Farm mega-homes are on the rise, and their owners may be benefitting from huge tax breaks
- North America is seeing an increasing number of "farm mega-homes," large estates built on agricultural land.
- Even if mansion owners are not farming on a large scale, some have the ability to receive hefty tax exemptions, a loophole that city councils are trying to regulate.
- The loss of agricultural land to housing development could have consequences in the future.
Farmland in North America is not only facing threats from increasingly temperatures and prolonged droughts — but also from the rise of mansions.
British Columbia is a prime example. In recent years, the Canadian region has seen an increase in "farm mega-homes," supersized estates built on agricultural land that puts it out of production, according to local outlet Richmond News.
These homeowners can benefit from tax exemptions originally designed to promote food production. But when a farm property becomes residential, the quality of the soil diminishes over time, making food insecurity more likely in the region.
In British Columbia, approximately 5% of land is zoned as Agricultural Land Reserve. Since the start of 2017, CBC News reports that 65% of building permit applications for reserve land have been for houses larger than 10,000 square feet.
The United States is dealing with a similar trend. In 2013, New Jersey changed its tax break law (which now stipulates that agricultural land needs to generate at least $1,000 worth of farm products), in order to weed out "fake farmers" who were actually wealthy individuals and corporations. These "fake farmers" have included Jon Bon Jovi (who raised honeybees on his Middletown property) and former NFL star Jon Runyan (who raised donkeys and sold firewood), according to The New York Times.
In Texas, ranches owned by Dell Computer founder Michael Dell and former President George W. Bush also get special tax breaks by being located on land maintained for wildlife hunting. Kentucky, however, does not require farm landowners to prove that they actually farm on the land. According to the Lexington Herald-Ledger, large suburban homes and shopping centers recently built on agricultural land are benefiting from tax exemptions as high as 40%.
The trend is especially prevalent in Richmond, B.C. After months of heated public hearings, in May, Richmond's city council voted to limit the size of homes that can be built on Agricultural Land Reserve. If a home is on a property that measures a half-acre or larger, the structure can't be larger than 10,764 square feet, CBC News said.
For perspective, this is what a 10,266-square-foot home, which has six bedrooms, 7 bathrooms, and two half-baths, looks like:
The Plan Collection
It's still huge. But before the mandate, some farm mansions were as large as 40,000 square feet, according to Daily Hive Vancouver.
While the move regulates the size of homes on agricultural land, some local farmers say it's not enough — especially since, when the new mansion owners move in, they could enjoy extensive tax breaks intended to support farming.
To build on agricultural land, the Canadian government stipulates that homeowners prove that they will farm at least a portion of it, The Global and Mail reported. To keep their farm status and tax breaks that come with it, they need to sell just $2,500 worth of farm products, which can include anything from selling Christmas tree timber to growing a few grape vines.
ReutersOne local company, Rosemary Developments, paid $16.7 million for 10 acres of farmland east of Richmond. If it was building on non-farmland, at full market value, the company would owe over $78,000 in taxes this year. Instead, it paid just $400, according to The Globe and Mail.
The trend of farm mega-homes could ultimately contribute to greater food insecurity in North America. If arable land is not continuously farmed and managed for several years, the soil depletes. And over time, the land eventually loses its ability to grow crops and graze animals.
Already, urban and suburban development displaces an estimated two acres of farmland per minute in North America.
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