David owns a 25-acre parcel in Summit County that has been assessed under Utah's Greenbelt Act for the past 10 years. He has now received an offer from a developer and plans to sell the land for residential subdivision development. Which of the following BEST describes the Utah tax consequence David will face when the land is converted from agricultural use to a non-qualifying use?
Correct Answer
B) David will owe rollback taxes representing the difference between taxes paid under Greenbelt assessment and taxes that would have been owed at market value for up to five years prior to the change in use
Under Utah Code Ann. § 59-2-506, when land enrolled in the Greenbelt program is converted to a non-qualifying use, the property owner is subject to rollback taxes. These rollback taxes represent the difference between the lower taxes paid under the Greenbelt (use-value) assessment and the taxes that would have been owed if the property had been assessed at full market value. Utah limits the rollback period to the five years immediately preceding the change in use, plus the current year — a critical distinction from states that may impose longer lookback periods.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Depreciation is an accounting method of allocating the cost of an asset over its useful life, allowing investors to deduct a portion of the asset's cost each year.
Highest and best use is an appraisal concept that identifies the most profitable, legally permitted, physically possible, and financially feasible use of a property. It is the foundation of all property valuation.
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
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