Current Use Program
by Jim Palmer Jr. - Real Estate Marketplace N.W. Inc.
The Open Space Taxation Act, enacted in 1970 allows Washington property owners to have land being kept in its natural state, used for farm & agriculture, or used as forest land to be valued for property tax assessment purposes on those actual uses, rather than on the potential highest and best use as required by state law. The Current Use Program establishes a method for each county Assessor to value property based on the current use of the land, resulting in reduced property taxes for the landowner.
A compensating tax must be paid whenever property is withdrawn from this program. The compensating tax is calculated by determining the difference between the tax amount that would have been due (based on fair market value of the highest and best use) and the tax amount that was actually paid based on the program classification for the last ten year period. Some counties audit “at will” and remove properties from the Current Use Program if they no longer meet the criteria, such as agricultural land that is no longer in production or timberland that has been cleared and is not being used for the purpose of eventual timber harvest. In most counties this audit only happens at point-of-sale which means that the seller may be subject to a significant tax hit unless the new buyer is willing to sign a continuance document, which after county approval, allows the new owner to remain in the Current Use Program as long as the property still qualifies.
There obviously is not enough space in this article to explain the program in its entirety, but since many properties in our region currently qualify for this program, it is important to understand it’s benefits. I find that inexperienced Realtors® or buyers who don’t understand the program often speak negatively to their clients or customers about the program simply because they are ignorant and fear the unknown. The truth is that this program can be a huge financial benefit to the landowner with few glitches or worries. One of the exceptions may be if someone is buying a large parcel that they intend to subdivide into smaller parcels and will have to eventually pay the piper as each small parcel is removed from the program.
Find a Realtor® who understands the program and can mentor you in a positive way so that you can make informed decisions when purchasing a property that qualifies for this program.