Present-Use Value: Why It Matters!
I often receive calls from private landowners throughout the county who are struggling to pay their tax liability on their agricultural, horticultural, or timber property. In most cases, agricultural land tracts consist of both forestland and cropland. Many landowners may only be receiving income from the cropland acreage. So depending on the size of the tract and the proportion of land that is creating income, meeting the property tax liability can become more difficult in some situations. If this sounds like a familiar situation, the first question I ask would be, “Is your agricultural property enrolled in Present-Use Value?” The typical response, “What is that?”
Present-Use Value (PUV) is a deferred tax program available to landowners that uses the value of land in its current use as agricultural, horticultural, or forest land. It allows the qualifying working land to be taxed at its farming value rather than its market value for development, which is the standard. Landowners need to know that working land should be managed at an appropriate level to ensure good social, environmental, and economic impacts. It is important to note the PUV program is voluntary and certain requirements must be met. For instance, forested land requires a forest management plan to be written and carried out before it can be accepted into the program.
Individual landowners must enroll their own property and should not expect it to happen automatically! Also, property that was previously enrolled in the PUV program must be re-enrolled within 60 days of change in ownership. Oftentimes, landowners think land that is passed down in the family remains automatically enrolled. Be aware, the 60-day window still applies and the new property owner must re-enroll in the program or the land will be taxed at the fair-market value.
Now recall, I mentioned PUV is a deferred tax program. Deferred taxes are the difference between the fair-market value and present-use value. Think of deferred taxes as being “put on the shelf” until the land use changes. In other words, there is a penalty imposed when land is taken out of agricultural use and the deferred taxes from the previous three years are levied against the landowner.
Some critics may argue against agricultural land receiving such an incentive. Some farmers may argue “my crops or livestock don’t go to school,” which reflects the concept that agricultural land does not demand the same municipal services as other uses and should be taxed proportionately. I think the case could be made that if landowners took advantage of some tax relief, it would serve as a great farmland protection tool that would help keep the number one industry in this county and state thriving for years to come.
For more information, please contact Mac Malloy, Extension Field Crops Agent with North Carolina Cooperative Extension, Robeson County Center, at 671-3276, by E-mail at Mac_Malloy@ncsu.edu, or visit our website at http://robeson.ces.ncsu.edu/. North Carolina State University and North Carolina A&T State University commit themselves to positive action to secure equal opportunity regardless of race, color, creed, national origin, religion, sex, age, veteran status, or disability. In addition, the two Universities welcome all persons without regard to sexual orientation.