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Sunday, June 28, 2015

How to pay less taxes, Part 4:

Farms, Forest and Open Space
By Will Collette

Part 1: Overview and waiver of interest on late payments

Part 2: Appealing your assessment


Charlestown does love its open space and we have lots of it. At least 50% of Charlestown land receives very favorable property tax treatment - sometimes no tax at all - through an open space zoning designation, a conservation easement or through participation in the Farm, Forest and Open Space program (FFOS). 

And it's not just public lands owned by the federal, state or town government or lands owned by non-profits that can be treated very favorably when it comes to Charlestown property tax. Private individuals can qualify for huge tax savings through FFOS and conservation easements as many of the leaders and supporters of the Charlestown Citizens Alliance (CCA Party) do. 



If you own 5 acres or more of farm land, 10 acres or more of relatively untouched forested land or some land that you’d like to see preserved as open space, there’s an interesting, obscure tax break program for you. It’s called the Farm, Forest and Open Space Program (FFOS). Under FFOS, eligible property owners can get the tax assessment for such land frozen at its “current use” level, not at its potential use as buildable land, or even assessed at a fraction of its fair market value.

FFOS is a little-known state program that is implemented at the town level, so to understand the program, you should look at the references to state information, but know that ultimately, you'll be working with our Town Tax Assessor and will be subject to Charlestown's often-quirky way at looking at land use issues.

FARM

The state overview lists how much revenue your farming should generate to be considered an actual farmer (as opposed to a gardener). E.g. $2500 or more in income from sale of agricultural products (vegetables, fruits, plants, turf, forage, Xmas trees, etc.). You will need to have a soil conservation plan.

If you have five acres or more of your land devoted to raising crops you sell, you should consider applying for FFOS tax status. After you read the state’s program description and the regulations, you should contact Charlestown Tax Assessor Ken Swain (364-1233) to get the ball rolling.

FOREST

If your land is heavily wooded, and you would prefer to leave the trees alone, rather than clear-cut them, you should consider applying for FFOS tax status. Again, as with the farm category, you should read the state’s program description and the regulations, and then contact Charlestown Tax Assessor Ken Swain.

By having a forest management plan where you manage the trees for five years at a time (the length of time each required forest management plan must cover), your property will be assessed for its value as forest, not as for example, the site of a future casino. Plus, you stay in good with Charlestown’s Tree Warden. If there actually was such a person.

OPEN SPACE

Although this is part of the state FFOS program, this category of land is much more subject to local definitions and specifications than the farm or forest categories. Rule 8 in the state regs contains virtually no detail on the size requirements or types of land, deferring to local authorities. The general overview section of the state’s website offers a little more, but not much guidance.

So again, start with Ken Swain and be prepared to deal with Charlestown’s very exuberant politics on open space. Unlike the forest or farm categories, I suspect that once your land qualifies as open space, you may or may not be able to use the land for any other purpose. But the incentive is the very generous tax break (e.g. if the soils are of low-grade quality, your assessment would be 10% of fair market value).


Conservation easements

Conservation easements are the bread-and-butter of the Charlestown Land Trust, as well as other groups such as the Nature Conservancy. Typically, these easements are an agreement between a private land owner and a conservation group whereby the property owner agrees to forego development of a parcel of land for a set period of time, anywhere from "forever" (which is legally defined as 999 years) to some substantial shorter period.

You can live on the land and even use it for farming or timbering. You get a huge cut in your property tax assessment and you also get a major charitable donation write-off on your state and federal income taxes.

Charlestown just went through a whole big fight because the CCA Party wanted to place a piece of town property - the site of the proposed Whalerock wind turbines - under a conservation easement with the Charlestown Land Trust, even though town ownership and the source of funding already protected the land. You can read more about that HERE

The important fact is that the debate introduced a lot more Charlestown residents to the concept of the conservation easement, which is actually designed primarily for higher income people who want to put their land in a tax-favored situation.