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Volume 9 - Opinions of Counsel SBEA No. 57

Opinions of Counsel index

Farm structures and buildings exemption (agricultural use) (horse breeding-indoor exercise arena) - Real Property Tax Law, § 483:

An indoor exercise arena used exclusively for training and exercising a farm’s horses may be eligible for an agricultural buildings exemption.

We have been asked whether an indoor exercise arena for a horse stable is eligible for an agricultural buildings exemption (RPTL, § 483).

Section 483 of the RPTL provides a ten-year exemption for newly constructed or reconstructed buildings or structures “essential to the operation” of certain agricultural and horticultural lands, where the improvements are completed after January 1, 1969 and before January 1, 1999. This is a partial exemption from taxation to the extent of any increase in value resulting in qualified construction or reconstruction. The land, consisting of at least five acres, must have been actively devoted to a bona fide agricultural or horticultural operation carried on for profit for a period not less than two consecutive years prior to the date of making application. Section 483(3) provides that the phrase “structure and buildings” includes “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. . . .”

Of special relevance to this inquiry is an amendment to section 483 enacted in 1977 (c.267). Prior to this amendment, we had concluded that section 483 had no application to a commercial horse-breeding operation (1 Op.Counsel SBEA No. 17). The 1977 amendment added a new subdivision nine to section 483, specifying that agricultural and horticultural uses include “the activity of raising and breeding horses.” Accordingly, we have since construed a newly constructed fence essential to the operation of a horse breeding farm to be eligible for this exemption (6 Op.Counsel SBEA No.75).

If an indoor exercise arena is used exclusively for training and exercising a farm’s horses, it would appear to be used exclusively and directly in “raising and production for sale of agricultural and horticultural commodities,” i.e., horse breeding. We distinguish horse related activity, such as riding academies or so-called dude ranches. While these facilities used in conjunction with commercial ventures may possibly qualify for the business investment exemption (RPTL, § 485-b), if locally authorized, in our opinion, they would not qualify for the agricultural buildings exemption. Ultimately, it is a question of fact, initially to be determined by the assessor, as to whether an arena is essential to horse breeding activity, thereby qualifying the arena for tax exemption pursuant to section 483.

March 21, 1991