The Agricultural, Forest, and Open Space Act of 1976 provides for the assessment of agriculture, forest, and open space lands for tax purposes based on the present use value rather than on the market value of the property. The law requires that “agricultural” land be a part of a farm unit “engaged in the production of growing crops, plants, animals, nursery, or floral products.” The law creates a presumption of farm use if the property produces a minimum average annual gross farm income of $1,500 over any three consecutive years and the property is located in a greenbelt.
The law establishes a maximum limit of 1500 acres per owner for greenbelt in any one county. Any individual who owns property with others is also” credited” with his or her percentage of the property. If the owner of land is a corporation or similar entity, the law attributes each owner of the corporation with a percentage of ownership in the land equivalent to their respective ownership in the corporation.
Rollback taxes apply when a property that has been assessed as Greenbelt becomes disqualified for any of the following reasons:
- Size of tract or use no longer meets the qualifications
- Owner requests in writing to withdraw
- Property is covered by a recorded subdivision plat (unless the owner can still prove farm use)
- Property is sold and converted to other use
Once a property becomes disqualified, the owner may be liable to pay what are referred to as “rollback” taxes. A “rollback” assessment is simply the difference between the greenbelt assessment and the market value assessment that would have been applied if the property had not been in the program. In effect, rollback taxes pay back the tax savings the owner enjoyed under a greenbelt assessment. For Agricultural and Forest properties, the rollback period is three (3) years--the current year and the two preceding years. For Open Space property the rollback is five (5) years. If only a portion of the property is sold or converted to a non-qualifying use, rollback taxes are only assessed on that portion, as long as the remainder of the property still qualifies. Rollback assessments are made on the next tax roll after the property no longer qualifies as greenbelt. An owner should fully understand “rollback” assessments before applying for the Greenbelt status.
Application for “greenbelt” property is made by filing a written application with the Shelby County Assessor of Property. Unpaid rollback taxes become a first lien against the property no matter who is responsible for payment.
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Roll Back Taxes. If applicable, Seller will pay upon receipt from Purchaser of a statement showing any additional taxes that are attributable to any period prior to Closing that may become due as a result of a change in usage or ownership of the Land (“Roll-Back Taxes”), regardless of whether the change occurs before or after Closing. At Closing, Seller shall deposit with the Title Company an amount equal to 110% of the estimated Roll Back Taxes (“Roll-Back Taxes Deposit”) as if the change in usage or ownership occurred at Closing. Following Closing: (i) Seller shall pay the Roll-Back Taxes for the Land on or before the day that they become delinquent (the “Rollback Taxes Payment Date”) and deliver evidence of same to Purchaser and the Title Company by the Rollback Taxes Payment Date, (ii) if Seller does not deliver to Purchaser and the Title Company evidence reasonably acceptable to Purchaser that Seller has paid the applicable Roll-Back Taxes by the Rollback Taxes Payment Date, then at the request of Purchaser (which request shall also be sent to Seller) the Title Company shall pay the Roll-Back Taxes for the Land with the proceeds from the Roll-Back Taxes Deposit and any additional amounts that Seller has deposited with the Title Company, (iii) if the proceeds available from the Roll-Back Taxes Deposit are insufficient to pay the Roll-Back Taxes, at Purchaser’s request Seller shall deposit said insufficiency with the Title Company to be disbursed pursuant to the terms of this Section 7.05, (iv) if Seller delivers to Purchaser and the Title Company evidence reasonably acceptable to Purchaser that Seller has paid the Roll-Back Taxes, on or before the Rollback Taxes Payment Date then the Title Company shall release the Roll-Back Taxes Deposit to Seller. If Seller and the Title Company fail to perform their respective obligations pursuant to this section, Purchaser may elect to pay the Roll-Back Taxes. Within 10 days after receipt of notice from Purchaser (which notice will also be sent to Seller) the Title Company shall pay to Purchaser out of the Rollback Taxes Deposit (i) the amount of the Roll-Back Taxes paid by Purchaser and (ii) any reasonable out-of-pocket costs incurred by Purchaser relating thereto. Seller shall pay to Purchaser within 10 days after receipt of notice from Purchaser (i) the amount of the Roll-Back Taxes paid by Purchaser not paid to Purchaser pursuant to the preceding sentence together with interest thereon from the date of payment by Purchaser unti...
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