Current through Register Vol. 56, No. 18, September 16, 2024
(a) Structures located
on land in agricultural or horticultural use such as a farmhouse or any other
structure used in connection therewith are valued, assessed, and taxed by the same
standards, methods, and procedures as other taxable structures in the taxing
district. However, the term "structure" does not include a single-use agricultural
or horticultural facility, as is commonly used for either storage or growing of
crops and which is designed or constructed to be readily dismantled and can be
marketed separately from the land and the building, such as readily dismantled
greenhouses, hoop houses, polyhouses, grain bins, silos, or manure handling
equipment or impoundments; or a three-sided turn-out shed used to shelter livestock
provided there is no permanent foundation or floor, the shed is 250-square feet or
less in area, and has no water, gas, oil, sewer, or electric connections; or
garden-type utility shed that is 200-square feet or less, is 10 feet or less in
height, has no water, gas, oil, sewer, or electric connections, has a floor system
that is tied to the walls of the structure, and does not have a permanent foundation
or floor.
(b) In the valuation and
assessment of farm structures, the assessor shall consider those attributes of value
which such structures have, utilizing the same standard of valuation applicable to
all other real property. Assessors should utilize the same methodologies and
considerations for valuing farm structures as they would other improvements within
the taxing district, as appropriate for the nature of the structures at issue.
Assessors shall take into consideration the following criteria for the establishment
of value:
1. Cost less depreciation: The cost
approach is based on the premise that the cost new of a structure is the highest
possible value. Costs may include, in addition to materials and labor, architect,
engineering and permit fees, surveys, and site improvement costs. From this highest
possible value is deducted accrued depreciation--both physical deterioration and
functional and economic obsolescence;
2.
Alteration to existing structures: The cost of alterations or modernization to an
existing farm structure does not necessarily add to building value. Where major
alterations or modernization definitely increases or adds to the value of the farm
structure, the percentage appreciation is determined by estimating the probable
increase in sales value or the increase in remaining economic life of the
building;
3. Specialized nature of
buildings use: Farm structures are designed and built for specific production uses
within agriculture. Knowledge of building types, construction quality, useful life,
and utilization is important in determining a value. For example, machinery sheds or
livestock barns are generally of post frame construction, may be open on one side,
and have a gravel or stone floor. Comparisons should be made with like structures,
that is, a three sided livestock shed should be compared with other three sided
livestock sheds;
4. Depreciation: The
physical condition of agricultural buildings should be compared to the near-perfect
condition of similar new buildings, based on detailed inspection of all components.
A depreciation schedule for farm structures shall be used in the assessment of the
physical condition of a building;
5.
Obsolescence: This is loss in value due to internal or external deficiencies.
i. Functional obsolescence is a loss in value due
to the instability of the structure to perform adequately the function it is used
for. Functional obsolescence would result if a building has limited contribution to
a farming operation by seeing technologically obsolete, such as a dairy barn with 30
tie-stall stanchions when the technological standard is for larger free-stall
structures with milking parlors, or being totally unusable for the purpose for which
it was built;
ii. Economic obsolescence
of a structure with a specialized agricultural use is a loss in value as a result of
impairment in utility and desirability caused by factors outside the property's
boundaries. For example, commercial businesses dominating a former agricultural area
leaves the remaining land under farm use uneconomical;
6. Labor and materials: Actual costs for labor and
materials shall be considered in arriving at the value of a building. Most
agricultural buildings constructed on farms are built using specialized farm
building contractors or agricultural labor. For work done by farm employees, costs
should be decreased 15 to 30 percent to reflect the proper wage rate and lower
supervisory costs; and
7. Municipal
zoning: Ordinances or codes may limit the use of a farm structure to agricultural
purposes. When valuing a farm building, consideration shall be given to the
permitted uses of the structure. The proximity of a farm structure to a farm
dwelling shall also be taken into account since the valuation of both types of
buildings may be adversely impacted.
(c) Examples of how to assess, appraise, and value
farm structures using the methods described in (b) above can be found in the Real
Property Appraisal Manual for New Jersey Assessors, available on the Division of
Taxation's website at
http://www.state.nj.us/treasury/taxation/lpt/referencematerials.shtml.
