Greenbelt

GREENBELT:

A TAXPAYER’S GUIDE

 

As a Tennessean you can pay less property tax if your property is dedicated to farm, forestry, or open space uses. Usually the amount of property tax is based on what it worth on the market. The Agricultural, Forest and Open Space Act of 1976, known as the Greenbelt Law, allows certain land to be taxed on its value based on present use instead. This guide explains your rights and responsibilities as greenbelt owner.

 

What property qualifies for the Greenbelt Law?

 

There are three types of land which may qualify for the greenbelt classification: farm, forestry, and open space land.

 

·          Agricultural Land is land which is part of a farm “engaged in the production or growing of crops, plants, animals, nursery or floral products.” The property may include some areas which don’t produce farm products (such as woodland or wasteland). It may also include a home site for the owner or a farm operator (assessed at market value like other homes, not use value). Two or more tracts may qualify if one is at least fifteen acres and none is less than ten acres, if all are part of a farm.

The assessor considers the number of acres, the portion of the land used for farming and how much is to be produced. To qualify for greenbelt, farm property must produce and average annual gross income (including farm sales, farm rent, or farm federal support payments) of at least $1,500. Property may also qualify if you, or your parent or spouse, have farmed the property for at least 25 years, as long as you continue to live on the property and the property is not used for any purpose than than farming.

·          Forestry Land is property of fifteen acres or more used in the growing of trees “under a sound program of sustained yield management” or with an amount and quality of tree growth which is managed like a forest. The assessor considers the number of acres, the amount and type of timber, the actual and potential growth rate of the timber and management practices being applied to the land. Forest land does not have to produce a specific income in order to be considered for greenbelt.

·          Open Space Land is property of three acres or more maintained in open or natural condition. It benefits the public because it conserves natural resources, provides a natural setting for people who might not otherwise have access to such a place, and otherwise provides “relief from the monotony of urban sprawl.” Although the public may use the property for recreation, properties which have been significantly developed for this purpose, such as gold courses, do not qualify.

The property must be included within a plan for preservation approved by the state or local planning agencies, or the owner must execute a perpetual open space easement – which requires the owner of the land to maintain the property’s open and natural character – in favor of the state commissioner of the environment and conservation on terms approved by the commissioner.

·          Other Limitations of the law limits the amount of land, which qualifies for greenbelt, to 1,500 Acres per owner per county. An “owner” may be more than one person. If you own property with others you’re credited with your portion of the property. If the owner is a corporation, the law treats the corporation as the owner and “credits” the individual owners of the corporations with their proportionate share.

 

How do I apply for greenbelt?

 

To qualify for greenbelt, you must apply to the assessor using a form provided by the state. You must certify on the form what the property is used for. There is no fee to apply, but you must record the application in the county register’s office if it is approved. You are responsible for any recording fee.

Once your application is approved you do not have to reapply each year. A new certification must be field whenever the legal ownership of a greenbelt property is changed if they want to continue the classification. This would include anytime the property is purchased by a new owner, or if the legal name of the owner changes. For example: if John Doe and wife Jane change the ownership of their farm to John and Jane Doe Trust then a new form must be filed.

To be eligible for greenbelt assessment the certifications must the completed and registered by March 1st of the tax year being applied for .

The assessor may ask you to supply information about property income, use and ownership either when you apply or later. The law requires the assessor to make sure that only qualifying properties benefit from the greenbelt.

 

How is use value determined?

 

Property approved for greenbelt is valued by the assessor at both its market value and use value. However the assessment is based only on the use value. Fair market value is what the property would sell for on the assessment date (January 1st of the tax year), considering not only the current use but also any possible more intensive uses. For example, farm property located residential subdivisions or commercial developments might have a higher market value because of the possibility of its future development. Use value, on the other hand, assumes that greenbelt land cannot be used for any other purpose other than greenbelt.

 

In fact a complex formula contained within the law assures that the use value will almost always be less than fair market value, and usually much less. The formula is used to determine a use value schedule for various types of agricultural land, which is calculated every reappraisal. The assessor determines use value from the county schedule and then calculates 25% of the total use value as the assessed value to which the current year’s tax rate is applied. The home site of a greenbelt parcel is not valued from the use schedule, but is instead valued from a market value schedule established for the rural land in the county. Likewise the home itself or any outbuildings or farm buildings (milk parlors, poultry houses etc) is valued like any other structure in the county.

 

What happens when a property no longer qualifies for greenbelt?

 

When a greenbelt property is disqualified for any reason, the owner is liable for a rollback assessment which means a repayment of taxes saved while the land was classified as greenbelt. The rollback period is three years for agricultural and forest land, five years for open space land, and ten years for land under an open space easement. The owner may be liable for rollback for any of the following reasons:

·          The property no longer qualifies for greenbelt

·          The owner requests in writing that the classification be withdrawn

·          The property is covered by a recorded subdivision plat unless the owner can prove that the property still meets the farm income requirements

·          The property is sold and the land is being converted to a use other than greenbelt. However, foreclosure on the property will not result in a rollback assessment unless the property is used for purposes other than a greenbelt.

A roll back assessment is made on the next tax roll prepared after the property no longer qualifies for greenbelt. The taxpayer’s bill will include:

·          The regular taxes for the current year based on the use value since the property qualified at the beginning of the year

·          A roll back assessment representing the greenbelt tax savings for the current year and two preceding years.

If a property is disqualified because of a sale such as a sale for development of a subdivision or sale that makes a greenbelt parcel too small, the seller is responsible for both the rollback assessment on the regular taxes of the year of the sale. However, the land is subject to the lien for both regular and rollback taxes. Just as the regular property taxes are prorated at closing, rollback assessments also may be divided between buyer and seller and prorated at the sale. The assessor can provide an estimate of these taxes. If the government is buying the greenbelt property and the land is being converted to another use, the rollback assessment is against the government unless the land is voluntarily sold. Both, the rollback assessment and the regular (prorated) assessment, take place immediately rather than waiting on the next tax roll.

For more information…

 

Tennessee’s Greenbelt Law is designed to preserve our farm and forest land for valued food and fiber, and to maintain open space for public enjoyment by easing some of the burden of property taxes. Please direct any further questions you have to the Bradley County Assessor of Property or the offices of the State Board of Equalization or the Division of Property Assessments.

 


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