12.02 PAYBACKS OF DEFERRED TAXES AND SPECIAL ASSESSMENTS

Transcription

1 12.02 PAYBACKS OF DEFERRED TAXES AND SPECIAL ASSESSMENTS Special valuations (See section 4.08) provide for the deferment of taxes and special assessments payable on real property meeting certain criteria. The laws state that property owners who qualify, can apply for deferment of higher valuations and the consequent taxes payable, and continue to have the property valued based upon a particular use. The tax imposed is a lien upon the property assessed to the same extent and duration as other taxes imposed upon property in the state. The tax is extended by the county auditor and is collected and distributed in the same manner as for other property taxes. When real property that has been assessed and taxed under a special valuation program with tax deferral no longer qualifies for the program in which it was entered, that portion which no longer qualifies is to be subject to additional taxes in the amount equal to the taxes which were deferred (i.e. the difference between the tax that is based upon the preferential value and the tax that is based upon the market value.) The tax that is based upon the market value is not to be greater than if the actual bona fide sale price at an arm's length transaction has been used in lieu of the market value. The additional taxes are to be extended against the property on the tax list for the current year. No interest or penalties are to be levied on the additional taxes if they are timely paid. The actual number of years of deferred taxes that must be paid back will vary depending upon the special valuation program involved. Minnesota Open Space Property Tax Law When real property that is or has been valued and assessed according to the Open Space law no longer qualifies, that portion which no longer qualifies is to be subject to additional taxes in the amount equal to the taxes which were deferred. The additional taxes are to be extended against the property on the tax list for the current year and are only to be levied with respect to the last 7 years which the property had been assessed under the Open Space law. No interest or penalties are to be levied on the additional taxes if they are timely paid. This does not apply to real property that ceases to qualify because it is acquired by the State of Minnesota or a political subdivision, agency, or instrumentality of the State, provided that the property continues to be used for a qualifying purpose for at least 5 years from the date the property was acquired. When title to real estate that is valued and assessed under the Open Space law is transferred, no additional taxes are to be extended against the property if the property continues to qualify for Open Space and the purchaser files an application for the continued deferment of taxes within 30 days of the sale. PAYBACKS OF DEFERRED TAXES AND SPECIAL ASSESSMENTS

2 Minnesota Agricultural Property Tax Law (Green Acres) The Green Acres program payback will be affecting both class 2a and grandfathered class 2b real property. There are several situations where these properties may leave the Green Acres program, and depending upon the situation there may or may not be a payback. Deferred Taxes Class 2a agricultural property will require a payback if a portion of the property is either withdrawn from the Green Acres program due to a change of use (i.e. agricultural to residential or commercial) or if after the property is sold or transferred by the owner and the new owner does not file an application for continued deferment within 30 days of sale. If the 2a property is transferred into the Agricultural Preserves program or a new property owner files for continued deferment within 30 days of sale then no additional taxes (and any deferred special assessments plus interest) are to be extended against the property. If deferred tax payback is required, then the additional taxes are only to be levied with respect to the last three years (the current year s deferred taxes plus payment of deferred taxes for the two prior years) that the property had been valued and assessed under "Green Acres." Grandfathered class 2b rural vacant property may require a tax payback if the property is either withdrawn from the Green Acres program due to a change of use or the property is sold or transferred to someone other than a son or daughter of the owner/shareholder. If deferred tax payback is required, then the additional taxes to be levied depend upon when the land no longer qualified under the Green Acres program: Before August 1, b rural vacant land can be withdrawn from the Green Acres program and no additional taxes are to be extended against the property. Those property owners who withdrew class 2b lands from Green Acres in response to the 2008 law changes and already made tax payback arrangements may be eligible for a refund of the paybacks made to counties. August 1, 2011 to April 30, 2013 the class 2b rural vacant land requires payment of the current year s deferred taxes plus payment of deferred taxes for the two prior years UNLESS the owner transfers the 2b property into the Rural Preserves program, in which case no additional taxes (and any deferred special assessments plus interest) are to be extended against the property. After May 1, 2013 the class 2b rural vacant land is automatically withdrawn from the Green Acres program and the land requires payment of the current year s deferred taxes plus payment of deferred taxes for the two prior years (and any deferred special assessments plus interest) EVEN IF the owner transfers the 2b property into the Rural Preserves program. Cross Compliance Regardless of whether the property is classified as 2a agricultural or grandfathered 2b rural vacant land, if the owner is subject to a second final enforcement action (not including verbal or written warnings) for violations of agricultural chemical (M.S. 18B, 18C, and 18D) or water protections laws (M.S. 103E, 103F, 103G, and 103H) within a three year time period, may be subject to a tax penalty. The tax penalty may equal the deferred taxes on the parcel for the current year and the two previous years (i.e. equivalent to the three year payback), but not exceeding the length of time the owner has owned the property. PAYBACKS OF DEFERRED TAXES AND SPECIAL ASSESSMENTS

3 The penalty tax should be extended against the property on the tax list for the current year and no interest or additional penalties shall be levied if timely paid. If the property is also withdrawn from the program then any deferred special assessments (see below) must also be paid, if any, in addition to the penalty. Deferred Special Assessments When a payback is required, all deferred special assessments plus interest are payable in equal installments spread over the time remaining until the last maturity date of the bonds issued to finance the improvement for which the assessments were levied. If the bonds have matured, the deferred special assessments plus interest are payable within 90 days. The provisions of section , subdivision 2, apply to the collection of these installments. Penalties are not imposed on any such special assessments if timely paid. The payment of special local assessments levied after June 1, 1967, for improvements made to any real property under "Green Acres" together with the interest will, on timely application, be deferred as long as the property qualifies for "Green Acres or is transferred to an Agricultural Preserve. If special assessments are being deferred, the governmental unit is to file a certificate containing the property's legal description and the amount deferred with the county recorder of the county in which the property is located. When the property no longer qualifies for the deferment, all deferred special assessments, plus interest, are to be paid in equal installments spread over the time remaining until the last maturity date of the bonds issued for the improvements. If the bonds have matured, the deferred special assessments plus interest are to be paid within 90 days. Penalties are not to be levied on the special assessments if timely paid. Rural Preserve Property Tax Law The Rural Preserve program payback will be affecting only class 2b real property. Since the Rural Preserve program follows the land rather than the owner (unlike Green Acres), payback is only required when the land no longer qualifies due to the owner having development plans for the future use of the property. Deferred Taxes Once entered in the Rural Preserve program a property must remain in the program for a minimum of 8 years, five years with a three year withdrawal period. As a result, the earliest a property may qualify for a tax payback would be when a property withdraws in May 1, 2019, 8 years after the program became available on May 1, When the property is withdrawn or no longer qualifies, the additional taxes are only to be levied with respect to the last three years (the current year s deferred taxes plus payment of deferred taxes for the two prior years) that the property had been valued and assessed under "Rural Preserve. PAYBACKS OF DEFERRED TAXES AND SPECIAL ASSESSMENTS

4 Deferred Special Assessments The payment of special local assessments levied after June 1, 2011, for improvements made to any real property under "Rural Preserve" together with the interest will, on timely application, be deferred as long as the property qualifies for "Rural Preserve. If special assessments are being deferred, the governmental unit is to file a certificate containing the property's legal description and the amount deferred with the county recorder of the county in which the property is located. When the property no longer qualifies for the deferment, all deferred special assessments, plus interest, are to be paid in equal installments spread over the time remaining until the last maturity date of the bonds issued for the improvements. If the bonds have matured, the deferred special assessments plus interest are to be paid within 90 days. The provisions of section , subdivision 2, apply to the collection of these installments. Penalties are not to be levied on the special assessments if timely paid. Special assessments levied for under public water and sewer system (M.S. 116A) or watershed districts (M.S. 103D) are not required to be paid under this section. Aggregate Resource Preservation Property Tax Law When real property that is or has been valued and assessed according to the Aggregate Resource Preservation Property Tax law no longer qualifies, that portion which no longer qualifies is to be subject to additional taxes in the amount equal to the taxes which were deferred. This additional tax is determined by computing the difference between the current year s taxes based upon the agricultural valuation and an amount determined by the assessor based upon the property s current year s estimated market value of similar real estate at its highest and best use and the appropriate local tax rate and then multiplying that difference by the number of years the land was enrolled in Aggregate Resources. The market value determined by the assessor for this calculation must not be greater than if the property was sold in an arms-length transaction. The additional taxes must be extended on the current tax lists and no interest or penalties are due if timely paid. Additional taxes must not be imposed on that portion of the property which has been actively mined and subsequently removed from the program. When property under the Aggregate Resources program is sold additional taxes must not be extended against the property, and if the property continues to qualify after the sale then the new owner may file an application with the assessor for continued deferment within thirty days of the sale. PAYBACKS OF DEFERRED TAXES AND SPECIAL ASSESSMENTS

5 Reference M.S M.S M.S M.S Minnesota Agricultural Property Tax Law (Green Acres) Aggregate Resource Preservation Property Tax Law (Aggregate Resource) Minnesota Open Space Property Tax Law (Open Space) Minnesota Rural Preserve Property Tax Law (Rural Preserve) PAYBACKS OF DEFERRED TAXES AND SPECIAL ASSESSMENTS