If you own a farm in Robeson County, please pay close attention to the information I share with you today. If you do not take advantage of this important provision in the property tax laws, it might cost you hundreds or even thousands of extra dollars in property taxes during the coming years.

There are only a few more days left in the month of January. Farm owners have until January 31 to apply for use-value taxation for their farmlands, forestlands, and/or horticultural lands.

In 1973, the North Carolina General Assembly enacted legislation providing for "use-value" taxation on agricultural, forestry, and horticultural lands. This legislation, entitled The North Carolina Farmland Taxation Act, was enacted to assist farm owners to continue farm operations without having to pay high property taxes.

At the time this law was enacted, land prices in North Carolina had begun to escalate because of the demand for residential and commercial development. In most areas of the state, including Robeson County, this trend has increased drastically since that time. In many situations, farmland is much more valuable for residential or commercial development than for farming.

By law, every state in North Carolina must update the market value of all properties within that county at least every eight years. Because property values have increased so drastically in recent years, some counties have elected to update these values more often than required by law.

The purpose of this law is to make sure that the tax values of all property in a county accurately reflect the true market value of that property so the proper taxes can be charged. Just as important, it ensures that all citizens are taxed fairly and equally for the property they own.

Everyone in Robeson County is well aware that during the past two years, the county has undergone an extensive process of reevaluating all property in the county. This process became very controversial, and many errors were made. However, most mistakes have now been corrected and all indications are that the property tax values in Robeson County are more accurate than they have been for many years.

A few property owners are still working with the county tax department to correct mistakes and oversights. Hopefully, these differences will be corrected within the next few weeks.

During the reevaluation period, all property in the county, including farmland, was appraised at its "best-use" value. Naturally, for residential and commercial properties, the best use is for residences and businesses. However, the best use for much of the farmland in the county is not for farming but for residential or commercial development. This makes the market value of this property much higher than what its value would be if used for farmland.

To understand this better, it is an accepted fact that a farm in Robeson County that was previously used for corn and soybean production can be divided into residential lots, and these lots will sell for thousands of dollars per acre. Recently, several large farms in the county have been sold by cutting them up into small tracks of four to twenty acres each, rather than selling the entire farm as one unit. This is evidence enough that the best-use value for this property is not for farming. It is also evidence that the value of this land is much greater for purposes other than farming.

When landowners who wish to retain their farms in agricultural or forestry production apply for use-value taxation, the tax value of their property is adjusted to reflect its value for farming or forestry rather than for residential or commercial development. Although the best-use value remains the same on the tax notices, the use value is lowered drastically. Taxes are paid on the use value rather than the market value.

Although it is not uncommon for small tracts of land in the county to sell for $5,000 or more per acre, the value of this land for farm purposes is calculated at about $650 per acre. Forestlands and wetlands are priced much lower.

If the landowner later decides to sell some or all of their property for residential or commercial development. they agree then that its best use was for something other than farming. They then must pay the differences in taxes for the previous three years.

There are some basic requirements for farmlands to qualify for farm use-value. Farmlands must be at least ten acres in size, and forestlands must be at least twenty acres in size. The owner must have owned the land for at least four years or reside on the property. Farms used for agricultural production must generate at least $1,000 worth of agricultural commodities each year. Forestlands must have a forest management plan.

Farm use-value tax values are not automatically applied to farms. Owners must apply for this provision. If you own farmlands in the county and have not applied for farm or forestry use-value, I encourage you to contact the Robeson County Tax Department and do so. You have until January 31 to apply.

E-mail address: Everett_Davis@ncsu.edu

Mailing Address:
P. O. Box 2280
Lumberton, NC 28359-2280

Phone: 910-671-3276
Fax: 910-671-6278

Date Created 06/16/06