In Arkansas, if a farmer/developer buys 20 acres, of pasture, with a few cows on it. It is taxed at the same rate as farm land.
Now, if the farmer divides part of it into 20 lots, with water and sewer, and sells one lot, then, eventually, his tax rates go up. (On his remaining unsold lots)
So, in Arkansas, what happens, is you get the whole subdivision done. And, the developer farmer says "Say, could you make me individual little plats, one for each lot, with a description, so my tax rates don't go up?"
And, of course, we wind up doing that.
This leaves his remaining lots at the FARM tax rate, because the master plan is not recorded. Just each lot, as it sells.
So, I am asking, how is it in your neck of the woods?
Do you have this problem? It seems like a NON progressive policy, for the Tax Assessors to penalize the developer, with higher taxes, before he sells the lots.
I just got off the phone with our local tax assessor, and she said that she would discuss it with the policy setters somewhere.
What do you think?
Thanks.
Nate
As far as I'm concerned I believe it should be taxed at the lower rate until sold unless there are internal roads, utility easements and all that sort of thing involved. There should be nothing wrong with coming up with a plan and paying a surveyor to monument the plan. However, it is still only a plan, it is not reality. The financial return from the land is not increased until it is actually removed from agricultural use and limited to a higher use.
Nate,
In Tennessee, at least in my county, anytime you cut out more than 4 lots, it requires a preliminary plan. If the developer (farmer) cuts out that 5th lot, he will have to prepare a preliminary plan, before that 5th lot is developed.
I am not sure about the tax rates for the lots. I don't get into that part of it. I have enough to stay on top of without getting into the taxation part of the process.
I hope this helps.
Jimmy
We have a few counties that do something similar to that but the vast majority pretty much leave you alone to do with your property what you want to do. Massive chaos has not yet been a big problem.
One nearby county will let you do what you want until you create a parcel smaller than 40 acres. The typical situation is one where Granny has finally kicked the bucket and either no one in the family wants the homestead out on the farm or no one in the family wants the farmland. So, someone gets the idea to split off the house and a few acres and either sell it or the adjoining land. Doing that requires a heavy dose of red tape, jumping through hoops and promising to go forth and sin no more. This normally takes a couple of months or more. Then the trouble starts. When someone then wants to slice a piece off of the large chunk of farmland for any reason whatsoever at any time after that a fullblown subdivision plat is required with all of the bureaucratic signoffs like you would need for a major addition to the city. You may still have 150-some acres in one piece and a roughly five-acre piece, but, by golly you gots yerself a subbydaveeshun now. Lot 1 and Lot 2 or something like that. What a load of horse puckey! It might be something as minor as adding a few feet on one side of the original piece split off with the old farmstead to accomodate something simple like expanding the septic lagoon to accomodate an extra bedroom or two being added to the old house. Instead of a simple, low cost survey and almost no bureaucratic mishmash, the DEVELOPER must spend several times more for the subdivision plan than the very simple survey and go through several months of "Mother May I's" while kissing the glutei maximi of the assembled all-knowing bureaucrats. They tend to lose sight of the fact that it is still plain old farm ground on the large remainder tract (Lot 2) and an otherwise nearly worthless little slice (Lot 1) being added to the first parcel cut out. Many times the need for the extra little slice is another bureaucratic demand that the back slope of the lagoon levees be at least 50 feet from any adjoiner. Oh, oh. You've only got 41 feet instead of 50 feet. So, if you really want to add those bedrooms to make the old house fit your family needs you better get ready to pony up more money than you have available. It may be three miles to the nearest residence, but, by golly you gots yerself a subbydaveeshun now!
In PA, You Pay Back Taxes On Developed Farmland
Paul in PA
Nate,
Harris County wouldn't allow that to happen. The authorities have platting ordinances that would prevent him from subdividing out like that.
When studying for the Illinois exam, I believe I remember them having a state law that kept the lots at the farm tax rate until a certain time had passed, or a certain number of lots are sold. That's how it should be.
