Use value assessment
Use value assessment is the method of valuing qualifying agricultural, horticultural, forest or open-space land only for what it is worth in that use, guided by state-recommended ranges based on productive earning power, instead of at fair market value. The house site is excluded and valued like other real estate.
One land book record, two values, and the use value is the one taxed
Look up the land book record for a parcel enrolled under a Virginia use value ordinance and it carries two values for the same ground. Va. Code 58.1-3236 requires the records to "show both the use value and the fair market value of such real estate". Use value assessment is how the first of those is reached.
| Use value | Fair market value | |
|---|---|---|
| What the assessing officer considers | Only the indicia of value the land has for agricultural, horticultural, forest or open-space use, along with the State Land Evaluation Advisory Council's recommendations | Not limited to the qualifying use: the fair market value assessment the land would otherwise carry |
| Ground taxed on it | The acres in the qualifying use | The land under and used with the farmhouse or home, and any structure not related to the special use |
| Where the guide figures come from | Recommended ranges based on productive earning power, submitted each year by October 1 | The locality's own assessment of real estate |
| Its part in a roll-back | The tax actually levied each year | The tax that would have been levied; the difference between the two is the deferred tax |
The columns come apart for a reason. The tax on the use value is what an enrolled owner pays, and the tax difference between the two columns is the deferred tax that roll-back taxes can later recapture. A use value also exists only where the program does: it is the valuation step inside land use taxation, available where a county, city or town has adopted an ordinance covering that class of land, or for land used in agricultural and forestal production inside an agricultural or forestal district. The tests a tract has to meet before an assessor values it this way are in what Virginia's land use program is.
Productive earning power, not a buyer's price, sits behind the use value
A use value is worked out from what the land can earn in its qualifying use.
The State Land Evaluation Advisory Council, SLEAC, is made up of the Tax Commissioner, the dean of the College of Agriculture at Virginia Tech, the State Forester, the Commissioner of Agriculture and Consumer Services and the Director of the Department of Conservation and Recreation. On or before October 1 each year it submits recommended ranges of suggested values, "based on the productive earning power" of land in agricultural, horticultural, forest and open-space use. They take effect the following January 1, or July 1 in a locality with a fiscal year assessment. The Commissioner of the Revenue or assessor considers those recommendations in valuing the land. A county's own per-acre figures are that office's to give, and they are not printed here.
The house stays out of it. Land under and used with the farmhouse or home, and any structure not related to the special use, is excluded from the use value area and valued by the same standards as other real estate in the locality. An enrolled farm with a house therefore carries a market-value house site inside a use-value tract, and which parts of a farm keep the use value when it changes hands is taken up in selling a farm that is in the land use program.
Because the figure tracks earning power and not the market, it is no measure of what a buyer would pay, and it is not an appraisal. It is a local assessment figure, not the federal rule for an heir: basis in inherited land is generally its fair market value at the date of death, subject to the exceptions the IRS names, which are covered in stepped-up basis on inherited land; that figure and its use on a return are a CPA's to work out. The use value says nothing about timing a sale either, the question in should I wait for a better market. Where it sits in the program, from application to exit, is in the land use program explained.
Reading the use value line on an enrolled tract's assessment?
Send the parcel number and the assessment, and Lowell will go through both values with you and name the office that set them. No cost, no obligation.
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Questions about this term
Does the state or the locality set the use value on a parcel?
The local assessing officer does. The State Land Evaluation Advisory Council only submits recommended ranges of suggested values each year; in valuing enrolled land, the commissioner of the revenue or assessor considers those recommendations along with the value the land has for its qualifying use. In Carroll County the Commissioner of the Revenue keeps the land use special assessments in the county's real estate files.
When do SLEAC's recommended use values take effect?
The State Land Evaluation Advisory Council submits its recommended ranges on or before October 1 each year, and they take effect the following January 1, or July 1 in a locality with a fiscal year assessment. The local assessing officer considers them in valuing enrolled land. The figures a county actually uses come from its 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 58.1-3231: local ordinance for use value assessment and taxation Code of Virginia
- Va. Code 58.1-3236: valuation of real estate under the ordinance Code of Virginia
- Va. Code 58.1-3237: deferred tax and roll-back taxes Code of Virginia
- Va. Code 58.1-3239: State Land Evaluation Advisory Council Code of Virginia
- Publication 551, Basis of Assets Internal Revenue Service
- Commissioner of the Revenue: real estate files and the land use program Carroll County, Virginia