Blog July 28, 2022

Old McDonald had a Farm or was it a Farmette?

Old McDonald had a Farm or was it a Farmette?

A farmette is basically a smaller-scale farm — and is sometimes used interchangeably with “hobby farm.” It could be as small as an acre or it could be closer to 10 acres (though some definitions put the acreage significantly higher). So this can be very confusing.

So the definition of a Farmette is: 

A farmette is a small residential farm run by an owner who earns income from a source other than the farm. It is sometimes known as a yokelet or a farmlet. Farmette owners are typically city workers who want to own rural land without operating a full farm. A farmette often includes a large vegetable garden, the occasional barn, tractor, and even farm or domestic animals, such as goats and cats. Farmetters usually rely on their tractor to plow or snow blow their driveways during the winter. Farmettes are usually around 50 acres. They can have a small hog pen, a few chickens in a chicken coop or a kennel house for dogs.

Given the rise in food prices, and increased interest in healthy nutrition, many folks are up-scaling their gardens to hobby farms. Hobby farms are more than a garden, but not quite a conventional farm. However, they take the operational essence of a fully-fledged farm, miniaturized to fit your property. Hobby farms can drastically supplement your food and income, and provide the wonderful joy and satisfaction of running your own agricultural operation.

Most hobby farms sit on just a few acres compared to a farm. To provide some contrast, the average farm size in the US is 234 acres. Of all the farmed land in the US, half of it is on farms larger than 1,100 acres.

Based on the amount of land you have, there are different types of hobby farms. There are urban hobby farms, slightly larger suburban hobby farms, and the farmette. The latter is often considered the full-sized hobby farm.

Growing and supplementing your food, or creating an agri-business and generating income, are two of the main opportunities of hobby farms. Furthermore, your pantry will be overflowing with canned goods, honey, homemade wine, produce, home-cured meats, and farm-fresh free-range eggs. Your food bounty will vary depending on the focus of the farm.

What is the Focus You Have in Mind?

Any hobby farmer will encounter limitations and constraints, primarily based on space and budget. This creates the need for a farm focus. Will your farm produce eggs and vegetables, or do you wish to support a cow for milking? This is one of the fundamental differences between a large garden and a hobby farm. A hobby farm should be designed to create a mutually beneficial environment for the crops and livestock of the farm. For example, chickens can be raised to provide fertilizer for your crops, along with their eggs; while planting in polycultures and rotating crops can maintain healthy soils and increase yields. Thinking like a farmer will help you manage the focus of your farm.

A hobby farm is also a place where wild edibles find a home. These include but are not limited to wild cherry choke trees, wild grape vines, mulberry trees, and elderberry bushes. Other food items that can be grown on a hobby farm include fig trees, loofahs, and beautyberry bushes. Wine or flavored oils can be made with dandelion greens, Jerusalem artichokes, and other food items growing on the farm. The hobby farmer on a larger scale might even provide their own dairy from goats or a milking cow. And they could grow their own wheat and never need enter a grocery store.

The Urban Hobby Farm

These very small hobby farms are a small homestead usually under one-third of an acre where backyard space is limited. Along with operating a successful garden, this hobby farmer will create compost, and even consider some livestock options like honeybees and chickens. This type of farm works well with a busy schedule, and is more relaxed.

It is very important to research, know, and follow your city ordinances, and maintain positive relationships with your neighbors. Even a tiny space can provide an abundance of food, especially if one incorporates some vertical gardening techniques and container gardening, and maximizes the use of indoor space such as windowsills.

The Suburban Hobby Farm

With an increase in space comes an increase in production. From one-third of an acre to five acres or so, there is some gray area between what is considered a suburban hobby farm and a full-fledged hobby farm.

However, many suburban homestead’s have guidelines under their home owners associations that they must follow; if you are currently searching for a property for a suburban hobby farm, you may want to pay attention to any covenants or associations with guidelines that might not permit farm animals on your land or in your neighborhood.

In suburbia, beehives should also be placed in areas away from fences and not too closely to neighbors to allay any concerns. On a suburban hobby farm, you’ll most likely be producing what you could in an urban setting, but may have room for goats, pigs, or even a horse. Keep in mind the more food you grow and the more livestock you add, the more labor and commitment will be required from the hobby farmer.

The Farmette – Typical Full-Sized Hobby Farm

Ranging from 5 to 50 acres, full-sized hobby farms are a real farm experience. Beyond the capability of residential hobby farms, one can add in livestock such as goats, pigs, and even cows, depending on the farm’s grassland or feeding capacity. Some farmettes are large enough to add orchards, cutting fields for flowers, and even a fish farm or a stocked fishing pond. The full-sized large hobby farm has potential for the hobby farmer to add cattle and horses, and to produce its own fertilizer to help the sustainability of the farm.

The joy and outputs of hobby farming make it a worthwhile pursuit, and the hobby farmer truly gets to literally enjoy and revel in the fruits of their labor. The hobby farm is a great place to let your farming dreams come true whether you are growing vegetables in pots or in rows, raising rabbits for meat, experiencing the joy of raising chickens or even keeping your own honeybees.

Mini-Farms Growing Like Weeds

Whether you call it a “farmlet,” a “farmette” or a “lifestyle” farm, the trend toward returning to life on the land is increasing.

Such residential farms account for nearly half of all farms in the United States with owners who earn their income from off-farm work, according to the U.S. Department of Agriculture’s Economic Research Service.

Farmettes are increasing at the rate of 2 percent a year.

Most people aren’t in it for the money. In Iowa, where there are a rapidly increasing number of these properties, farmettes generate average sales of less than $1,000 annually. Most buyers are fulfilling a dream to own a piece of land.


A working farm has a lot going on. It can be a place that harvests produce, raises animals, grows landscaping plants or trees. But when it comes to what qualifies as a farm, there are very specific criteria.

The U.S. Department of Agriculture and the Internal Revenue Service, both have their own definitions of what qualifies as a farm. Some state entities, such as universities, may also have their own. Here’s an overview of definitions.

Official definition of farms

According to the United States Department of Agriculture, “A farm is defined as any place from which $1,000 or more of agricultural products were produced and sold, or normally would have been sold, during the year.”

This definition takes into account that farms that may not have sold $1,000 or more of products in a specific year, but normally do every other year. According to the USDA, these tend to be smaller farms that experience low sales in a particular year. These farms tend to be very small and normally have profitable seasons. In some years, however, they experience low sales due to bad weather, disease or changes in marketing strategies.

IRS definition of what qualifies as a farm

According to the United States Internal Revenue Service, a business qualifies as a farm if it is actively cultivating, operating or managing land for profit. A farm includes livestock, dairy, poultry, fish, vegetables and fruit.

Individuals or businesses that meet the definition of farming may be able to deduct certain farm-related expenses or losses as part of their annual tax filing.

The IRS does, however, make a solid distinction between a production farm and a so-called hobby farm in which an individual grows and sells small amounts of produce or other crops or livestock in addition to their regular employment off the farm. While the income generated from these hobby farm sales must be declared when filing taxes, if it does not represent your primary source of income, you do not qualify as a farm according to the IRS.

When it comes to figuring out your farm tax status, the IRS has several publications and resources available online at

Farms vs homesteads

Remember the many reality (are so they say) TV shows about Homesteads?

A homestead typically refers to a permanent free-standing house, a condo or a manufactured home that the owner occupies as their principal residence. Although this is a broad definition, the exact definition of a homestead depends on the state.

State homestead laws allow homeowners to register part of their property as a homestead, which can offer property owners certain legal protections. Some state homestead laws can also mandate a maximum amount of property that can be claimed as well as the type of property.

What Is a Homestead Exemption?

The homestead exemption is an exemption or credit that a homeowner can claim on their primary residence to help minimize property taxes. From a policy perspective, a homestead exemption is a simple way to provide property tax relief that’s targeted toward lower-income homeowners and seniors. It can provide a very meaningful benefit for them at a potentially modest cost.

According to the Lincoln Institute of Land Policy, homestead exemptions and credits are the most common type of property tax relief.

Homestead exemptions are set at the state and sometimes local levels, and can vary widely around the country. Some states even restrict eligibility to seniors. Businesses, renters and owners of second homes are almost never eligible for homestead tax relief.

Homestead exemptions are set at the state and sometimes local levels, and can vary widely around the country. Some states even restrict eligibility to seniors. Businesses, renters and owners of second homes are almost never eligible for homestead tax relief.

33 states have homestead exemptions or similar homestead credits that are available to either all homeowners or at least to all seniors.

Homestead exemptions can also provide other legal protections, such as protecting property owners from creditors looking to collect a debt and providing protections to the homeowner’s surviving spouse or children. However, it doesn’t protect homeowners from secured creditors. For instance, if a homeowner defaults on their mortgage, the bank can choose to foreclose on the property.

How Does the Homestead Exemption Work?

How the homestead exemption works varies by state from how it’s applied, who’s eligible and how much protection it gives against creditors. Homeowners may also need to apply for the homestead tax exemption, which shields a portion of a home’s value from property taxes. As far as taxes go, homestead exemptions are based on your home’s assessed value and can work in two ways: a flat-dollar amount or a percentage.

Flat-dollar homestead exemption: The flat-dollar exemption reduces the taxable value of the property by a fixed amount. For example, if your home is valued at $200,000, a homestead exemption of $15,000 means you only pay taxes on $185,000.

Percentage homestead exemption: Percentage exemptions reduce the taxable value of the property by a certain percentage. If your state has a homestead exemption of 15% and your home is $200,000, then you only pay taxes on $170,000.

In many places, it’s a fairly modest exemption. It may reduce your assessed value by $20,000 and in turn, reduce your tax bill.  In other places, it can be much more significant. There are places where there’s a 50% exemption, so the homestead exemption would half your property tax bill compared to what it would be if it were not your primary residence.

The financial protection available with a homestead exemption also depends on where you live. In Florida and Texas, homeowners have unlimited financial protection, but there are acreage limits. Most states typically have a dollar limit on what can be protected.

Protection only applies to equity in the home, not the total value. If equity exceeds dollar limits, then the homeowner may be forced to sell. If equity is under the limit, then creditors cannot force the sale of the home.

Bankruptcy protection is a little different. According to federal bankruptcy laws, a homeowner cannot be forced to sell if the owner’s equity does not exceed $25,150 and if the case was filed after April 1, 2019. However, most homeowners use state limits, which tend to be more helpful.

The Pros and Cons of the Homestead Exemption


Reduces property taxes that you pay on your home.

Provides protection against creditors and stops the forced sale of your home.

Provides protection for the owner’s surviving spouse or children.


Potential for a significant loss of revenue which could impact public services.

Large tax exemptions could shift a majority of the tax burden over to businesses and other types of property that aren’t eligible for the homestead exemption.

Who Is Eligible for the Homestead Exemption?

States may restrict homestead exemptions based on income, age, property value, disability or veteran status.

Homestead exemptions fall into a couple of categories. First, homestead exemptions are available to all owner-occupied primary residences. As long as it’s your primary home, you’re eligible. The second category is programs for seniors. You’re eligible if it’s your primary residence and if you’re 65 years or older.

In the third category, there are some programs that provide exemptions specifically for veterans and disabled homeowners and potentially some other target groups.

How to Apply for a Homestead Exemption

Homeowners must typically apply for a homestead exemption and the process may be different state by state. The most important difference when it comes to application processes for homestead exemptions is whether an annual application is required.

In some places, you apply once when you purchase a home to prove that it’s your primary residence and then you automatically receive it every year. However, there are other places where you need to reapply every year.

Those tend to be more for the programs for seniors, veterans or disabled individuals. Those are usually larger homestead exemptions compared to the broad-based exemptions available to all owner-occupied primary residences.