Rollback Taxes

What Are They?

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.

Limitations

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.

How do Rollback Taxes Work?

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.