Financing Habitat Protection
Current Use Tax Programs
Tree Growth and Farm and Open Space
Many landowners in Maine have experienced dramatic increases in their property taxes. The rising demand for land has driven up selling prices which in turn has led to increased property valuations. In many cases, no longer affordable property taxes are forcing families and long-time landowners to sell. Consequently, many special places are being developed or transformed and their working, scenic and natural landscapes and values are being altered.
The Tree Growth Tax Law and the Farm and Open Space Tax Law were established in the 1970's to prevent property taxes from forcing productive woodlands, farms and significant open spaces into tax delinquency or conversion to development. These programs make it easier for landowners to achieve a more manageable tax assessment. Under the tree growth and farmland programs, land is assessed depending on its productive value, without regard to its development potential and taxes are based on very low land levels. The open space program, on the other hand, applies percent value. Tax reductions in this program range from 20 percent to 95 percent for land under forever wild easement that guarantees public access.
Each of the current use tax programs has specific guidelines for eligibility. Only properties that are undeveloped can be enrolled in the Tree Growth and Farm and Open Space Tax Programs (portions that contain buildings or structures cannot be enrolled in the program and remain taxed at the standard level). For tree growth classification, the property must be forested, managed according to a forest management plan, and contain at least ten contiguous acres. For farmland classification, the tract must be used for farming, agriculture, or horticultural activities, and must contain at least five contiguous acres. The landowner must also obtain an agricultural income of at least $2,000 annually from the land. For open space classification, there is no minimum acreage, however the tract must be preserved or restricted in use to provide a public benefit by conserving scenic resources, enhancing public recreation opportunities, promoting game management, or preserving wildlife or wildlife habitat. To enroll in these programs, landowners apply to the town for consideration (or the State Tax Assessor in the case of the unorganized towns).
In addition to the Tree Growth and the Farmland and Open Space Tax Laws, the State of Maine also has a Working Waterfront Tax Law that was developed in 2006 to encourage the preservation of working waterfront land and to prevent the conversion of these properties to other uses as the result of economic pressures caused by the assessment of that land for purposes of property taxation. To allow the property to be valued for property tax purposes based on what the value of the property would be in the marketplace if its future use were required to remain the same as the way it is currently being used as working waterfront. This law requires the assessor to place a value on the property which recognizes what the property is worth as working waterfront land and not what its market value would be if the property could be converted to other uses.
Benefits of Current Use Programs
While landowners can receive reductions on their property taxes by enrolling in these programs, they are assessed a penalty if the property is withdrawn from the program or its uses change no longer qualifying it. Although, not permanent, the Current Use Tax programs can be a useful method that gives landowners monetary incentives to keep their properties undeveloped, providing a temporary level of protection from development sprawl.
For more information on current use tax programs visit the Maine Revenue Service website.