What is the Use Value Assessment Program and what are the requirements?
The Land Use program (Farm Use or Present Use) is a state mandated program
designed to give tax relief to specific landowners and their property that is
being soundly managed in the production of an agricultural, horticultural or
forest commodity. There are four types of requirements that must be met in order
to qualify for the program:
- Ownership: You must have owned the property on four previous January 1st
subsequent to making application in order to qualify. Land: There must be at
least one tract that meets the qualifying tract requirements of five acres for
horticultural applications, ten acres for agricultural applications and twenty
acres for forest application. Income: Property must produce an average of $1,000
of gross income for the subsequent three years.
- Sound Management: A program of production designed to obtain the greatest net
return from the land consistent with its conservation and long-term improvement.
The requirements for qualification the use value assessment program are further
outlined in detail in G.S. 105-277.3 as follows:
"§ 105-277.3. Agricultural, horticultural, and forestland –
Classifications.
(a) Classes Defined. – The following classes of property are designated special
classes of property under authority of Section 2 (2) of Article V of the North
Carolina Constitution and must be appraised, assessed, and taxed as provided in
G.S. 105-277.2 through G. S. 105-277.7
(1) Agricultural land. – Individually owned agricultural land consisting of one
or more tracts, one of which consists of at least 10 acres that are in actual
production and that, for the three years preceding January 1 of the year for
which the benefit of this section is claimed, have produced an average gross
income of at least one thousand dollars ($1,000). Gross income includes
income from the sale of the agricultural products produced from the land and any
payment received under a governmental soil conservation or land retirement
program. Land in actual production includes land under improvements used
in the commercial production or growing of crops, plants, or animals.
(2) Horticultural land. – Individually owned horticultural
land consisting of one or more tracts, one of which consists of at least five
acres that are in actual production and that, for the three years preceding
January 1 of the year for which the benefit of this section is claimed, have met
the applicable minimum gross income requirement. Land in actual production
includes land under improvements used in the commercial production or growing of
fruits or vegetables or nursery or floral products. Land that has been
used to produce evergreens intended for use as Christmas trees must have met the
minimum gross income requirements established by the Department of Revenue for
the land. All other horticultural land must have produced an average gross
income of at least one thousand dollars ($1,000). Gross income includes income
from the sale of the horticultural products produced from the land and any
payments received under a governmental soil conservation or land retirement
program.
(3) Forestland. – Individually owned forest land consisting of one or more
tracts, one of which consists of at least 20 acres that are in actual production
and are not included in a farm unit.
(b) Natural Person Ownership Requirements. – In order to come within a
classification described in subsection (a) of this section, the land must, if
owned by a natural person, also satisfy one of the following conditions:
(1) It is the owner’s place of residence.
(2) It has been owned by the current owner or a relative of the current owner
for the four years preceding January 1 of the year for which the benefit of this
section is claimed.
(3) At the time of transfer to the current owner, it qualified for
classification in the hands of a business entity or trust that transferred the
land to the current owner who was a member of the business entity or a
beneficiary of the trust, as appropriate.
(b1) Entity ownership requirements. – In order to come within a classification
described in subsection (a) of this section, the land must, if owned by a
business entity or trust, have been owned by the business entity or trust or by
one or more of its members or creators, respectively, for the four years
immediately preceding January 1 of the year for which the benefit of this
section is claimed.
(b2) Exception to Ownership Requirements. – Not withstanding the provisions of
subsections (b) and (b1) of this section, land may qualify for classification in
the hands of the new owner if all of the conditions listed in this subsection
are met, even if the new owner does not meet all of the ownership requirements
of subsections (b) and (b1) of this section with respect to the land. If the
land qualifies for classification in the hands of the new owner under the
provision of this subsection, then the deferred taxes remain a lien on the land
under G. S. 105-277.4 (c), the new owner becomes liable for the deferred taxes,
and the deferred taxes become payable if the land fails to meet any other
condition or requirement for classification.
(1) The land was appraised at its present use value or was eligible for
appraisal at its present use value at the time title to the land passed to the
new owner.
(2) At the time title to the land passed to the new owner, the new owner
acquires the land for the purposes of and continues to use the land for the
purposes it was classified under subsection (a) of this section while under
previous ownership.
(3) The new owner has timely filed an application as required by G. S.
105-277.4(a) and has certified that the new owner accepts liability for the
deferred taxes and intends to continue the present use of the land.
(c) Repealed by Session Laws 1995, c .454, s.2.
(d) Exception for Conservation Reserve Program. – Land enrolled in the federal
Conservation Reserve Program authorized by 16 U. S. C. Chapter 58 is considered
to be in actual production, and income derived from participation in the federal
Conservation Reserve Program may be used in meeting the minimum gross income
requirements of this section either separately or in combination with income
from actual production. Land enrolled in the Federal Conservation program must
be assessed as agricultural land if it is planted in vegetation other than
trees, or as forestland if it is planted in trees.
(d1) Exception for Easements on Qualified Conservation Lands Previously
Appraised at Use
Value. – Property that is appraised at its present – use value under G. S.
105-277.4(b) shall continue to qualify for appraisal, assessment, and taxation
as provided in G. S. 105-277.2 through G. S. 105-277.7 as long as the property
is subject to an enforceable conservation easement that would qualify for the
conservation tax credit provided in G. S. 105-130.34 and G. S. 105-151.12,
without regard to actual production or income requirements of this section.
Notwithstanding G. S. 105-277.3 (b) and (b1), subsequent transfer of the
property does not extinguish its present use value eligibility as long as the
property remains subject to an enforceable conservation easement that qualifies
for the conservation tax credit provided in G. S.105-130-34 and G. S.
105-151.12. The exception provided in this subsection applies only to that part
of the property that is subject to the easement.
(e) Exception for Turkey Disease. – Agricultural land that meets all of the
following conditions is considered to be in actual production and to meet the
minimum gross income requirements:
(1) The land was in actual production in turkey growing within the preceding two
years and qualified for present use value treatment while it was in actual
production.
(2) The land was taken out of actual production in turkey growing solely for
healthy and safety considerations due to the presence of Poult Enteritis
Mortality Syndrome among turkeys in the same county or a neighboring county.
(3) The land is otherwise eligible for present use value treatment.
(f) Sound Management Program for Agricultural Land and Horticultural Land. – If
the property owner demonstrates any one of the following factors with respect to
agricultural land or horticultural land, then the land is operated under a sound
management program:
(1) Enrollment in and compliance with an agency-administered and approved farm
management plan.
(2) Compliance with a set of best management practices.
(3) Compliance with a minimum gross income per acre test
(4) Evidence of net income from the farm operation.
(5) Evidence that farming is the farm operator’s principal source of income.
(6) Certification by a recognized agricultural or horticultural agency within
the county that the land is operated under a sound management program.
Operation under a sound management program may also be demonstrated by evidence
of other similar factors. As long as a farm operator meets the sound
management requirements, it is irrelevant whether the property owner received
income or rent from the farm operator.
(g) Sound Management Program for Forestland. – If the owner of forestland
demonstrates that the forestland complies with a written sound forest management
plan for the production and sale of forest products, then the forestland is
operated under a sound management program.
Present Use Compliance Review
In accordance with G.S. 105-296(j), the assessor must annually review at least
one eight of the parcels in the county classified for taxation at present-use
value to verify that these parcels qualify for the classification. By this
method, the assessor must review the eligibility of all parcels classified for
taxation at present-use value in an eight year period. The period of the review
process is based on the average of the preceding three years’ data.
The application to file for the use value assessment program can be found in the
forms section of our website at
http://www.co.iredell.nc.us/forms.aspx