Massachusetts

Property Classification:

Real property in cities and towns may be assessed according to the following usage classifications:

Class one: residential;

Class two: open space;

Class three: commercial; and

Class four: industrial.

Forest Land: (Chapter 61, G.L.)

Massachusetts law has special valuation provisions for forest property and recreational land, and provides a separate classification for open-space lands.

Qualifying forest land must meet the following criteria (302 CMR 15.00):

1) be a parcel of forest land at least ten contiguous acres in size devoted to the growth of forest products;

2) and may consist of access roads, skid trails, log landings, log storage areas, and other areas that are necessary and related to forest management and forest products harvesting activities.

Application - The owner of the property must apply to the state forester on or before July 1 for classification as forest land. After certification, the owner must submit evidence of certification and the approved management plan to the assessors prior to September 1 of the same year. Classification takes effect on January 1 of the year following certification, and taxation as forest land (with the exception of the products tax payable as a condition of classification) commences with the fiscal year that begins after the January 1st classification.

A new certification by the state forester must be submitted to the assessor at least every ten years.

Change in use - When an owner removes land from classification as forest land or if the land is withdrawn from classification as forest land because it is not properly classified or managed under a forest management plan, a withdrawal penalty tax must be paid. The penalty is equal to the greater of the rollback taxes or conveyance taxes. The rollback tax is the difference between the amount of taxes that would have been payable if the land had been assessed and taxed at its full market value, and the total amount paid for forest products tax and land taxes, for the period from the last prior certification or the preceding five years, whichever is longer. The conveyance tax is 10% of the total price of the property if the land is sold or converted within the first year of ownership with the rate declining 1% per year of ownership.

If the voluntary withdrawal occurs at the end of a completed certification period, a credit is allowed for any forest land and forest products tax payments made during the certification period. If the withdrawal is not voluntary or does not occur at the end of a completed certification period, no credit for product taxes paid is allowed.

Valuation and Assessment - Qualifying forest land is assessed and taxed based on the current forest use values.

See Chapters 61/61A/61B Forest Land Valuation for Landowners and Foresters and the DOR per ace valuation for FY 2020: https://www.mass.gov/doc/chapter-land-61-61a-values-recommendation/download

Annual Forest Land Tax - The land tax is calculated by applying the local rate for class three commercial property to the current use value of the land (Sec. 2, Ch. 61).

Basis Formula: Land Tax = forest use value x local rate for Class 3 property

Notice requirement for classified forest or recreational land - Land that has been classified and taxed as forest land or recreational land may not be sold for or converted to residential, commercial or industrial use unless the city or town in which the land is located is notified by the owner and is given an option to purchase the land (G.L. c. 61, &sec; 8; G.L. c. 61B, &sec; 9).

Use of the land as a residence for the owner or the owner's parent, grandparent, child, grandchild, or brother or sister, or their surviving spouses, or for living quarters for any persons actively employed full time in the forest or recreational use of the land is not a conversion.

In the case of an intended sale, the city or town must be allowed a first refusal option to meet a bona fide offer to purchase the land for a period of 120 days after notification. In the case of an intended conversion not involving a sale, the city or town must be allowed an option to purchase the land at full and fair market value as determined by impartial appraisal for a period of 120 days after notification. The sale or conversion may not be consummated until the option period has expired or the owner has been notified in writing by the mayor or board of selectmen of the city or town that the option will not be exercised.

Agricultural and Horticultural Land: (Chapter 61A, G.L.)

Qualifying agricultural or horticultural land is assessed and taxed at its use value, rather than market value, under Chapter 61A. Accordingly, the Board of Assessors is to consider only those indicia of value which the land has for agricultural and/or horticultural use. Such land is taxed at the rate applicable for class three, commercial property. The owner of the land must apply for agricultural use value assessment. Application must be made each year to the board of assessors of the town in which the land is situated on or before October 1 of the year prior to the year for which use assessment is sought.

Qualifications: To qualify for use-value assessment, the land must meet restrictions as to size, use and productivity. The land must be at least five acres in area, including all contiguous land under the same ownership not devoted to residential, industrial or commercial use, and must be actively devoted to agricultural or horticultural use.

Land is in agriculture use when primarily used in raising animals for the purpose of selling the animals or products derived from the animals in the regular course of business. Land is in horticultural use when primarily and directly used in raising the following plant products for the purpose of selling them in the regular course of business:

(1) fruits, vegetables, berries, nuts and other foods for human consumption;

(2) feed for animals;

(3) tobacco;

(4) flowers, sod, trees (sold whole for transplanting purposes), nursery or greenhouse products; and

(5) ornamental plants and shrubs.

Land is also in horticultural use when primarily and directly used in raising forest products under a program certified by the state forester to be a planned program to improve the quantity and quality of a continuous crop for the purpose of selling such products in the regular course of business.

Gross sales - Land is actively devoted to agricultural or horticultural use for purposes of qualifying for use value assessment if gross sales of agricultural and horticultural products from the land total at least $500 per year, included any amounts payable under a state or federal soil conservation or pollution abatement program.

Change in Use - The penalty is equal to the greater of the rollback taxes or conveyance taxes. The rollback tax is the difference between the amount of taxes that would have been payable if the land had been assessed and taxed at its full market value, and the total amount paid for forest products tax and land taxes, for the period from the last prior certification or the preceding five years, whichever is longer. “Grandfather” exemption from interest on rollback for parcel classified for FY 2007 and still owned by same landowner or certain close relatives. The conveyance tax is 10% of the total price of the property if the land is sold or converted within the first year of ownership with the rate declining 1% per year of ownership. No tax is imposed after the tenth year of ownership. If land that has been assessed and taxed at its agricultural use value is sold within ten years of the date of its acquisition or the earliest date of its uninterrupted use by the seller, a conveyance tax must be paid, unless the purchaser files an affidavit with the Board of Assessors stating that the land is being purchased for agricultural or horticultural use, or unless the transfer is exempt.

Recreational land : (Chapter 61B, G.L.)

Recreational land is valued for assessment purposes at its use value, and may not be valued at more than 25% of its fair cash value Recreational land is taxed at the same rate as class three commercial property. Owners must apply separately each tax year for recreational land classification.

For property tax purposes, recreational land is land not less than five acres in area retained in a natural, wild or open condition, or in a landscaped condition in such a manner as to allow to a significant extent the preservation of wildlife and other natural resources. These include ground or surface water resources, clean air, vegetation, rare or endangered species, geologic features, high quality soils, and scenic resources.

Land not less than five acres in area is also recreational land if it is devoted primarily to a recreational use that does not materially interfere with the environmental benefits that are derived from the land, and is available to the general public or to members of certain nonprofit organizations.

Certain restrictions and tax penalties apply if the land is removed from recreational use. The penalty is the greater of the rollback tax and the conveyance tax. Rollback tax is assessed for the immediately preceding 5 years. Conveyance tax is 10% of sale price if it is sold or converted within the first 5 years of classification and 5% for the sixth through tenth year of classification.

Other open space lands : (Chapter 59, G.L.)

Open space land, other than land taxed as agricultural property, forest land, or recreational land, constitutes Class two property. Such open space land is valued at its fair cash value, not its use value, but may be taxed at a lower rate than other classes of property.

Land under conservation restriction - Real estate permanently restricted as a scenic river or stream or as coastal or inland wetlands, and real property placed under a permanent conservation restriction, is to be assessed as a separate parcel of real estate. The initial assessment as a separate parcel is made on January 1 of the year following the conveyance of the permanent restriction.

The forest products tax under Chapter 61 has been eliminated since 2006 (Chapter 394 of the Acts of 2006).

• Massachusetts Department of Conservation & Recreation. Forest tax program Chapter 61. https://www.mass.gov/service-details/forest-tax-program-chapter-61

• Umass Extension. www.masswoods.org

• Farmland Valuation Advisory Committee (FVAC) values https://www.mass.gov/orgs/massachusetts-department-of-revenue