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'Farmers' such as Tom Cruise get tax break

Some states, such as Colorado, don't require much farming to get a tax-saving agricultural exemption.

By Kay Bell Mar 9, 2011 6:29PM

Want a lower property tax bill in Colorado? Get yourself a couple of sheep. Or grow a little hay.


That's all it takes to earn an agricultural designation by the state. You don't really have to be a farmer or a rancher, just play one and that will get you the much lower property tax rate Colorado created for the agriculture sector.


The Denver Post lists the wide array of so-called Colorado agronomists who have "secured low property taxes through agricultural designations on land they own even though they personally have little or nothing to do with producing food."


Among those the newspaper cites as benefiting from being deemed owners of agricultural property are actors Tom Cruise, Goldie Hawn and Kurt Russell, a network television executive and his former-actress wife, an energy industry billionaire, a professional blackjack player turned media mogul, a ski gear inventor and a Colorado state senator.


In many cases, the land where these folks' homes (which usually are second, third or fourth residential properties) are located actually once was a working ranch or farm, reports the Post. But the original owners sold the parcels off to today's "gentlemen ranchers."


And hundreds of those ranching and farming impostors are still getting the original tax break. They keep a few livestock around or a small patch of land planted with a crop, allowing them to reap the rewards of the Colorado law and cut their annual taxes from thousands of dollars to two-figure amounts.


Now I wouldn't call these folks tax cheats. They are just taking advantage of a loophole big enough to drive a tractor, which they'd have is they were real farmers or ranchers, through.


But they definitely are violating the spirit of the law.


And I suspect that Colorado lawmakers, except for maybe the state senator who's getting the ag tax break, are already working on legislation that more strictly defines what does and doesn't qualify for tax purposes as an agricultural operation.


Real property tax relief exists


Texas has a storied ranching heritage. And it exempts from sales tax some agricultural property transactions.


But when it comes to property taxes, it doesn't appear that the Lone Star State has a tax break for agricultural land similar to that in Colorado.


That's too bad, since a goat or two could keep our yard -- and property tax bill -- under control while simultaneously fertilizing the lawn!


And even if there were such a state or county tax exemption here, I know our homeowners' association wouldn't like a farm animal on our suburban lot, although a goat is smaller than some of our neighbors' dogs.


But there are other ways to reduce residential property taxes.


Make sure you're getting your area's homestead exemption. This knocks off a bit of your home's assessed value so that the tax bill on the property is less.


In some locales, once your deed is registered the exemption is automatic. But not always. So check with your local tax assessor-collector about the process where you live. If you need to apply for a homestead exemption, do so.


Most jurisdictions also offer additional property tax exemptions based on age, income or even former military service. Check out the possibilities in your area and find out which you qualify for and and how to apply for them.


And if you find that even with exemptions, your property tax assessment is larger than you think it should be, appeal it. The extra work could help you shave a substantial amount off your property tax bill.


More from Don't Mess with Taxes and MSN Money:

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43Comments
Mar 9, 2011 11:17PM
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Landowners are not necessarily farmers. Close the loophole by requiring the filing of a Schedule F Tax Return to qualify for Agricultural tax breaks. Its crap like this and food stamps that give the farm bill and legitimate programs a bad name
Mar 9, 2011 7:39PM
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This tax is meant for struggling farmers, not the rich, just another way of getting around paying taxes.  I live in a small farming community that is being eaten up my new housing that are sitting empty and the developers are getting this tax break.  This makes me sick to my stomach.  The thought of Tom Cruise even getting his finger nails dirty is a joke!  This needs to be changed and help the farmers that truly need the help not the wannabe's.

Mar 9, 2011 7:44PM
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There should definintely be an income limit for getting the tax breaks.  The breaks only ought to be for small farmers - not for giant agricultural conglomerates or rich people playing games witht the system
Mar 10, 2011 1:27AM
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I don’t understand why this is a surprise to anyone. I know at least three people that live in Mc Mansions on an acre or more in California doing something like this and this article doesn’t even scratch the surface of the tax benefits being received. They buy the land, build a custom home, and then spend an additional 20K on irrigation and grape vines. They call it a vineyard with a pretentious name, make one of the children’s crayon drawings into a label, and write it all off as a business start up expense. They now depreciate the land, buildings, and equipment. Maintenance and improvements can also be subtracted from other income.  

 

I used to go to two parties a year at one of the vineyards and stand around the pool with a wink and a node pretending to drink nasty tasting cheap box chardonnay under the pretence of it being a winery. He was a magician because it is pretty hard to get chardonnay from concord grapes which my kids and I spent many a summer consuming in mass. Wink Wink Node Node.

 

My very well connected Republican friend is very proud of his cleverness. Tax attorneys/CPAs in general are a creative lot. He invites near 200 of his friends, business associates, clients, and family to his house then writes the parties off as promotional event for the vineyard all perfectly legal.

 

On one occasion, we sat in his Jacuzzi with him laughing together about Fox’s assertion that the rich pay most of the taxes and no one knows the truth better then he does.

 

He once told me a story about his frustration having to pay the outrageous salaries that his illegal alien grounds keepers used to demand when he lived in Bellaire. I believe it was 5.25 per hour at the time. Laughable considering that a year’s salary was about two days billable and he honestly didn’t want to pay the minimum wage increase in a plantation owner nostalgia kind of way. Seriously.

 

Thanks to the tax code, Ronald Raygun, and a professional courtesy from one of his collogues all the workers became legal citizens and he stopped complaining when they became a total write off at his vineyard. He no longer complains even now at close to 10 dollars an hour. He had quite a change in attitude. He has one of the best maintained lawns/gardens/estates the tax code ever paid for and all of his real estate holdings are a business expense that “the little people” don’t get.

 

I guess I’m jaded to all this. This is how it is and has always been. And probably always will be. All hidden in plane sight for the world to see with a lot of people choosing not to see it. Go back to sleep sheeple there is nothing to see here.             

 

None of this is meant to be tax advice. Check with your tax advisor.

Mar 9, 2011 8:02PM
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Maybe he should get food stamps too.

Thanks for making it harder for the real farmers Tom, I'll be first in line to support your next movie.

NOT!!!

Mar 10, 2011 1:14AM
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While most of you fine people think that this is somehow a rich get richer the poor get poorer argument that is not the point of this tax break. I live in Washington State, Benton County to be exact and I partake in this so-called rip-off. I have to, I live on 35 acres, while that may seem big to some of you, it's really not that much. 100 years ago when my great grandfather homesteaded this place it could support a family of 6 and provide a future for my grandpa, great uncles and great aunt.

 

Fast forward a few decades and realize that my neighbor who doesn't now or will never farm some of the same land that was once in my family has an assessment of $15,000 per acre. Unless you are growing pot or doing some sort of illegal activity you cannot make a living on this or any land. While I may be no different than him in that I want to live outside of town, I didn't buy my place to pay way more than it's worth to sell on the open market. There ain't no way in hell anyone in their right mind would pay over a half mill for my property why should I pay an over assessed tax on it

 

Just so you all know I can't stand Tom Cruise, he's a total douche bag. I'm just a small town hick who likes being able to go outside and take a leak, crack a beer and stand around a bon-fire now and then. 

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WE have had a horrible problem with people here in Florida buying up large chunks of land; putting a few horses or cows on the property for tax breaks and then neglecting said animals.  Many have had to be put down they were in such bad shape.  It is fine to designate land as ag. land but take care of what you put on the land.   It always comes down to greed and the innocent have to suffer.
Mar 10, 2011 10:43AM
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What!!!!!!!!!!!!   What kind of good, Liberal Hollywood Democrat would DARE take advantage of a tax loophole? Oh, that's right; they're only interested in saving THEIR money. Only the "evil corporations" should have all their loopholes closed.  Can you say Scientology hypocrite?
Mar 9, 2011 8:04PM
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The top 2% keep on getting their breaks.  I am sure these movie stars and billionaires need more tax breaks to keep their third or fourth houses and their yachts floating.

 

Do you think the average person would be able to get away with this scam?  Just try putting a goat or any livestock in your yard to get the the tax break and city hall will haul your **** into court faster than a blink.

 

Live may not be fair but the rich manage to tilt things their way.  All people should just pay their fair share.

Mar 9, 2011 10:06PM
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I am sure that none of you that advocate for Tom Cruise to pay his taxes have never smudged your taxes either. Bottom line is.... ya it may suck that he might not paying all of his appropriate taxes to the state. However, this article states no where how many livestock Tom Cruise owns, how many acres Tom Cruise owns, or how many bushel Tom Cruise produces.  It simply states that he might own a couple of livestock to generate this tax deduction. Furthermore who is to say what qualifies as a "real farmer".... in Wisconsin you can be a full time farmer with 50 head of dairy cattle...where as other places in the US might consider this hobby farming. I also come from the lower middle class, but what I have gathered is we are a society that hates rich people because of their ability to do things. If you are not content with being a part "middle class" go out and do something about it.... but do not sit in here and whine about how you have been given the short end of the stick in life, because you have been to lazy to make something of yourself. As for the story... good for you Tom Cruise.

Mar 9, 2011 9:06PM
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This is an easy fix. Simply tie the reduction to legitimate agricultural income.  Blame the CO legislature for creating a nice loophole for their wealthy friends.  I agree- Tom Cruise just has an astute tax preparer.
Mar 9, 2011 9:46PM
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LostLuster  We need to change laws! Find loop holes and get rid of them! Elect people who actually work for "The People"! .... don't vote for the Colorado Senator who is taking advantage of the system and the middle and poor class!
Ohhhh, LostLuster - here's the kicker! The senator that you speak of - he's a Dem that campaigned on reform to help the "Average Joe' - Repubs were evil rats who just wanted to exploit the Middle Class. What a hypocrite he is! All I can say is, don't blame me - I voted Libertarian here in Colorado.
Mar 9, 2011 11:43PM
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Doesn't matter if Tom Cruise owns 1 cow or 200 cows. He is not a farmer by profession and he does not provide food for our nation. This tax break is meant for professional farmers who really need a tax break, and most of them are struggling to make ends meet. Its not meant for hollywood stars who make millions a year and its a clear abuse of the system.
And its funny how every political discussion I read has at least that one glenn beck watching loon who blames everything on the obama administration.
The economy collapsed...obama's fault. Healthcare in our country sucks...obama's fault. Soldiers are killed in Iraq...obama's fault. Riots in egypt and libya...obama's fault.
Your cat gets run over by your neighbour's car...obviously its' obama's fault since your neighbour drives a toyota prius, and obama is all for the environment and the go green movement.

Mar 9, 2011 8:43PM
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I'm not surprised to hear Tom Cruise is doing this, after all he does belong to the so called church of scientology! The church of scientology only became designated as a church to get the tax benefits! They originally were just a small group of people until they found out if they became a "church", they could get $$$$$$$ of tax breaks!

 

We need to change laws! Find loop holes and get rid of them! Elect people who actually work for "The People"! Write the powers that be in Colorado and tell them we are sick of the middle class getting screwed! Boycott Tom Cruise movies, Tell Goldie Hawn and Kurt Russell to get out of Colorado if they are going to do that kind of thing, don't vote for the Colorado Senator who is taking advantage of the system and the middle and poor class!

Mar 10, 2011 9:41AM
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These are your Hollywood Liberals who want the taxpayers to give more to the illegals, welfare, other countries, but they want to keep their money no matter what. 
Mar 9, 2011 8:09PM
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Senor cheeks...

He may have a good tax guy.....but that doesn't make what he's doing any better.

These programs were set up for a reason, to help farmers who are putting food on the table for many families. I am quite certain that he can afford to pay his taxes.

As for being a stupid story, taking advantage of a loophole to save a few bucks for someone who earns millions, yeah THAT is stupid.

 

Mar 10, 2011 10:31AM
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 My point was that as a farmer, I can not afford to buy that land that Tom or whoever can, but if I am allowed to farm it, farmland is preserved. So is wildlife land. Its the carrot that keeps it all from going into development.

 Don't get me wrong, I would just assume that Tom doesn't move into my area, he would probably complain that my dogs chased his coyotes, but you can not change the law because someone makes more money than you.

 Is your old farm still a farm? If not, then you didn't manage.

 What is missing from the story is wiether any real farming is going on. Do you really think he would not buy it if the taxes were a little higher? How much of a break does he get?

 The real problem that I have with the breaks is that here in Wisconsin at least, if the land gets sold for development they are suppose to pay back several years worth of breaks, but there is no one on the payroll to keep track. Its costs the state millions. Just like a tax assessor holding the line on what is really a farm, the state needs to enforce whats right. There is a story, and it was covered last year in one of our state farm papers.

 This story is just more drivel about how the rich don't pay their share, which we all know. But there is several old folks around here using the same law to keep their homes. Don't throw the baby out with the bathwater.

Mar 9, 2011 8:29PM
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Another piece of information that reinforces the fact that "honest people do not become wealthy". While gazing about from the legal "highground" they are on, these people must know that they are COMPLETELY in VIOLATION of the spirit of the law. One more perfect example of the moral  perversion that this country is becoming globally famous for. As for the listed senator, why should we not expect to find one more "politicon' on a list of loopholers?!
Mar 9, 2011 10:21PM
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If the article is to complete its argument then the author should list everyone rather than half names and the title of the others.  Why?  Your agenda is to blast Cruise.  I look at it this way, he may have more than you know, unless the article writer has visited and seen the land.  That said, look again, and this time on the tax form and description regarding what can and cannot be designated as a qualified parcel worthy of the tax break.  Then once you have done all of this, request permission to visit every property mentioned-those with and without names and see what they have.  If you find they have done something illegally, then author, it is your duty to report them to the IRS, not to an internet fan base.  Grow up, drop the envy and farm yourself!  Become a thinker for good, in ways that can profit mankind.  Then, you might be worthy of being in print once again.  If you live in the state and own 10 acres, plant some seeds of good, perhaps something will grow of it.  If you are deadset again anyone getting the tax break and you live in Colorado, call your senators and contressmen and make an appointment with them and explain why you feel someone who has money is not as equally qualified to get the tax break as someone who has less money.  I can't figure that one out myself as I feel, in this country that if the state makes it available to Joe LandOwner A and he makes $5000 a year and Joe LandOwnerB lives next door (well 10 acres away), and he's got an income of $100000, and Joe LandOwnerC makes $1000000. and Joe LandOwner D makes a cool Billion.  What in the taxbreak do these 4 people have in common as it certainly won't be their bottom line.  Rather, it is that they own the required amount of acreage and all have animals.  10 acres is small potatoes.  That would only be a small scale farm anyway.  I DETEST people who begrudge someone for their own accomplishments or even their inherited worth.  People are people and if they wish to grow a small garden to feed those who live there and can keep those 10 acres by getting that break, then more power to them for reading their tax laws. 
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