Agricultural Real Property Special Assessment Ratio

1. Qualifications and Requirements
2. Definition of Agricultural Real Property
3. Rollback Tax Estimation Formula

1. Qualifications and Requirements

Agricultural real property which is actually used for such purposes and meets certain size or income restrictions, not including, however, a corporation which is the owner or lessee except for certain corporations which do not:

1. Have more than 10 shareholders
2. Have as a shareholder a person (other than an estate) who is not an individual
3. Have a nonresident alien as a shareholder, and
4. Have more than one class of stock

Timberland tracts must be at least five acres.  Tracts of timberland must be devoted actively to growing trees for commercial use.  Tracts of timberland less than five acres may be eligible for agricultural classification if any of the following conditions are met.

1. The tract is contiguous to another timberland tract of at least five acres.
2. The tract is under the same management system as another qualifying timberland tract.
3. The tract is owned in combination with non-timberland tracts that qualify as agricultural real property.

Non-timberland (cropland) tracts must be at least 10 acres.  Tracts of non-timberland less than 10 acres may be eligible for agricultural classification if any of the following conditions are met:

1. Contiguous tracts with identical ownership meet the minimum acreage requirement when added together.
2. The person making the application earned at least $1,000 gross farm income in at least three of the past five years or at least three of the first five years if this is an initial application.
3. The property has been owned by current owner or immediate family member of the current owner for at least ten years ending January 1, 1994 and the property is classified as agricultural real property for tax year 1994.

2.Definition of Agricultural Real Property

Agricultural real property shall mean any tract of real property which is used to raise, harvest or store crops, feed, breed, or manage livestock, or to produce plants, trees, fowl, or animals useful to man, including the preparation of the products raised thereon for man's use and disposed of by marketing or other means.  It includes, but is not limited to, such real property used for agricultural, grazing, horticulture, forestry, dairying, and mariculture.  In the event at least 50% of real property tract shall qualify as "agricultural real property", the entire tract shall be so classified, provided no other business for profit is being operated thereon.  The term "agricultural real property" shall not include any property used as the residence of the owner or others in that the taxation of such property is specifically provided for in Section 2 (C) and (E) of Act 208.

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1. Find the current Market Value of subject property
2. Multiply the Market Value X  .06
3. Find the current Assessed Value of subject property
4. Compute the difference of Line 2 & Line 3
5. Multiply this difference by the Millage Rate, for each tax year being rolled back on.

Note:        Rollback tax estimates should be computed for five (5) years.  Start with year property was split, and work backward four (4) years.