There are four test that agricultural and horticultural land must meet in order to qualify for present-use valuation. Forestland only has to meet

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1 There are four test that agricultural and horticultural land must meet in order to qualify for present-use valuation. Forestland only has to meet three test since the income test is not applied to forestland. 1-Ownership 2-size 3-Income 4-Sound Management 1

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3 Individual 3

4 a. The land was appraised at its present use value at the time title to the land passed to the new owner. b. The new owner acquires the land and continues to use the land for the purpose for which it was classified under the previous ownership. c. The new owner has timely filed an application as required by NCGS (a) and has certified that the new owner accepts liability for any deferred taxes and intends to continue the present use of the land. 4

5 A business entity that meets all of the following conditions: 1. Its principal business is farming agricultural land, horticultural land, or forestland. 2. All of its members are, directly or indirectly, individuals who are actively engaged in farming agricultural land, horticultural land, or forestland or a relative of one of the individuals who is actively engaged. 5

6 3. It is not a corporation whose shares are publicly traded, and none of its members are corporations whose shares are publicly traded. 4. If it leases the land, all of its members are individuals and are relatives. Under this condition, 'principal business' and 'actively engaged' include leasing. 6

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8 At least one tract must meet the following minimum acreage requirements: Agriculture 10 acres in actual production (actively engaged in the commercial production or growing of crops, plants, or animals) Horticulture 5 acres in actual production (actively engaged in the commercial production or growing of fruits and vegetables or nursery and floral products) Forestry 20 acres in actual production (actively engaged in the commercial growing of trees) 8

9 For agriculture and horticulture, land under improvements used in the farming operation is considered to be land in production. Land enrolled in Conservation Reserve Program (CRP) is considered to be in actual production 9

10 Land not in production cannot be used to meet the minimum acreage in production (example homesite- a one acre homesite is common practice with counties) 10

11 Αgricultural tract can include woodland and wasteland. ( This has not always been true) Ηorticultural tract can include woodland and wasteland. ( This has not always been true) Forestland tract can include wasteland, but not open land. 11

12 If an agricultural or horticultural tract contains less than 20 acres of woodland, the woodland is not required to be under a sound forestry management plan. 12

13 If an agricultural or horticultural tract contains more than 20 acres of woodland, the woodland is required to be under a sound forestry management plan. 13

14 Additional tracts can also qualify even if they do not meet the minimum size requirements. Commonly referred to as Piggyback 14

15 Additional tracts must meet the following requirements: 1. Must be under the exact same ownership. 2. Must be the same classification 3. Must be in the same county or within 50 miles of a qualifying tract if in a different county than the qualifying tract. 4. Must be in active production and under sound management. 15

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17 Overview of Income 17

18 1. The sale of products produced from the land. 2. Any payments received under a government soil conservation or land retirement program. 3. For agricultural land only, the amount paid to the owner as a result of the Tobacco Buyout. 18

19 1. Rental income from leasing the land. 2. Stud fees, grazing fees and boarding fees. 3. Training or showing of animals for judging or show. 4. Sale of firewood, pine cones, pine straw, etc. 5. Fees for services such as plowing, mowing, baling, hauling, drying, curing, or other similar operations. 19

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21 Sound management requires land to be used for the production of agricultural, horticultural, or forest products in a manner that maximizes the return from the land. If this is not the objective of the owner, it should be questioned whether the land is being used for commercial production as required by the statutes. 21

22 Forestry management plans can be prepared by: An Independent forestry consultant A forester with the North Carolina Division of Forestry Resources Property owner If the property owner prepares the plan, the owner must have the necessary forestry management and analysis skills to prepare a plan comparable to a plan prepared by a qualified forester. 22

23 1. Management and Landowner Objectives Statement long and short range objectives. 2. Location Include a map that locates the property described and also delineates each stand referenced in the Forest Stand Description. 3. Forest Stand 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. 4. Regeneration-Harvest Methods and Dates For each stand, establish a target timetable for harvest of crop trees, specifying the type of regeneration-harvest (clear cut, seed-tree, shelterwood, or selection regeneration systems as applicable). 5. 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. 23

24 A forest management plan should be updated as forest conditions significantly change. Storm damage Insect or disease attack Timber harvest Thinning Wildfire Change in product class mix as the stand ages and grows 24

25 If the property owner demonstrates any one of the following factors, 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. Evidence of net income from the farm operation. 3. Evidence that farming is the farm operator s principal source of income. 25

26 The deferred taxes for the preceding three fiscal years are due and payable in accordance with G.S D when the property loses its eligibility for deferral as a result of a disqualifying event. A disqualifying event occurs when the land fails to meet any condition or requirement for classification or when an application is not approved. Always remember: It is a deferment and not an exemption. 26

27 Per NCGS (j) 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. 27

28 The assessor may request any information needed to verify that the property continues to qualify for present-use value taxation. The owner will have 60 days to submit the information to the assessor or lose their present-use value qualification and the property s deferred taxes will become due and payable as provided in NCGS (c). 28

29 January 31 st of the year for which you are applying is the Application Deadline for a new parcel coming into the program. ( Parcel has to be in the Applicants name as of January 1 st ) 60 Days from the date of transfer is the Application Deadline for continuing use from the previous owner without having to wait the four full years before becoming eligible. 29

30 Forms and other useful information are available at our website under Tax Appraisal Department. You can also visit the Department of Revenue s site at and click on Tax Forms and then click on Property. 30

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