If you own 15 acres or more, you just might be able to reduce your Tennessee property tax liability by applying for the Greenbelt Law. The Greenbelt Law, or the Agricultural, Forest, and Open Space Land Act of 1976, was designed to preserve farms, forests, and open space and to reduce urbanization across Tennessee. Greenbelt helps provide much-needed tax relief to landowners and farmers who qualify and it also helps maintain the natural beauty of our state.
Agricultural land is land which “constitutes a farm unit engaged in the production or growing of crops, plants, animals, nursery, or floral products.” The property may include some areas which don't produce farm products (such as woodland and wasteland). It may also include a homesite for the owner or farm operator, which will be assessed at market value. The land “must have been farmed by the owner or the owner’s parent or spouse for at least 25 years.” Noncontiguous tracts may also qualify.
If you own 15 or more acres that are used in the growing of trees "under a sound program of sustained yield management," then you may qualify.The land does not have to yield an income, however, in this case, an assessor takes into consideration the number of acres, the amount of timber, and the actual and potential growth rate of the timber. They will also consider the management practices that are applied to the land. It’s worth noting that a forest management plan is required to maintain a forest classification.
Many individual home and property owners with land in or near urban areas can qualify for the Greenbelt under the Open Space definition. In this instance, if a property owner has three or more acres that are maintained in an open or natural condition, they may be eligible. The notion behind the Open Space clause is that this kind of preservation “benefits the public by conserving natural resources by providing a natural setting for people who might not otherwise have access to such a place and providing ‘relief from the monotony of urban sprawl.’" It also aids in the conservation of natural resources, water, air, and wildlife.
However, if you plan on developing a golf course on your property, you’re out of luck! Land must be kept in a natural state and as with the forest land clause, you’ll need an approved preservation plan.
How Do You Apply for the Greenbelt?
To apply, property owners must complete one of three assessment applications (agricultural, forest, or open space), provide necessary documentation, and have the application notarized. Applications must be received by March 1. There is no fee to apply, however, you must record the application with the county’s register’s office if you’re approved. So now is the perfect time to start the process!
Depending on the county in which you live, reassessments occur on a 4- to 6-year cycle.
What if My Property Straddles County Lines?
This is more common than you might think! If your property crosses county lines (let’s say you have 10 acres in Davidson County and 15 Acres in Williamson county), you are still eligible for the Greenbelt.
How is Use Value Determined?
Property approved for Greenbelt is appraised by a qualified assessor at both its fair market value and use value. “However, the assessment and taxes are based only on use value. Fair market value is what the property would sell for on the assessment date (January 1 of the tax year), considering not only the current use but any possible more intensive uses. The assessor determines use value from the county schedule and then calculates 25% of the total use value as the assessed value to which the current year's tax rate is applied” (Greenbelt: A Taxpayer’s Guide). The use value can only be appealed to the State Board of Equalization.
A Real Life Greenbelt Scenario
A client recently reached out to me, inquiring about the Tennessee Greenbelt Law. In this instance, the property owner had 13 acres of land, which as we’ve discussed, is not quite enough to qualify for the Open Space Land Act. However, his father-in-law owned an 18-acre contiguous tract. To help his daughter and son-in-law qualify for lowered property taxes, he wanted to transfer some of his property to them so that both properties would be eligible to apply for the Greenbelt. For a small fee, I was able to draft and record a couple of deeds, saving my client substantial sums on property taxes.