Ins and outs of Greenbelt Taxes

Landowners

What is GREENBELT? The Utah Farmland Assessment Act (FAA) or Greenbelt Act allows qualifying agricultural property to be assessed and taxed based upon its productive capabilities instead of the prevailing market value. Land in close proximity to expanding urban areas, where taxing agricultural property at market values, could make farming operations economically prohibitive. With the land in “Greenbelt”, the owner pays a fraction of the taxes assessed.

Private farmland can qualify for assessment and taxation under “Greenbelt” if the land:

  • is at least five contiguous acres in area (or in close proximity). Any buildings or land used in connection with the buildings, such as landscaping, etc, cannot be included in the acreage for eligibility; and
  • is actively devoted to agricultural use, and the operation is managed in such a way that there is a reasonable expectation of profit and or productivity; and
  • has been devoted to agricultural use for at least two successive years immediately preceding the tax year in which application is made; and
  • meets the average annual (per acre) production requirements. (Land must produce in excess of 50 percent of the average agricultural production per acre per year for the given type of land and the given county).

ROLLBACK TAXES

When land becomes ineligible for farmland assessment the owner becomes subject to what is known as the rollback tax. Land generally becomes ineligible when it is sold for a non-agricultural use. Payment of the rollback tax may be negotiated between the buyer and seller but must be paid on or before the closing date. A buyer may elect to maintain the property in “greenbelt” status by making application with the county, wherein no rollback taxes would be due at the time of sale.

Rollback tax is the difference between the taxes paid while the property was classified as “Greenbelt” and the taxes which would have been paid had the property been assessed at market value. A maximum of 5 years of rollback taxes are due at the time the property is withdrawn from “Greenbelt”. The five-year period is always the most current five years preceding, including the current year.

If rollback taxes are not negotiated between the buyer and seller, the full amount will be assessed to the seller. The rollback taxes should be calculated by the county as soon as possible so as to reflect a more accurate net amount due the seller.