DIFFERENTIAL ASSESSMENT OF REAL PROPERTY AS AN INCENTIVE TO OPEN SPACE PRESERVATION AND FARMLAND RETENTION

Abstract

Reductions in assessment for owners participating in differential assessment programs (which assess property at use rather than at market value) are partially offset by increases in tax rates necessary to make up potential losses in revenues and results in tax shifts to non-participating owners. Even if participants enjoy significant tax savings, the effect of savings on the decision to sell may be outweighed by the economic viability of continuing in farming or forestry, by demographic and personal factors, and by urban factors affecting the demand for land for development Statistical analysis of county-level data indicates that the reduction in property taxes has much less effect on land use than have soil productivity or the demand for developable land. If it complements other measures, differential assessment may be useful for keeping land in open uses—by itself, it is not sufficient.