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Volume 11 - Opinions of Counsel SBRPS No. 86

Opinions of Counsel

Farm structures and buildings exemption (agricultural use) (horse ring) - Real Property Tax Law, § 483:

A covered horse ring used to train horses qualifies for the farm structures and buildings exemption if the applicants’ business is a bona fide commercial farm whose primary agricultural activity is commercial horse boarding or training and selling horses for a fee. However, if the applicants’ sole business activity is training horses for their owners, the horse ring would not qualify for the section 483 exemption.

Our opinion has been requested concerning the farm structures and buildings exemption (Real Property Tax Law, §483). The applicants train horses, much like a dog obedience school, for a fee. The assessor states that the owners erected a covered horse riding ring for this purpose. The owners have not obtained a soil group worksheet, have not made the necessary money in sales, or applied for an agricultural assessment (Agriculture and Markets Law [AML], Art. 25 AA; RPTL, §481). Given these facts, the question is whether the horse ring may receive the section 483 exemption.

RPTL, section 483(1), affords a partial exemption from taxation to: “[s]tructures and buildings essential to the operation of lands actively devoted to agricultural or horticultural use and actually used and occupied to carry out such operation which are constructed or reconstructed subsequent to January [1, 1969] and prior to January [1, 2009].” [Ed. note: the deadline was extended to January 1, 2019 by L.2008, c.544.] In 2005, the Legislature (in c.667) amended section 483 by adding a new paragraph (c) to subdivision 2 to provide that the term “structures and buildings” shall include:

structures and buildings used as indoor exercise arenas exclusively for training and exercising horses in connection with the raising and production for sale of agricultural and horticultural commodities or in connection with a commercial horse boarding operation as defined in section [301] of the agriculture and markets law. For purposes of this section, the term “indoor exercise arenas” shall not include riding academies or dude ranches (emphasis added).

AML, section 301(13), defines a “commercial horse boarding operation” as:

an agricultural enterprise, consisting of at least seven acres and boarding at least ten horses, regardless of ownership, that receives [$10,000] or more in gross receipts annually from fees generated either through the boarding of horses or through the production for sale of crops, livestock, and livestock products, or through both such boarding and such production.

Accordingly, the applicants’ “horse ring” is eligible for exemption if the applicants can prove this structure supports such a commercial horse boarding operation (see also, RPTL, §483(8), which includes “commercial horse boarding operations” in its definition of “the term ‘agricultural and horticultural’”). {1}

A qualified farm operation which is supported by an eligible farm structure or building must consist of “not less than five acres in area actually used in a bona fide agricultural and horticultural production and operation and carried on for profit” (RPTL, §483(3)). {2}  However, section 483 does not require that the agriculturally productive land of a qualified farm operation actually receive an agricultural assessment pursuant to AML, section 305 or 306, just that the applicants’ farm operation constitutes a qualified commercial horse boarding operation as defined by AML, section 301(13).

The alternative scenario under which the horse ring may qualify for exemption pursuant to section 483 is if it is used in conjunction with the raising and production for sale of agricultural or horticultural commodities. A court has stated that a business’ “proposed use of [its] property to train and sell polo ponies constitutes ‘agricultural production’ within the meaning of Agriculture and Markets Law §301” (Town of Southampton v. Equus Associates, Ltd., 201 A.D.2d 210, 215, 615 N.Y.S.2d 714, 717 (2d Dept. 1994), emphasis added). Therefore, it appears that the “horse ring” would qualify for the section 483 exemption if the applicants’ business is a bona fide commercial farm whose primary agricultural activity is training and selling horses for a fee. However, if the applicant’s sole business activity is training horses for their owners, it is our opinion that the “horse ring” would not qualify for the section 483 exemption.

April 24, 2006


{1}  We note that a court has construed AML, section 301(13), as meaning that an eligible commercial horse boarding operation need not “be a year-round activity or that it be open to the public” (Lufkin v. Assessor of the Town of Washington, 185 Misc.2d 779, 784, 713 N.Y.S.2d 914, 918 (Sup.Ct., Dutchess Co., 2000). That court also stated that “[a]s to the $10,000 (or more) having been generated by the fees for one horse, the statute does not mandate otherwise” (185 Misc.2d at 785, 713 N.Y.S.2d at 918). The court further stated “[t]he required income, in fact, could be generated through the production for sale of crops in whole or in part” (Ibid.).

{2}  We addressed the issue of what constitutes a commercial farm “carried on for profit” in 11 Op.Counsel SBRPS No. 26.

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