What is Land Use Taxation?
In 1971, the Virginia General Assembly enacted a law permitting localities to adopt a program of special assessments for agriculture, horticultural, forest and open space lands (Section 58.1-3299 through 58.1-3244 of the Code of Virginia). In 1978, the Alleghany County Board of Supervisors chose to adopt an ordinance based on State Law to conserve acreage that may otherwise be developed.
The purpose of the program is to encourage the proper use of such real estate in order to assure a readily available source of agricultural, horticultural and forest products and of open spaces; conserve natural resources to prevent erosion and protect adequate and safe water supplies; to preserve scenic natural beauty; to promote proper land-use planning and orderly development of real estate.
When your land qualifies for Land Use Taxation, the parcel receives a lower assessment than the fair market assessment. The difference in tax dollars is not a total abatement, but rather a deferment. Taxpayers owning real estate that meets the qualifications may enter the program under one or more of the following categories: Agricultural Use, Horticultural Use, Forestal Use or Open Space Use.
What are the Qualifications for Specific Land Use Categories?
- Agricultural & Horticultural Use Categories
Virginia State Code requires a minimum of five (5) contiguous (unimproved) acres. One acre is excluded for a house-site (if dwelling exists) or a proposed house-site. The remaining five acres or more may qualify for Land Use taxation.
The property must have a five (5) year previous history of continuous farming or horticultural activity before qualifying on the sixth year. If land is left vacant for one year or more, the farm history must begin again for five (5) continuous years.
The entire farm must be qualified with adequate livestock: One mature cow, five goats, five sheep, or five swine, one hundred chickens, and/or sixty-six turkeys per every five acres for twelve (12) months. Horses can qualify the land only if they are being used for a breeding or boarding BUSINESS. Horses maintained exclusively for recreational purposes DO NOT qualify the land.
Cropland needs to be qualified on the basis of selling crops or needs to be qualified by adequate livestock.
HORTICULTURAL crops must be produced for commercial use only to qualify for land use taxation.
- Forestal Use Categories
FORESTAL USE category requires twenty (20) contiguous acres unimproved or more exclusively devoted to forestal use with NO LIVESTOCK ACCESS. Forestal acreage with livestock access must be qualified under the AGRICULTURAL USE category. NO stripping or clear cutting is permitted unless working under the guidance of the Department of Forestry. Forestal participants are required to have a Forest Management Plan. This can be obtained by consulting an independent forester.
- Open Space Use Categories
This category is for specific types of parks, historical land, and recreational areas only. This category DOES NOT refer to open, unused land.
How Do I Apply?
Applications for Land Use Taxation on newly purchased parcels not in land use at time of purchase, must by made by November 1 of the preceding year for which the special assessment is sought. In any year in which a general reassessment is being made, such NEW application must be submitted until 30 days after the notice of reassessment has been mailed. If you purchase land that is already in land use, it is your responsibility to notify the commissioner’s office of your intentions regarding continuation in the program. If you sell acreage from a tract under Land Use, it is your responsibility to notify the commissioner’s office of the change in acreage.
- Income Tax Documentation:
Those who are in Land Use under Agricultural use or Horticultural use must submit a copy of Federal 1040 income tax schedule C (business), E (supplementary income, Form 4835Farm Rental Income & Expenses – which is mostly applicable to those who lease the land), or F (farm) each year while under Land Use taxation, if requested by the Commissioner of the Revenue’s office.
The commissioner’s office reserves the right to request copies of tax returns to show the five (5) year history of continuous farming prior to being approved for Land Use. If you do not file one of these schedules and wish to be in the Land Use program, you will be required to submit documentation of a “bona fide” farm operation in another manner: feed receipts, fertilizer receipts, receipts from a sale of livestock/crops, etc.
Application fee is $10.00 per parcel for acreage totaling less than one hundred (100) acres. Land over one hundred acres is $0.10 per acre per parcel.
Approval of all applications is made by the Commissioner of the Revenue based on the use of the parcel, documentation submitted, acreage, etc.. In some instances, you may be requested to submit additional information before an application can be processed. If at any time, should it be determined that the parcel is not continuing to meet the requirements necessary to be taxed under a Land Use Assessment, it will be removed from the program. NO fees will be refunded on parcels removed from the program.
What if the Use of my Land Changes?
If you make one or more of the following transactions, you MUST contact this office within sixty (60) days to discuss reapplication, fees, and possible roll-back tax. These changes include:
- Change in the use of the land
- Sale of acreage
- Transfer of acreage by deed of gift or receive by will
- Re-survey the property boundaries, or vacate property lines
- Change ownership, buy out an owner, remove/add an owner on the deed, or convey interest
- Property rezoned
- Erect a dwelling or trailer
Failure to contact this office within sixty (60) days after recording one or more of the above transactions will result in the parcel being disqualified from the Land Use program and taxed at full fair market value.
- Roll-Back Taxes:
If a landowner under Land Use Taxation makes one of the land use changes listed above, a roll-back tax may incur since the tax dollars saved by being assessed under land use valuation is a deferment. This roll-back is applied on the deferred amount on the non-qualifying acreage for six (6) years prior with interest and penalty. This roll-back is charged to the taxpayer making the change.
Is There Anything Else I Should Know?
- Real Estate Taxes:
The taxes on a parcel in Land Use must be paid timely. If taxes become delinquent on a parcel under Land Use Assessment and remain unpaid on June 1, that parcel will be removed from Land Use taxation and taxed at full fair market value.
- Your Role:
Your role in the Land Use Assessment Program is important. You must “USE” your land according to the State and County prescribed standards and requirements. Your farmland must be involved each year in a “bona fide production”.
If you have any questions, please feel free to contact the Commissioner of the Revenue office at (540)863-6640. Office hours are 8:00 am – 5:00 pm, Monday through Friday.