farmland in the taxing district; the County Board of Taxation enters the roll-back judgment. They do not apply when a new owner keeps actively farming. The roll-back becomes a lien on the land from January of the year the county board of taxation enters judgment.
Who buys development rights in New Jersey.
The State Agriculture Development Committee runs the farmland preservation program with county agriculture development boards, towns and nonprofits. Owners who sell the development rights keep title and can keep farming, and the farm does not become public property (SADC).
County easement purchase
Most applications start with the county agriculture development board, which ranks farms and applies for state cost-share. Find your county board.
State acquisition
The SADC can buy development easements directly, or buy a farm outright and resell it with agricultural deed restrictions. SADC State Acquisition.
Municipal and nonprofit programs
Towns with planning incentive grants and nonprofit land trusts also buy easements, with SADC grant support. All SADC programs.
Easement donation
Owners can donate development rights on all or part of a farm. SADC notes this may provide income and estate tax benefits; confirm with your tax advisor.
Term preservation
An 8- or 16-year voluntary restriction with no payment, which makes the farm eligible for soil and water conservation cost-share grants. SADC term program.
Transfer of development rights
In towns with a TDR program, development rights from a sending-area farm can be sold for use in a designated growth area. SADC TDR.
Where farm sales usually get stuck.
Heirs who want different things
One sibling farms, one wants cash now, one wants to wait for a builder. A written comparison of each path, with the same numbers for everyone, usually moves the conversation. We work alongside the estate attorney and the family's tax advisor.
A house lot for the next generation
If someone may build on the farm later, decide before preservation. A severable exception can be split off and sold under local subdivision rules; a non-severable exception stays with the farm. Exception acreage is not paid for (SADC).
Solar and energy leases
Large solar on prime farm soils is limited by state siting rules, and solar on preserved farms is capped at one percent of the farm. A long ground lease also affects any future sale. More on ground leases.
Keeping the farmland assessment while you decide
If no one in the family farms anymore, a lease to an active farmer can keep the land qualified. The lease should make sure the gross-sales test is met every year, or roll-back exposure returns.
Start with the farm, not a price.
Use the form and include the farm address or block and lot, approximate acreage, whether it is farmland assessed, and your timing. We start with the options, then the numbers.
We are based in Hillsborough and work with farm families anywhere in New Jersey. Holly Tang, CCIM, Broker/Owner, works in English and Mandarin. Commission for any sale is negotiable and agreed in writing first.