A Virginia landowner enrolled 50 acres of forested land in the state's land use taxation program under the Virginia Land Use Assessment Act. The locality assesses the land at its use value of $800 per acre rather than its market value of $3,000 per acre. The landowner later sells the property and the new owner converts it to residential development. Which of the following best describes the tax consequence of this conversion under Virginia law?
Correct Answer
D) The new owner owes rollback taxes covering up to five years of the difference between market value taxes and use value taxes, plus interest
Under Virginia's land use taxation program (Va. Code § 58.1-3237), when land enrolled in the program is converted to a non-qualifying use, rollback taxes are triggered. The rollback equals the difference between the taxes paid at use value and the taxes that would have been paid at market value for up to five preceding tax years, plus interest. The rollback tax obligation follows the land and is typically the responsibility of the current owner at the time of conversion.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
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.
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