What is Land Used for Agricultural Purposes and Can I Get a Bad Debt Deduction for Unpaid Rent?

Full question:

I have multiple questions related to the same issue with my land. Here is some background on my situation with my land. The below represents an e-mail that I recently sent to the agricultural department of Miami-Dade County, FL.I am trying again to get an agricultural exemption on my land in Miami-Dade County. I currently rent the land to my brother under a property lease agreement and it has plantains planted on the entire 2.5 acres. This land has been planted for this specific agricultural use for over 3 years. Last year, I submitted an application for the exemption before the deadline only to have the request sit for more than 2 months until I contacted the office to inquire about the status. I was then told that my brother would have to provide tax documents to show the agricultural use. I was told he would have to produce his 1040 forms showing his costs and profits from the land. My brother is retired and uses the land primarily for his family's use and not specifically for a profit. He and his sons planted the crops themselves on the land.I am in the process of again requesting an exemption since I have not been able to pay the taxes on land that is agricultural and has been for several years. When I submitted the application last year, I included pictures that clearly show the plantain trees on the land (the pictures included shots of the street signs to show the actual location). This land is clearly agricultural in nature and I am requesting that I receive the proper exemption for that use.This year for the first time, I will be charging him a rental fee ($100 a month) for the use of the land since he has not been able to pay for the land taxes for which he verbally agreed in the past. I also will be putting a clause in the lease that he will be responsible for the past taxes on the land.1-What can I claim (how much) on my tax return if my brother does not pay me for the use of the land per the terms of the new lease/contract? Basically, I want to make sure that if he does not pay me the rental fee of $100/month and the back taxes owed on the land, that I can claim these as a loss on my income taxes next year.2-Can I claim this loss as a person (rental income) or will I need to form a business (LLC, sole proprietorship, etc) to claim this loss?3-What is the definition of agricultural use? My brother has planted on this land for several years, but does not claim any profit/loss for this use since he is retired and has no income.4-Can I file for an agricultural exemption if I am only leasing the land and not planting on it myself? The land has been planted for more than 3 years and is used solely for agricultural purposes. live in GA, but my questions relate to land that I own and lease to my brother which is located in Miami-Dade County, FL.

• Category: Taxes
• Date: 04/07/2025
• State: Florida

Answer:

Agricultural use for purposes of taxation is Florida is defined as lands which are used primarily for bona fide agricultural purposes. "Bona fide agricultural purposes" means good faith commercial agricultural use of the land. A commercial use is one which is undertaken for a business purpose, rather than hobby, recreational, educational, or other purposes. In determining whether the use of the land for agricultural purposes is bona fide, the following factors may be taken into consideration:

1. The length of time the land has been so used.

2. Whether the use has been continuous.

3. The purchase price paid.

4. Size, as it relates to specific agricultural use, but in no event
shall a minimum acreage be required for agricultural assessment.

5. Whether an indicated effort has been made to care sufficiently and
adequately for the land in accordance with accepted commercial agricultural
practices, including, without limitation, fertilizing, liming, tilling,
mowing, reforesting, and other accepted agricultural practices.

6. Whether such land is under lease and, if so, the effective length,
terms, and conditions of the lease.

7. Such other factors as may from time to time become applicable.

The maintenance of a dwelling on part of the lands used for agricultural purposes shall not in itself preclude an agricultural classification.

There are different types of deductions for debts that are unpaid. If you are a business entity a business bad debt deduction may apply, but an individual may also deduct a bad debt according to IRS rules. Please see the information at the following link to determine applicability:

http://www.irs.gov/taxtopics/tc453.html

Please see the following Florida statute:

193.461 Agricultural lands; classification and assessment; mandated
eradication or quarantine program. —

(1) The property appraiser shall, on an annual basis, classify for
assessment purposes all lands within the county as either agricultural or
nonagricultural.

(2) Any landowner whose land is denied agricultural classification by
the property appraiser may appeal to the value adjustment board. The
property appraiser shall notify the landowner in writing of the denial of
agricultural classification on or before July 1 of the year for which the
application was filed. The notification shall advise the landowner of his
or her right to appeal to the value adjustment board and of the filing
deadline. The board may also review all lands classified by the property
appraiser upon its own motion. The property appraiser shall have available
at his or her office a list by ownership of all applications received
showing the acreage, the full valuation under s. 193.011, the valuation
of the land under the provisions of this section, and whether or not the
classification requested was granted.

(3)(a) No lands shall be classified as agricultural lands unless a return
is filed on or before March 1 of each year. The property appraiser, before
so classifying such lands, may require the taxpayer or the taxpayer's
representative to furnish the property appraiser such information as may
reasonably be required to establish that such lands were actually used for
a bona fide agricultural purpose. Failure to make timely application by
March 1 shall constitute a waiver for 1 year of the privilege herein
granted for agricultural assessment. However, an applicant who is qualified
to receive an agricultural classification who fails to file an application
by March 1 may file an application for the classification and may file,
pursuant to s. 194.011(3), a petition with the value adjustment board
requesting that the classification be granted. The petition may be filed at
any time during the taxable year on or before the 25th day following the
mailing of the notice by the property appraiser as provided in s.
194.011(1). Notwithstanding the provisions of s. 194.013, the applicant
must pay a nonrefundable fee of $15 upon filing the petition. Upon
reviewing the petition, if the person is qualified to receive the
classification and demonstrates particular extenuating circumstances judged
by the property appraiser or the value adjustment board to warrant granting
the classification, the property appraiser or the value adjustment board
may grant the classification. The owner of land that was classified
agricultural in the previous year and whose ownership or use has not
changed may reapply on a short form as provided by the department. The
lessee of property may make original application or reapply using the short
form if the lease, or an affidavit executed by the owner, provides that the
lessee is empowered to make application for the agricultural classification
on behalf of the owner and a copy of the lease or affidavit accompanies the
application. A county may, at the request of the property appraiser and by
a majority vote of its governing body, waive the requirement that an annual
application or statement be made for classification of property within the
county after an initial application is made and the classification granted
by the property appraiser. Such waiver may be revoked by a majority vote of
the governing body of the county.

(b) Subject to the restrictions set out in this section, only lands which
are used primarily for bona fide agricultural purposes shall be classified
agricultural. "Bona fide agricultural purposes" means good faith commercial
agricultural use of the land. In determining whether the use of the land
for agricultural purposes is bona fide, the following factors may be taken
into consideration:

1. The length of time the land has been so used.

2. Whether the use has been continuous.

3. The purchase price paid.

4. Size, as it relates to specific agricultural use, but in no event
shall a minimum acreage be required for agricultural assessment.

5. Whether an indicated effort has been made to care sufficiently and
adequately for the land in accordance with accepted commercial agricultural
practices, including, without limitation, fertilizing, liming, tilling,
mowing, reforesting, and other accepted agricultural practices.

6. Whether such land is under lease and, if so, the effective length,
terms, and conditions of the lease.

7. Such other factors as may from time to time become applicable.

(c) The maintenance of a dwelling on part of the lands used for
agricultural purposes shall not in itself preclude an agricultural
classification.

(d) When property receiving an agricultural classification contains a
residence under the same ownership, the portion of the property consisting
of the residence and curtilage must be assessed separately, pursuant to s.
193.011, to qualify for the assessment limitation set forth in s. 193.155.
The remaining property may be classified under the provisions of
paragraphs (a) and (b).

(e) Notwithstanding the provisions of paragraph (a), land that has
received an agricultural classification from the value adjustment board
or a court of competent jurisdiction pursuant to this section is entitled
to receive such classification in any subsequent year until such
agricultural use of the land is abandoned or discontinued, the land is
diverted to a nonagricultural use, or the land is reclassified as
nonagricultural pursuant to subsection (4). The property appraiser must,
no later than January 31 of each year, provide notice to the owner of
land that was classified agricultural in the previous year informing the
owner of the requirements of this paragraph and requiring the owner to
certify that neither the ownership nor the use of the land has changed.
The department shall, by administrative rule, prescribe the form of the
notice to be used by the property appraiser under this paragraph. If a
county has waived the requirement that an annual application or statement
be made for classification of property pursuant to paragraph (a), the
county may, by a majority vote of its governing body, waive the notice
and certification requirements of this paragraph and shall provide the
property owner with the same notification provided to owners of land
granted an agricultural classification by the property appraiser. Such
waiver may be revoked by a majority vote of the county's governing body.
This paragraph does not apply to any property if the agricultural
classification of that property is the subject of current litigation.

(4)(a) The property appraiser shall reclassify the following lands as
nonagricultural:

1. Land diverted from an agricultural to a nonagricultural use.

2. Land no longer being utilized for agricultural purposes.

3. Land that has been zoned to a nonagricultural use at the request of
the owner subsequent to the enactment of this law.

(b) The board of county commissioners may also reclassify lands
classified as agricultural to nonagricultural when there is contiguous
urban or metropolitan development and the board of county commissioners
finds that the continued use of such lands for agricultural purposes will
act as a deterrent to the timely and orderly expansion of the community.

(c) Sale of land for a purchase price which is three or more times the
agricultural assessment placed on the land shall create a presumption that
such land is not used primarily for bona fide agricultural purposes. Upon a
showing of special circumstances by the landowner demonstrating that the
land is to be continued in bona fide agriculture, this presumption may be
rebutted.

(5) For the purpose of this section, "agricultural purposes" includes,
but is not limited to, horticulture; floriculture; viticulture; forestry;
dairy; livestock; poultry; bee; pisciculture, when the land is used
principally for the production of tropical fish; aquaculture; sod farming;
and all forms of farm products and farm production.

(6)(a) In years in which proper application for agricultural assessment
has been made and granted pursuant to this section, the assessment of land
shall be based solely on its agricultural use. The property appraiser shall
consider the following use factors only:

1. The quantity and size of the property;

2. The condition of the property;

3. The present market value of the property as agricultural land;

4. The income produced by the property;

5. The productivity of land in its present use;

6. The economic merchantability of the agricultural product; and

7. Such other agricultural factors as may from time to time become
applicable, which are reflective of the standard present practices of
agricultural use and production.

(b) Notwithstanding any provision relating to annual assessment found in
s. 192.042, the property appraiser shall rely on 5-year moving average data
when utilizing the income methodology approach in an assessment of property
used for agricultural purposes.

(c)1. For purposes of the income methodology approach to assessment of
property used for agricultural purposes, irrigation systems, including
pumps and motors, physically attached to the land shall be considered a
part of the average yields per acre and shall have no separately assessable
contributory value.

2. Litter containment structures located on producing poultry farms and
animal waste nutrient containment structures located on producing dairy
farms shall be assessed by the methodology described in subparagraph 1.

(d) In years in which proper application for agricultural assessment has
not been made, the land shall be assessed under the provisions of s.
193.011.

(7) Lands classified for assessment purposes as agricultural lands
which are taken out of production by any state or federal eradication or
quarantine program shall continue to be classified as agricultural lands
for the duration of such program or successor programs. Lands under these
programs which are converted to fallow, or otherwise nonincome-producing
uses shall continue to be classified as agricultural lands and shall be
assessed at a de minimis value of no more than $50 per acre, on a single
year assessment methodology; however, lands converted to other
income-producing agricultural uses permissible under such programs shall
be assessed pursuant to this section. Land under a mandated eradication
or quarantine program which is diverted from an agricultural to a
nonagricultural use shall be assessed under s. 193.011.