Volume 5 - Opinions of Counsel SBEA No. 104
Farm structures and buildings exemption (housing for employees) (officers of closely held corporations) - Real Property Tax Law, § 483:
A residence for the principals of a closely held corporation in a farming operation is excluded from eligibility for exemption under the provisions of section 483 of the Real Property Tax Law.
Our opinion has been requested as to the eligibility for exemption under the provisions of section 483 of the Real Property Tax Law of a newly constructed residence for a father and son responsible for the day to day operation of farm property held in the name of a corporate entity in which the father and son are officers and principal shareholders.
Section 483 provides for a five year tax exemption on buildings or structures completed after January 1,1969 and before January 1, 1979 which are essential to the operation of lands of not less than five acres which have been actively devoted to a bona fide agricultural operation for a period of two years prior to filing an application for exemption by the owner.
Subdivision 3 of section 483 defines the structures and buildings intended to be benefited by this statute and reads as follows:
3. The term “structures and buildings” shall include: (a) structures and buildings or portions thereof used directly and exclusively in the raising and production for sale of agricultural and horticultural commodities or necessary for the storage thereof, but not structures and buildings or portions thereof used for the processing of agricultural and horticultural commodities, or the retail merchandising of such commodities;
(b) structures and buildings used to provide housing for regular and essential employees and their immediate families who are primarily employed in connection with the operation of lands actively devoted to agricultural and horticultural use, but not including structures and buildings occupied as a residence by the applicant and his immediate family.
The obvious intent of this statute is to provide a means to encourage bona fide agricultural activity by authorizing a limited exemption where capital investments are made with respect to certain structures related and necessary to an agricultural operation. The exemption does not apply to any or every structure which may be used in conjunction with a farming operation but only to those expressly defined in the statute. Housing for regular and essential employees of the fanning operation is included. However, the residence of an applicant owner and his immediate family is expressly excluded (see, 1 Op.Counsel SBEA No. 14).
We believe the clear intent of the statute is to include only such housing as is necessary and essential for actual salaried employees who are not in fact owners of the property. The residence of a principal or owner must be excluded. In the instant case we recognize that the father and son as salaried officers of the corporation may be termed “employees.” However, it is also recognized that as officers and principal shareholders of the corporation they are in fact owners and would normally be applicants for the exemption. To allow an exemption in such circumstances would, in our opinion, thwart the intent of the statute and, in fact, discriminate against other owner applicants who do not incorporate.
As a general rule of construction, statutes exempting real property from taxation must be strictly construed against the property owner seeking such exemption (City of Lackawanna v. State Board of Equalization and Assessment, 16 N.Y.2d 222, 212 N.E.2d 42, 264 N.Y.S.2d 528; Lawrence-Smith School v. City of New York, 166 Misc. 856, 2 N.Y.S.2d 752, aff’d, 255 App. Div. 762, 7 N.Y.S.2d 486, aff’d, 280 N.Y. 805, 21 N.E.2d 693). If ambiguity or uncertainty occurs all doubts should be resolved against exemption (People v. Brooklyn Garden Apts., 283 N.Y. 373, 28 N.E.2d 877). Accordingly, it is our opinion that a residence for the principals of a closely held corporation in a farming operation is excluded from eligibility for exemption under the provisions of section 483 of the Real Property Tax Law.
October 8, 1976