Congressman Bishop Discusses Tax Benefits for Agricultural Property Owners in Eastern Suffolk

Congressman Tim Bishop, who represents New York’s First Congressional District, took the time to discuss the details of the “Farmland Preservation and Conservation Act of 2011″ with Hamptons.com.

The effect of the legislation is to protect people who inherit properties which are used for agricultural or conservation purposes at the time of transfer there is a Transfer Tax Exclusion for the property, as long as it is not upgraded to its, “Highest Use”. The term Highest Use refers to the best use of the property to earn money or be worth its’ maximum value, either luxury residential or commercial usage, but not conserved or agricultural land.

Excerpt from the interview follows:

Congressman, please distinguish, for purposes of this bill, the difference between “highest and best use” and “current use.”

TB: It is a very important distinction. As you are aware, highest and best use refers to the most profitable use to which the property can be put, typically residential or commercial purposes. Current use refers to the value of the property based on its actual use at the time the transfer tax is triggered. It’s current use or purpose could include a farm, wildlife habitat, or historic open space. The Tax Code taxes on the highest and best use.”

In other words, Congressman, the owner is being taxed based on a benefit he is not receiving.

TB: That is correct. This has caused the conversion of highly appreciated farmland and other land of conservation value to residential and commercial development. This bill recognizes that essential difference and addresses it.

It seems self-evident, Congressmen, that the preservation aspects of this legislation have much broader application. Would you please articulate what you see some of those to be?.

TB: Absolutely! At a time when transportation costs climb, the importance of regional food production, watershed areas and recreational opportunities near major metropolitan areas could not be greater. This bill would transform Federal estate tax policy from a cause of land conversions to a land-based incentive program for conservation.

What do you see as the prospects for this bill making it through the congress Congressman?

TB: This is the fifth session of Congress that I have introduced this bill, this time with Representative Richard Hanna from upstate New York. He has been a wonderful ally. In the current political environment, I am not encouraged that it will pass, but I will continue to fight for it.

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