Lately, I’ve been working with a few buyers who have been looking for land; specifically, multi-acre parcels of land. Many of those properties have been zoned Agricultural, while others might have some sort of Residential zoning, but in a few cases, we’ve seen properties that have had the term “Land Use” attached to their record. So what is Land Use in Montgomery County?
Land Use in Montgomery County was established in 1978, and allows for the deferment of real estate taxes on land that is agricultural in nature, at rates that are based on a value that’s less than the tax assessed value. The purpose, according to the County website, is to “further the public interest by encouraging the preservation of land … and to promote orderly land use planning and development.”
So the benefit to a property owner is that by having a property be a part of the Land Use program, they pay less on their real estate taxes. Imagine a 40-acre parcel in Montgomery County is assessed at $100000 … that parcel, taxed at the County’s current rate of $.87 per $100 of assessed value, would mean a tax bill of $870 per year to the property owner. By putting – and keeping – the property in Land Use, the owner would pay significantly less per year in taxes, somewhere on the order of 50-75% of that amount. Of course, if the property is ever taken OUT of the Land Use program, then the owner would be responsible for “roll back taxes”, which would be the difference between the tax levied during the past five years the property was in Land Use, and the tax that would have been levied had the property not been subject to Land Use qualifications.
Clear as mud? Land Use is a way that landowners in Montgomery County can protect the natural resources of the land, while paying lower taxes.