Florida's "Rent-a-Cow" Tax Loophole


In April, The Atlantic magazine ran a story about a peculiar tax loophole in Florida that allows landowners to save millions of dollars in taxes by “renting cattle.” As with most things, the tax break started out with good intentions; Florida’s “greenbelt law” aims to preserve farmland by taxing it according to its agricultural–use value, rather than its (higher) potential development value. To qualify, you simply file a four–page application and convince the county tax appraiser that the land is for “bona fide” agricultural purposes. You don’t even have to make an actual income from your farming in order to lower the valuation on your property.  

But what if you’re not really a farmer? What if you’re a developer, with land just sitting idle that you’re getting ready to build on, and you want to take advantage of these tax breaks? No problem – just lease your land to a nearby cattle rancher and plop a few cows in what’s left of the grass, and start saving. Some landowners let ranchers graze their cattle for free. But the tax breaks are so big that some landowners actually pay the ranchers to graze their cows, hence the “rent–a–cow” nickname.  

The Miami Herald reported back in 2005 that over two–thirds of the greenbelt law’s biggest beneficiaries aren’t true farmers. The Herald discovered the loophole has other consequences too: it found skinny and underfed cows eating garbage and grazing on bare, rocky land throughout the state.  

While developers confess that this may not have been exactly what the Florida Legislature intended when they passed the greenbelt law back in 1959, they argue that vacant land shouldn’t be taxed at full value if it hasn’t been developed yet. They also point out that once the land is developed, new homes and offices generate a lot of tax revenue.  

While many tax loopholes exist, and Florida’s greenbelt law is certainly a comical one, we can tell you that you don’t have to go to such lengths to save on your income taxes. The tax code is full of legitimate deductions, credits, and opportunities that serve legitimate public goals that are much more likely to pass scrutiny with the IRS if the unfortunate situation of an audit ever arises. Do your homework, and make sure you (or your tax professional) are taking advantage of the ones that are right for you.