Patricia is selling a 50-acre parcel of forested land in Carroll County, NH. The land has been enrolled in New Hampshire's Current Use program under RSA 79-A for the past 15 years, resulting in significantly reduced property taxes. A buyer, David, intends to subdivide and develop the land. Patricia's broker fails to disclose the Current Use status to David before he signs the purchase agreement. What is the most significant financial consequence David may face that was not disclosed?
Correct Answer
A) David will owe a land use change tax equal to 10% of the full market value of the land when it is removed from Current Use
Under RSA 79-A, when land enrolled in New Hampshire's Current Use program is removed from that designation (such as for development or subdivision), a land use change tax is triggered. This tax equals 10% of the full market value of the land at the time of the change in use. This is separate from and in addition to the standard real estate transfer tax, and can represent a very significant cost — especially on a large parcel like David's 50 acres. Failure to disclose Current Use status is a material omission.
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