A Tennessee real estate agent lists a property that has been enrolled in the Greenbelt program as agricultural land for many years. A buyer intends to purchase the property and convert it to a residential subdivision. The listing agent mentions that the current low property taxes are a selling feature. Which of the following represents the most complete and accurate advice the agent should give to the buyer regarding future property taxes?
Correct Answer
B) Upon conversion to residential use, the property will be reassessed at 25% of market value, and a rollback tax of up to three years' difference may be assessed
This question tests multiple Greenbelt concepts simultaneously. When agricultural Greenbelt land is converted to residential subdivision use, two things happen: (1) The Greenbelt enrollment is terminated because the land no longer qualifies for agricultural use, and a rollback tax is assessed for up to the three most recent years of enrollment — representing the difference between what was paid under Greenbelt assessment and what would have been owed at market value assessment. (2) Going forward, the property will be assessed at 25% of its new market value as residential property. The agent must disclose both the rollback tax exposure and the future reassessment to give the buyer complete and accurate information.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
The income approach estimates a property's value based on the income it generates by converting net operating income into a value estimate using a capitalization rate. It is the preferred method for income-producing properties.
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
More Valuation Questions
In Utah, property taxes are collected by which governmental entity?
In Utah, how is a primary residence assessed for property tax purposes under the residential exemption?
Which of the following best describes how Utah's rapid population growth, driven partly by Silicon Slopes tech expansion, has affected housing affordability?
When appraising a property in Utah's Wasatch Front, which environmental hazard would an appraiser need to consider that is less common in most other states?
The rapid growth of the 'Silicon Slopes' tech corridor in Utah has most directly affected real estate in which area?
- → The income approach to appraisal is most commonly used for which type of property?
- → Which formula correctly calculates the capitalization rate?
- → External obsolescence in Oklahoma:
- → The sales comparison approach to appraisal is most appropriate for which type of property?
- → Which of the following correctly lists the three types of depreciation recognized in real estate appraisal?
- → The sales comparison approach to appraisal is most commonly used for which type of property?
- → Which four tests must a use satisfy to qualify as the highest and best use of a property?
- → Three depreciation:
- → Cap rate:
- → Which formula best represents the cost approach to appraisal?
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