Published on Wednesday, 30 November -0001 00:00
Revenue commissioner urges landowners to weigh their options now
Minnesota farmers now have a few more months to decide on property tax treatment for any non-agricultural, class 2b rural vacant land that is currently enrolled in Green Acres but will become ineligible for the program in 2013 (for taxes payable 2014).
Landowners now have until Aug. 16 to decide whether they want to withdraw class 2b land from Green Acres immediately (for taxes payable in 2011), thereby avoiding any tax payback. Landowners may also choose to leave class 2b land in Green Acres for now while they explore and pursue other options, such as the new Rural Preserve program.
The Green Acres law has always required a payback of deferred tax when land is sold or withdrawn from the program. The payback is equal to the amount of deferred tax for the most recent three-year period.
The payback requirement will not apply to class 2b land that is withdrawn by the Aug. 16 deadline. However, withdrawal is only one of several options that taxpayers should consider for their situation.
"We encourage landowners to carefully weigh their options, but not wait until the last moment," said Revenue Commissioner Ward Einess. "Once the summer growing season begins, Aug. 16 will come fast."
Under legislation enacted in 2008 and 2009, class 2b land will become ineligible for Green Acres for taxes payable in 2014 and beyond. Small pockets of such land - such as fence lines, windbreaks, unfarmable hillsides, or similar terrain that is interspersed with farmed acres - may be assessed as part of adjoining class 2a agricultural land and remain in Green Acres.
The main options for landowners with 2b lands currently enrolled in Green Acres include:
Withdraw class 2b land from Green Acres by Aug. 16, 2010. The usual three-year payback of deferred property tax will be waived for any class 2b land that is withdrawn by Aug. 16. This avoids the payback, but withdrawn acres will be valued at market value for taxes payable in 2011 and beyond.
Leave class 2b land in Green Acres for now, then transition it to another program before Jan. 2, 2013. Class 2b land that is transitioned to Rural Preserve by 2013 will not be subject to the three-year payback requirement. Other programs include the Sustainable Forest Incentive Act (SFIA), which provides an annual payment for enrolled woodland, or the class 2c Managed Forest classification, which provides some landowners with a reduced class rate.
Leave class 2b land in Green Acres until the 2013 assessment. Any class 2b land that remains in Green Acres will be automatically withdrawn on the assessment date of Jan. 2, 2013. The land will be subject to a three-year payback and will be assessed at full market value for taxes payable in 2014 and beyond.
Landowners will be able to apply for Rural Preserve starting with the 2011 assessment (for taxes payable in 2012). Rural Preserve was created to provide an alternative for qualifying class 2b land once it is removed or withdrawn from Green Acres. Rural Preserve will offer tax deferral benefits similar to Green Acres for qualifying rural woodlands; however, the program requires a land-management plan and covenant that prevents changing the use of the land for at least 10 years.
Einess noted that other proposals concerning Green Acres are being debated by the Legislature, but it's unclear which of them, if any, might be passed and signed into law. "To protect their interests, landowners should be prepared to choose whether or not to withdraw class 2b land by Aug. 16," Einess said.
Taxpayers with questions should contact their county assessor's office. For general program information, visit the Department of Revenue Web site at www.taxes.state.mn.us, and click "Property Tax" in the top-left navigation menu.