Rural landowners have options to reduce their tax liability. Review your information at the tax assessor office to be certain what you pay taxes on is correct. Things to look for are correct acreage, structures, improvements and tax covenants. The tax assessor’s office does a remarkable job managing a huge amount of data. However, there are errors that go undetected and it is the landowner’s responsibility to verify their information.
I worked on one property about 100 acres short and another 100 acres over what the tax assessor was using for acreage. Some of the older plats are incredibly accurate but sometimes there are inaccuracies. I wrote a stewardship plan for a client and asked him if he was renting the house on his property and if he wanted to thin the pines. Turns out he did not own the house and pines, and had been paying taxes on a house and 30 acres of land for nearly 25 years. The tax office said they would start sending the tax bill to the proper landowner. There was no refund of taxes. The landowner needs to be certain of what they are taxed for.
Rural landowners have another very important tool in reducing their tax burden. There are three tax covenants that can be entered into that will reduce the tax bill. If you have larger land parcels, usually larger than 25 acres, you are eligible for local conservation easements. These easements are designed to help farmers, recreational and timberland owners reduce their tax burden by being taxed on a current use basis rather than a higher and better use valuation. If you live near a city and have 500 acres of timberland that could be used for development, you will pay taxes on a timberland investment. The covenants typically reduce the tax liability by 30% to 40%. Two of the covenants (Preferential and CUVA) are for ten years and the other (FLPA) is fifteen years. If you subdivide or develop property, you breach the covenant and have to pay penalties. There is a little more to it than I have explained but it is a great tool we recommend to many of our clients.
The tax assessor’s office assigns value to different land types based on quality or productivity such as upland, bottomland, cropland, swampland… They also assign value to improvements on your property. The tax assessor does a remarkable job but sometimes there are discrepancies that you can appeal or at least question the chief appraiser as to the accuracy of certain valuations.
One last comment on valuation is that, in Georgia, timber is not taxed annually like property taxes. You pay a severance tax or timber tax when you harvest the timber. This was a very good ruling protecting timberland owners. If you paid taxes on the timber as an ad valorem tax for 30 years and never sold the timber, you were taxed for the value of something that was never realized. In case of storm or fire damage whereby the timber could not be harvested or sold, you still paid tax. Today, you only pay tax on income you actually realized at time of harvest.
We hope this information s helpful in these times when every penny counts. Green Hill Land & Timber, LLC always welcomes the opportunity to help you with your land and timber investments. Please give us a call if you have questions on buying or selling land and timber.