The Vermont statutes do not specifically dictate classes of property that are subject to different assessment ratios or tax rates, however certain types of property are treated differently for valuation and assessment purposes.
Vermont property tax law provides special tax treatment to encourage and assist the maintenance of Vermont's productive agricultural and forest land, to prevent the accelerated conversion of these lands to more intensive use by the pressure of property taxation at values incompatible with the productive capacity of the land, and to achieve more equitable taxation for undeveloped land.
For purposes of this discussion the following definitions apply:
Housesite - means the two acres of land surrounding any house, mobile home or dwelling
Use value appraisal - means, with respect to land, the price per acre which the land would command if it were required to remain henceforth in agriculture or forest use. With respect to farm buildings, "use value appraisal" means 30 percent of fair market value.
Managed forest land - means any land, exclusive of any housesite, which is at least 25 acres in size and which is under active long-term forest management for the purpose of growing and harvesting repeated forest crops in accordance with minimum acceptable standards for forest management.
Managed forest land shall be eligible for use value appraisal if the land is subject to a forest management plan, or subject to a conservation management plan in the case of lands certified under 10 V.S.A. Section 6306(b). The plan must be filed with and approved by the department of forests, parks and recreation by October 1, and provide for continued conservation management or forest crop production on the tract for at least 10 years. Upon the expiration of a ten year plan, the owner shall file a new plan for at least the next succeeding ten years to remain in the program
Agricultural land - means any land, exclusive of any housesite, in active use to grow hay or cultivate crops, pasture livestock or to cultivate trees bearing edible fruit or produce an annual maple product, and which is 25 acres or more in size except as provided below. Any agricultural land that meets the requirements is eligible for use valuation. There shall be a presumption that the land is used for agricultural purposes if:
it is owned by a farmer and is part of the overall farm unit; or
it is used by a farmer as part of his farming operation under written lease for at least three years; or
it has produced an annual gross income from the sale of farm crops in one of two, or three of the five, calendar years preceding of at least:
$2,000.00 for parcels of up to 25 acres; and
$75.00 per acre for each acre over 25, with the total income required not to exceed $5,000.00;
exceptions to these income requirements may be made in cases of orchard lands planted to fruit producing trees which are not yet of bearing age.
Application: Generally, owners of managed forest land or agricultural land must apply to the Director of Property Valuation and Review by September 1 of the previous tax year for the property to be eligible for use value appraisal.
Once a use value appraisal is granted, it remains in effect until the property is no longer eligible or until there is a change of use. The Director must determine if previously classified property is still eligible for use value appraisal and whether the amount of the previous appraisal is still valid. An owner of eligible land may withdraw it from use value appraisal. (Sec. 3756, Tit. 32, V.S.A.)
Change in use: (Sec. 3757, Tit. 32, V.S.A.)
There are now two tax rates used for determining the land use change tax to be assessed for development of enrolled property or for owners wishing to prepay the tax in order to discharge the lien and clear the property title. The old rate of 20 percent of full fair market value is now applicable to property enrolled for ten years or less. The new tax rate of 10 percent applies if the owner demonstrates to the satisfaction of the director (of PVR) that the parcel has been enrolled more than ten years.
The property qualifies for the 10 percent rate regardless of the chain of ownership as long as total enrollment has been more than 10 years. Also, the property does not need to be enrolled for consecutive years as long as the total number of years of enrollment is greater than ten. If a property was enrolled and received use value appraisal for ten years it qualifies for the 20 percent rate and if it was enrolled and received use value appraisal for eleven years it qualifies for the 10 percent rate.
Landowners wishing to withdraw property from use value appraisal and pay the tax are encouraged to plan ahead when submitting their discontinuance notices. Additional time may be required to research landowner files to determine the appropriate rate structure for calculating the land use change tax because of the number of years necessary to qualify for either tax rate or a combination of both rates if portions of the property being withdrawn were enrolled at different time periods. In the event that the land subject to a discontinuance includes land enrolled more and less than 10 years, you may be required to provide supporting documentation demonstrating the acreage subject to each rate.
Valuation and Assessment:
If the parcel of land meets the requirements above the land will be valued based on its current use rather highest and best use. Forest land is classified as either "productive forest land" or "non-productive forest land." Agricultural land is classified as either "agricultural land" or "non-productive agricultural land."
Land values are reviewed annually and determined by the "Current Use Advisory Board" who take into account the class, type, grade and location of the land along with its productive and income producing abilities.
Severance or yield tax:
The state of Vermont does not have a severance or yield tax on timber or timber products.