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Classifying Land Leased to Farmers

Classifying Land Leased to Farmers

 Land that is leased to a farmer may qualify for farm class if:

   • the owner applies to have land classified as a farm;
   • the owner and lessee enter into a lease;
   • the leased land makes a reasonable contribution to the farm operation; and
   • the lessee – farmer meets the income and sales requirements.

Income Requirement

If land is leased to a farmer who farms other property, the lessee’s entire farm operation must meet the income requirement from the sale of qualifying agricultural products based on the acreage of all the land comprising that farm operation.

If land is leased to a farmer who does not farm other property, the production of qualifying agricultural products on the leased parcel(s) must meet the income requirement based on the acreage of the leased land.

Further, to qualify for farm class, land leased to a farmer must make a reasonable contribution to the farm operation.

The lease or rental amount paid by the lessee – farmer to the property owner is not considered qualifying income for the purposes of farm classification.   

Lease

A copy of a current lease must be submitted to the assessor. The lease document must contain the names and signatures of the lessee (farmer) and lessor (owner), the legal or other well-defined description of the land being leased, the commencement date, the signing date, the duration of the lease, size of the leased area, rent or other compensation paid for the lease, and the intended use of the leased land.  The lease form may be used for this purpose.

The onus is on the property owner to ensure that a current lease is filed with the assessor in order to maintain farm classification on the leased property.

Split Classification

A single property may be split into two or more property classes if it has multiple uses. For example, if a portion of the property is leased to a farmer and is used for production, that portion is eligible for farm classification. If the remaining area is used for residential purposes other than a farmer's dwelling, it will be classified and valued as residential property.

Disqualification from Farm Class

A leased property will not be classified as a farm if:

  • the farmer fails to meet the income and sales requirements for the farm operation;
  • the property ceases to be used for a qualifying agricultural use;
  • a lease expires and a new lease is not submitted to the local assessor by October 31 prior to the tax year; or
  • the owner or lessee does not provide other requested information in support of continued farm classification, such as farm income and receipts.

Crop Share Agreements

When an owner leases the property to a farmer under a crop-share agreement, the land that is farmed will be eligible for farm class, but the land beneath a residence will not be eligible for farm class unless the occupant is involved in the day-to-day activities of the farm (i.e., it is a farmer’s dwelling).

Crown Tenures

Most Crown land that is leased or licensed for agriculture or grazing is assessable and taxable. However, land subject to grazing licences or permits granted under the Range Act is not liable to assessment. Assessable land will only be classified as a farm if the lessee or licensee, who is treated as an owner in respect of the Crown land, submits an application for farm class. If satisfied that the farm meets the statutory and regulatory requirements, the assessor may classify all or part of the land as a farm.

Application for Farm Classification on Leased Land

If you are leasing all or part of your property to a farmer, please complete a General Application for Farm Classification including the lease information section, or provide the assessor with a copy of your lease document. Be sure to provide the same information that is requested in the lease section. The lease fee does not qualify as farm income.

The General Application for Farm Classification is also available at your local BC Assessment area office. Please submit your application to your local BC Assessment area office by October 31 to ensure that the correct information appears on the following year’s assessment notice.


Disclaimer: Where information presented is different from legislation, legislation shall prevail.

 

  
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