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Easement and Land Use Explained

Perpetual Easement and Land Use Reassessment Notices
State law provides for the periodic reassessment of real property in counties and cities in the Commonwealth.  A requirement, as a part of that reassessment, is the county must send a change in assessment notice to land owners of record.  That notice is to include both the new and immediately prior assessed value.  Both of the values are computed at the fair market value level.

This requirement works well for properties that are not in any special assessment program. However, properties that are under easement and/or the Land Use program are a little more complicated.  As a result, those properties receive two notices.

Perpetual Easement Property
For those parcels under perpetual easement (including PDR properties), the first notice sent has the comparative taxable values for the buildings shown with both previous and new values.  However, the land value is not a comparative taxable value.  The new value depicts what the land may be valued without the required statutory easement valuation methodology applied.  Since the previous taxable value does have the statutory easement valuation methodology applied, first notice does not give a good comparison for the land portion.  The notice sent to land owners with easement has a special instruction advising that second notice will be forthcoming.
The second notice with the new taxable value will be computed by the Commissioner of the Revenue’s office after the Board of Assessors has completed their work.  At that time, the easement valuation methodology will be applied.  A new notice of change in assessment is generated and mailed to the affected property owners.  This notice will have a more useful comparison with respect to the land value as it will compare taxable values rather than fair market value to taxable value.  The appeal process will still be available to property owners through the Board of Equalization for appeals of the fair market value portion of the assessment which includes any home site or structures.

Land Use Property
For those parcels in the Land Use Program, the process is similar except that, the original notice does have a fair market to fair market value comparison on the original notice.  However, this parcel will also be revalued using the land use value methodology and also receive a new notice with a taxable value comparison.

The key difference in these properties, with respect to appeal for correction of value, involves “deferral”. Parcels in land use have a deferral tax meaning that should circumstances dictate a removal from the program, the property owner could be liable for a rollback tax that would  involve repayment of the deferred tax for up to five years.  Therefore, the fair market value placed on the parcels as shown on the notice in October may have a bearing on future tax liability and should be carefully considered in deciding whether to appeal the new assessed value.

No Deferral on Easement Property
Parcels under easement, while valued using the land use methodology, are not in land use and therefore have no such deferral.  Therefore, when considering the value shown as land value on the notice received in October, only the home site value will carry through to the eventual taxable value.  The balance of the land value on the October notice is in effect a placeholder.  The next notice is sent with the net taxable value listed.  These notices should be received by land owners in mid-January 2014.

Date Last Modified: 11/04/2013


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