Farm and Open Space Tax Law

Farm Tax Law / Open Space Tax Law / Penalties

Farm and Open Space property taxes use a taxable value for land based on its use for agriculture or open space. The resulting property taxes are usually lower than regular property taxes that base their land valuation on the likely price of the land if offered on the real estate market. Instead of market valuation, Farm and Open Space base land values on current use. This type of valuation is the same as the Tree Growth Tax Law. The State of Maine offers Farm and Open Space taxes to encourage the preservation of farmland and open space. Applications are made with the local assessor (state assessor if in LURC jurisdiction). Parcels must be greater than 5 contiguous acres and less than 15,000 total acres (Field 1994).

Farmland: Any single or multiple parcels on which farming or agricultural activities have produced a gross income of at least $2,000 per year in 1 of 2, or 3 of 5 years preceding date of application to tax program. Gross income can include that produced for household use. If your past income does not qualify, you can get a provisional qualification for 2 years. If you do not qualify after 2 years, you must pay back the tax savings with interest. The applicant bears the burden of proof for acceptance. Once accepted into the Farm Tax program, you must submit your gross yearly income from agriculture to prove you are above the $2,000 minimum.

The Farm Tax is based on the current value of agriculture on the land. The assessor considers farmland rentals, farmer to farmer sales, soil types and quality, commodity values, and topography. No development values, roadfront values, or shorefront values are considered.

*The forestland on the farm parcel is taxed the same as in Tree Growth.

The application asks for the acres and location of both the farmland and the classifications within the farmland. Classifications include cropland, woodland, orchard, pasture, and horticultural land (vegetables, small fruits, flowers, plants).

(Field 1994)

Open Space: Land that provides public benefit by:

• Conserving scenic resources
• Enhancing public recreation opportunities
• Promoting game management
• Preserving wildlife and wildlife habitat

The Open Space Tax Law assesses the value of land based on its value in the market as open space. If this method does not work, the current tax is reduced be a percentage that depends on the type of open space. The tax rate may not go below the Tree Growth rate for the woodland in an Open Space classified parcel. Unlike Tree Growth, the owner does no have to harvest any timber.

1. All open space is eligible for a 20% decrease in property taxes.
2. Permanently protected open space receives a 30% decrease in property taxes. This land is in a perpetual conservation easement that prohibits building development or the land is kept as a preserve by a non-profit entity. Any municipality may purchase conservation easements for a period of at least 10 years.
3. Permanently protected open space with "forever wild" restrictions receives an additional 20% reduction in property taxes. Forever wild means the land's resources will remain unaltered; except for fishing, hunting, shellfish harvesting, prevention of the spread of fire or disease, and low-impact outdoor recreation.
4. Permanently protected open space with public access receives an additional 25% reduction in property taxes. Public access involves allowing daytime, non-motorized, and non-destructive public use. Applicant may sell permits for more intensive uses like hunting, camping, and snowmobiling. Applicant may impose use restrictions to protect habitat of endangered species, protect fragile protected natural resources, and to protect recreationists from hazards.

Application: Applications must include a description of the land, the land use, and other requested documents. Owners should exclude from the application any areas containing structures or substantial improvements inconsistent with open space. The size of these exclusions should be based on minimum lot standards for the municipality. If the application is denied, the assessor will state why. If denied, the landowner has the opportunity to amend the application for re-submittal. Once accepted, parcels are recertified yearly by the assessor. The assessor bases acceptance on any of the following on the parcel in question:

• Parcel size, uniqueness, and proximity to development
• Likelihood that developing the parcel would contribute to the degradation of scenic, natural, historic, or archaeological character
• Opportunity for the public to enjoy scenic values, recreation, or educational use
• Importance to preserve a landscape that attracts tourism or commerce
• Benefit to town by decreasing municipal service costs
• Zoning classification
• Existence of conservation easements, other legal restrictions, and ownership by nonprofit conservation entity
• Proximity to protected conservation lands
• Contribution to ecological viability if in open space
• Presence of rare, endangered, or threatened species or habitat
• Consistency with public programs preserving aesthetics, wildlife, and recreation
• Governmental identification of outstanding natural resources
• Historic or archaeological resources

(Field 1994)

Farmland: If you have been in the Farm Tax program for less than 5 years, you pay 40% the assessed current market value of the land withdrawn. If you have been in the program for 5 to 10 years, the penalty is your tax savings with interest (compared to if you were assessed based on market value). If you have been in the program greater than 10 years, the penalty is your tax savings with interest for the last five years only.

Open Space: The penalty is the same as for the Tree Growth Tax program.

(Field 1994)

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