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CHECKLIST:
What You Should Know
. . . Before Making Your Decision!
In the last issue of LAND RUSH, we covered topic
3 of 11 suggested questions you should ask before making your land
purchase decision. In this issue, we'll cover the fourth one - about
property taxes- in depth.
4. How much are the property
taxes each year?
Want to save some money on taxes? Who doesn't? You'll be pleased
to learn that buying mountain land can save you a bundle on property
taxes.
Here in the mountain counties of North Carolina, there is a valuable
property tax break for landowners called the "Land Use"
tax program. It's available to property owners with ten acres or
more, and there are no fees or other costs to put your land into
the program.
Let's use Wilkes County as an example. Say you purchase a tract
of land containing 105.8 acres and pay $2,500 per acre for the property.
The next year, you receive your property tax bill showing that,
for tax purposes, it is appraised at $2,080 per acre. The current
tax rate in Wilkes County is .655%. Based on the total tax value
of $220,064.00, your tax bill would total $1,441.42.
So, what is the "Land Use" program, and how does it save
money? In an effort to encourage landowners to "manage"
their land for maximum timber production, and to keep families from
having to sell their land just to pay the taxes, a special tax category
has been created. Called the "Land Use" classification,
a special county-wide tax valuation is assigned to all land in the
program.
Now, take a look at the effect of placing your land in the "Land
Use" category for tax purposes. In Wilkes County, the 2002
tax valuation for property in the Land Use program is a mere $330
per acre. The tax bill would still show a total valuation of $220,064.
Next to that valuation, it would show "Deferred - $185,150"
and a final "Taxable Value" of $34,914. Using the same
tax "rate" of .665% applied to the reduced value of $34,914,
the tax bill would be only $228.69 instead of $1,441.42. That's
a whopping savings of $1,212.73!
We all know there's no such thing as a "free lunch" -
so what's the catch? Here it is . . . and isn't! If you ever sell
the property to a "non-blood relative", you will be obligated
to pay the full amount of property taxes for the three years preceding
the sale, i.e. $1,441.42 X 3 = $4,324.36. While that may sound like
a "catch" - consider that you would have been paying that
amount each year anyway if your land were not in the "Land
Use" program.
The "catch" comes in the form of "selective forgetfulness".
During the ten or fifteen years you owned the land, you will have
forgotten how the program works. Thus, when you sell the land, the
extra taxes collected at closing will come as a shock and surprise.
Don't let it deter you from enrolling in this very beneficial program.
Take these two steps to enroll in the program: 1) Complete an application
available from the county tax office at no charge, and 2) have the
N.C. Forest Service conduct a timber survey of your property (no
charge). The Forest Service will provide you with a two-page report
summarizing what age and species of timber is growing on your property
with suggestions for future harvesting and proper growth management.
Upon receipt, furnish the report along with your application to
the county tax office. You should receive notification of acceptance
into the program within 3-6 months, effective in the following tax
year.
Participation in the program places no special obligations on you
or your land, i.e. allowing the public onto your land. Nor are you
dedicating any conservation easements to others, or giving up any
rights of ownership. It's just one of those government programs
that works for all involved. Who says there's no free lunch?
PAST TOPICS INCLUDE:
(click on a topic to read about it)
INTRODUCTION
1.
Has the property been surveyed recently?
2.
What is the topography of the property?
3.
Is the property accessed by public road or right-of-way?
UPCOMING TOPICS WILL INCLUDE:
5. Are there any restrictive
covenants or zoning on the property?
6. Will sellers finance the
property or do they expect cash?
7. How much earnest money is
required with a purchase offer?
8. What, if any, utilities are
provided?
9. How much are the closing
costs to complete the transaction?
10. Are there any hunting leases
in effect on the property?
11. Are there easements or rights-of-way
for the benefit of others?
RETURN
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