Present-Use Value Assessment Program FAQ
What is the Use Value Program?
North Carolina General Statutes 105-277.2 through 105-277.7 provide an incentive for farmers and foresters to keep agricultural and forested land in those uses through property tax deferrments.
How does it work?
Land is appraised by the county at each revaluation based on a schedule of values derived from market sales of land. Property not in the program is taxed at these market values, in which total acreage, road frontage, road type, land cover, and soil type are variables determining value. Property in the Use Value Program is taxed based on a seperate schedule of values, provided by the state, which is based on the region, soil type, and land cover, and on the productivity of that land for specific types of agriculture or forestry. These per-acre values vary, and are often lower than market value.
Sounds like a great deal, what is the catch?
The program is designed to keep land in agricultural or forestry use. If you change the use of the property or subdivide it in such a way as to not meet minimum requirements, there are penalties. The difference between market value (what would be taxed were the property not in the program) and use value (what is taxed in the program) is a tax liability on the land, known as "deferred taxes." If all or a part of the property becomes ineligible to remain in the program, or is removed from the program, some or all of these "deferred taxes" become due and payable plus interest. Property which comes out of the program is "rolled back" and any deferred taxes on that portion for the year of the change and the three previous years become due and payable immediately plus interest which would be due on those taxes had they been billed in their respective years and gone unpaid.
What would remove land from the program?
Numerous actions can take the property out of the program, such as change in use (changing from agricultural or forestry to residential, whether by subdividing lots or by placing buildings on land in use value), ceasing agricultural operations, or selling to a non-qualifying owner.
So I can't sell my land?
Land can be sold and remain in the program. Whenever a change in ownership occurs, a new application must be filed. The application will be reviewed to ensure that the land sold continues to meet minimum acreage requirements, ownership requirements, and income requirements, and the new owner must accept the liability for the deferred taxes, even for those years before the ownership change. If the new owner turns around two years after the sale and develops a farm into a subdivision, the new owner is responsible for the deferred taxes, not you.
What are the requirements for land in the program?
Land in the program must qualify as agricultural, forested, or both. In order to qualify for agricultural use, there must be at least 10 acres of cultivated land in production for at least 3 years prior to application. The gross product (total income from sale of production) must average at least $1000 per year over the past 3 years. Land rent cannot be used to meet this income requirement. If the land is leased, the income figures must be obtained from the lessee and meet the minimum amount.
In order to qualify for forestry use, there must be at least 20 acres of forested land, and you must present to the tax assessor a Forestry Mangagement Plan, showing the forested land is under a Sound management program. (A program of production designed to obtain the greatest net return from the land consistent with its conservation and long-term improvement.) This plan can be prepared by the NC Division of Forest Resources, a consulting forester, or by the owner and must contain:
- Management and Landowner Objectives Statement -- Long range and short range objectives of owner(s) as appropriate.
- Location -- Include a map or aerial photograph that locates the property described and also delineates each stand referenced in the “Forest Stand(s) Description/Inventory and Stand Management Recommendations” (item 3 below)
- Forest Stand(s) Description/Inventory and Stand Management Recommendations -- Include a detailed description of various stands within the forestry unit. Each stand description should detail the acreage, species, age, size (tree diameter, basal area, heights), condition (quality and vigor), topography, soils and site index or productivity information. Stand-specific forest management practices needed to sustain productivity, health and vigor must be included with proposed timetable for implementation.
- Regeneration-Harvest Methods and Dates--For each stand, establish a target timetable for harvest of crop trees, specifying the type of regeneration-harvest (clearcut, seed-tree, shelterwood, or selection regeneration systems as applicable).
- Regeneration Technique--Should include a sound proposed regeneration plan for each stand when harvest of final crop trees is done. Specify intent to naturally regenerate or plant trees.
NOTE: Forest management plans can and should be updated as forest conditions significantly change (e.g. change in product class mix as the stand ages and grows, storm damage, insect or disease attack, timber harvest, thinning, wildfire). The county will audit plans periodically and, to remain eligible for use-value treatment, the plan must be implemented.
Land which contains sufficient acreage to be in agricultural use (10 acres in production) or forestry use (20 acres forested), but not both, will receive the benefit for both classes by qualifying for one. (This applies only to land which would qualify if sufficient acreage was met.) If the land has sufficient acreage in both classes that it could qualify either way, it must qualify for both. Failure to do so will exclue the non-qualifying category from receiving the benefit. Likewise, tracts of land which are considered part of the same "farm unit" may qualify to be in the program, but there must be at least one parent tract which does meet all requirements.
What are the owner requirements?
An individual or individuals can own land in the Use Value program. Trusts, partnerships, corporations, and LLCs may also qualify, but there are some restrictions. Please refer to NC Department of Revenue Form AV-4 "USE VALUE ASSESSMENT & TAXATION OF AGRICULTURAL, HORTICULTURAL, AND FORESTLANDS" at the bottom of this page for information about what types of ownership qualify for the program.
What about land not already in the program?
If land is not already in the Use Value Assessment Program, ownership must meet all the requirements above, the land must meet all the requirements above and one of the following conditions:
So how do I apply?
- The owner resides on the property at the time of application ·
- The owner (or a relative of the owner) owned the property for four years prior to the January 1st of the year for which the application is made. ·
- The owner has other property in the program for which the new tract can be considered part of the same "farm unit".
If you and the land meet all requirements for eligibility, you must apply for the program during the annual listing period of the year you are applying to enter the program. The listing period is during the month of January. If you are applying for property already in the program to keep it in use, you must file the application within 60 days of the transfer of ownership (recognized as the date when the deed is recorded in the Edgecombe County Register of Deeds). You will receive a letter from the County Tax Assessor stating your application has been approved, stating that it has been denied and explaining the reasons, or it may request additional information with a deadline for response.
Once I qualify, how to I renew?
Once you have qualified for the program, you remain in the program until ownership or use changes. Periodically, the County Tax Assessor will conduct an audit of properties in the program to ensure they continue to qualify. By statute, this should be done every eight years. If your property comes up for audit, you will be required to submit a new application with updated income figures or other requested information. Failure to make timely response to the information requested may disqualify the property from the program. Remember that any time ownership or use changes, you need to file a new application. If in doubt, contact the Edgecombe County Tax Assessor's Office.
The document above is for informational purposes only. Potential and current participants in the program should review Form AV-4 below which includes the general statutes relevant to the Use Value Appraisal Program for the legal wording and conditions of the program. Should there be any conflict between the information presented here and the actual program as defined in the NC General Statutes, the statutory condition shall take precedence.