Rollback taxes
Rollback taxes are the deferred real estate taxes that come due when land taxed on its use value stops qualifying, assessed only on the portion that no longer qualifies. Where no sliding scale ordinance applies, they cover the five most recent complete tax years plus simple interest, and the current year's taxes are extended on fair market value.
Roll-back, hyphenated the way the Code writes it
A purchase contract clause or a closing statement line written from the statute spells the word the way Va. Code 58.1-3237 does: roll-back, with a hyphen. The section names the additional taxes it imposes and then says they are "hereinafter referred to as roll-back taxes".
What rolls back is tax that was put off. While land is taxed on its use value under a local ordinance, the tax is levied on that figure instead of on fair market value. The statute defines the gap one year at a time.
The deferred tax for each year shall be equal to the difference between the tax levied and the tax that would have been levied based on the fair market value assessment of the real estate for that year.
Va. Code 58.1-3237
How many years depends on the locality. Where no sliding scale ordinance has been adopted, the roll-back is the deferred tax for each of the five most recent complete tax years, plus simple interest at a rate the governing body sets, "no greater than the rate applicable to delinquent taxes in such locality". The current year's taxes are also extended on the basis of fair market value. Where a sliding scale ordinance has been adopted, the roll-back runs instead from the effective date of the written agreement. The arithmetic, and how a sliding scale works, is set out in the land use program explained.
Only the portion that stopped qualifying carries the charge
A roll-back is not a charge against a whole enrolled tract by default.
The statute says the additional taxes "shall only be assessed against that portion of such real estate which no longer qualifies" for assessment on the basis of use or zoning. Acres that remain in a qualifying use are not part of that assessment.
Va. Code 58.1-3237 names two kinds of event that start it: a change from the qualifying use to a nonqualifying use, and a rezoning to a more intensive use at the request of the owner or his agent, subject to a local subsection G ordinance. A split-off of enrolled land can bring it too, under a separate section of the Code. The full list, with the exceptions, belongs to what triggers rollback taxes.
Once it exists, a roll-back is handled like the rest of the tax on the land. Va. Code 58.1-3243 provides that for purposes including tax liens, roll-back taxes "shall be considered to be deferred real estate taxes", and under Va. Code 58.1-3340 real estate taxes are a lien on the land ahead of any other lien or encumbrance. That lien is the reason a closing attorney has cause to ask whether one is outstanding before the deed changes hands.
Assessed to the owner at the moment the use changes
The statute ties the bill to an event on the land, not to a closing date.
The Commissioner assesses the roll-back against the owner of the property at the time the disqualifying change in use occurs, or at the time of an owner-requested rezoning to a more intensive use, and it is paid to the treasurer within thirty days of the assessment.
A change of owner on its own does not start that clock: liability does not attach at a change in ownership "if the new owner does not rezone the real estate to a more intensive use" and continues the land in the use for which it is classified, unless a subsection G ordinance provides otherwise. A contract clause that moves the cost between buyer and seller is the contract speaking, not the Code; how that plays out is the subject of who pays rollback taxes when land sells, and the wording of a clause is the closing attorney's call.
Timing a sale around an enrollment is a separate decision from the tax itself, and it is weighed in should I wait for a better market.
Is there a roll-back figure on enrolled land you are buying or selling?
Send the parcel and what you have been told about the roll-back, and Lowell will go through the record with you and point you to the Commissioner of the Revenue for the number. No cost, no obligation.
Got it. Thank you.
We'll be in touch shortly with an honest read.
Questions about this term
Is there a minimum amount below which no roll-back is owed?
Yes, a small one. Va. Code 58.1-3237 says liability for roll-back taxes attaches and is paid to the treasurer only if the amount of tax due exceeds ten dollars. Above that line the full computation applies, and the figure for a given parcel, with the local interest rate, comes from the Commissioner of the Revenue.
Does interest run on roll-back taxes?
Yes. In a locality without a sliding scale ordinance, the roll-back includes simple interest at a rate the governing body sets, no greater than the rate that locality applies to delinquent taxes. If the roll-back is then not paid by its due date, the treasurer adds a penalty and interest as well. The local rate comes from the Commissioner of the Revenue.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- Va. Code 58.1-3237: change in use or zoning; roll-back taxes Code of Virginia
- Va. Code 58.1-3243: roll-back taxes considered deferred real estate taxes Code of Virginia
- Va. Code 58.1-3340: lien on real estate for taxes Code of Virginia