Clark County WA Property Tax Rate

Do You Qualify For Reduced Property Taxes? Current Use Taxation Current Use Vs. “Highest & Best Use” Current Use taxation designations provide landowners a tax break when their land use meets the criteria for farm/agricultural, timber land, open space, and forest land. Current use lands are taxed according to the value of the current use instead of the market value for development, such as residential, commercial, or industrial use. The development value is often called a land’s “highest and best use” which means its highest economic value if sold. However, these programs only defer taxes while the land remains in the designated current use. For this reason, landowners should plan to maintain these designations for the long-term. As outlined later, penalties make short-term classification costly. Current use taxation promotes residents’ quality of life by preserving working landscapes that provide aesthetic, economic, and social benefits in the form of farms, forests, and open space. Encouraging these land uses also protects the quality of our water by maintaining vegetation and landscapes that filter and absorb storm water. Types of Current Use Taxation Farm and Agricultural Land Requirements. For the three options below, applications require the signature of all owners of the land, a legal description, a site plan, and copies of IRS Farm Income Schedules for three of the previous five years. In some cases, a Farm Management Plan may be required. Option One Criteria. Parcels or adjoining parcels must be twenty acres or more: 1) devoted mostly to livestock production or commercial agricultural commodity production; OR 2) registered in a federal conservation reserve program. Option Two Criteria. Parcels or adjoining parcels must be less than twenty acres, but at least five acres in size generating at least $200 per acre annually in commercial agricultural products during three of the preceding five years. S Option Three Criteria. Parcels must be less than five acres generating at least $1,500 per acre annually in commercial agricultural products during three of the preceding five years. ma creage ll A Qualifying lands can include up to 20% of the land in compatible incidental uses (such as a woodlot) along with buildings necessary to produce, prepare, or sell the agricultural products (e.g., barns, sheds) although potted nursery stock and greenhouse production may not count in Clark County. P ro Timber Land and Designated Forest Land Requirements. Applications require the signature of all owners of the land and a Timber Management Plan. gram 1 Timber Land. • A minimum of 5 acres exclusive of the homesite. • Actively managed for growing timber for commercial harvest. • Must submit a timber management plan prepared by a professional forester. • Must submit two copies of the complete application packet. Designated Forest Land. • A minimum of 5 contiguous acres in the same ownership, exclusive of homesites. • Actively managed for growing timber for commercial harvest. • Must meet minimum stocking level requirements. • Must submit a timber management plan prepared by a professional forester. Open Space Requirements. Applications require the signature of all owners of the land and relevant documentation supporting the classification. • Mineral deposits on parcels exceeding 20 acres - or • Archaeological or historic sites listed on local, state, or national registry - or • Certain streams or springs on parcels exceeding 10 acres - or • Certain soil types on parcels exceeding 10 acres - or • Certain recreational opportunities on parcels exceeding 10 acres. • Must submit two copies of the complete application packet. Application Costs and Determining Land Value Classification Farm and Agricultural Land Timber Land Current Use Value Cost to Apply * Based on earning capacity on similar land determined by soil class and commodity. $150 application Based on land grades (composite of soil class and utility) used to determine per acre values supplied by DNR. $2,032 application Designated Forest Based on land grades (composite of soil class and utility) used Land to determine per acre values supplied by DNR. Open Space Based on soil classification. recording fee $2,032 application * As of Janurary 2015, subject to change. Fees are non-refundable. Timeline & Review Process It takes over a year to process current use applications. Applications before December 31st of a given year will be processed during the following year and will apply to the taxes in the third year (application in 2004, processed in 2005, reduction in 2006 taxes if accepted). S ma creage ll A Withdrawal from Current Use Taxation P ro Removing a property’s current use taxation designation prior to ten years automatically triggers a 20% penalty (mandated by state law) in addition to back taxes. When a property is withdrawn, the landowner must pay the deferred taxes for the previous seven years. The taxes are the difference between what was paid at the current use tax rate and gram Current Use Taxation 2 Classification Review Process for Accepted Applications Farm and Agricultural Land Timber Land Designated Forest Land Open Space Application review. Physical inspection. Assessor records tax lien with Auditor. Application review. Physical inspection. County Planning Commission Public Hearing. County Commissioner Public Hearing. Applicants sign Community Development agreements. Assessor records tax lien with Auditor. Application review. Physical inspection. Assessor records tax lien with Auditor. Application review. Physical inspection. County Planning Commission Public Hearing. County Commissioner Public Hearing. Applicants sign Community Development agreements. Assessor records tax lien with Auditor. what would have been paid had the property been taxed at the normal highest and best use tax rate. In other words, that is the amount of tax that was deferred while in the current use tax designation. In addition, the landowner will owe interest on the deferred tax amount consistent with the interest rate on delinquent taxes. Selling Land in Current Use Taxation Status. The seller must pay the deferred taxes and any penalties and interest on the land being sold unless the buyer signs a Notice of Continuance on the Real Estate Excise Tax Affidavit and the Intent to Continue Current Use Classification form that demonstrate the buyer’s intent to maintain the property in the current use designation. Plan for this to take some extra time to be processed. In this case, the buyer assumes the responsibilities required for the current use classification. Current Use Example In the following example, the owner of an 11 acre parcel wishes to place her land in the farm and agriculture current use designation. In this case, the homesite is considered one acre and is taxed at market value. The remaining 10 acres will be taxed at its current earning capacity. All parcels are unique and depend on specific conditions of each property. This example is for illustrative purposes only. Market Value Taxation Land Value $129,500 for 11 acres Current Use - Agricultural Land $3,790 for 10 acres; One acre (homesite) @ $21,910; Total = $25,710 Structure Value $48,500 $48,500 Total Value $178,000 $74,210 Taxes $2,670 per year $1,120 per year Deferred Tax $1,550 per year In this example, the landowner defers $1,550 each year while in the current use classification. When that land is withdrawn, the landowner will owe the last seven years of deferred taxes, plus seven years of interest on the deferred tax amount and any applicable penalties.