David purchases a property in Lowell that was previously classified under Chapter 61A as agricultural land. He intends to subdivide and develop it into a residential subdivision. Under Massachusetts law, what tax consequence will David most likely face?
Correct Answer
A) He will be assessed a roll-back tax covering up to the previous five years of deferred taxes
Under MGL Chapter 61A, Section 19, when land classified as agricultural is converted to a non-qualifying use (such as residential development), a roll-back tax is assessed. This roll-back tax equals the difference between the taxes paid under the Chapter 61A preferential assessment and the taxes that would have been paid at full and fair cash value, for up to the five preceding tax years, plus interest. This recapture provision discourages conversion of farmland.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
A transfer tax is a tax imposed on the transfer of ownership of real estate.
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
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