Roll back taxes...What are they? Does your property purchase trigger them? Who is responsible for paying for them? We are here to answer all your questions. Imagine...your dream has finally come true! You have just found acres of land where you can farm and build your dream house, the only problem...corn fields are currently where your dream house should be. Before you buy the property, just to plow down the corn fields there are some things you should know. "ROLL BACK TAXES!" What are roll back taxes? Anytime a property changes its USE from agricultural to any other use, it will cause roll back taxes to be assessed and billed to that portion of the property that has changed. Wondering what classifies as agricultural use? Land that is being cared for, cultivated and harvested for a marketable price. Now this doesn't mean you can't have your house and eat your corn, too! As long as your property remains at least half agricultural your property may still qualify. Say that you decide to go ahead and plow down all the corn. You guessed it, Rollback taxes will take effect. Another time you definitely see roll back taxes triggered is when a developer buys a farm which has the agriculture status and they go develop the land. They start cutting up smaller tracts and selling lots of homes. But who pays for them? Insider tip here… The responsibility of the taxes should be negotiated when your offer is made and agreed upon. The buyer and seller can agree to split the taxes or one of the parties can agree to pay in full but get this settled upfront in writing. The Rollback tax bills are sent to the owner of the property as of December 31 of the year the land use changed. The good news is effective in 2021, rollback taxes are to be assessed over a three-year period rather than the previous five-year period. This is advantageous potential savings of two years’ worth of rollback taxes. We know this can be confusing! Make sure to reach out to your favorite real estate agent so they can answer all your questions. If you do not have one, we would love to help you. We know, it's a big decision! And we're here to help! It’s your home, your lifestyle and we are your real estate team!
Brandi Cook and Vikki Crossland
Meybohm Real Estate
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