The State of Maine has four "current use" programs that offer the property owner a reduction in assessed value: Farmland, Open Space, Tree Growth, and Working Waterfront. The programs establish valuation of property at its current use, rather than at market value.
All four programs are available to property owners through an application process with the local municipality. Applications must be filed on or before April 1 of the year the reduced valuation is first requested.
Property must meet certain criteria to qualify for each program and any future change in the use of the land will cause disqualification resulting in a penalty.
In the Farmland program, the property owner is required to have at least five contiguous acres in their parcel of land. The land must be used for farming, agriculture or horticulture and can include woodland and wasteland. Additionally, the parcel must contribute at least $2,000 gross income from farming activities each year.
The Department of Agriculture prepares a valuation guideline for municipalities, which results from studies based on suggested values using a correlation from income stream and market data attributable to agricultural enterprise.
If the property no longer qualifies as farmland, then a penalty will be assessed. The penalty is equal to the taxes that would have been paid in the last five years if the property had not been in farmland, less the taxes that were paid, plus any interest on that balance.
See Bulletin 20 (PDF) (Farmland Tax Law), 36 M.R.S. §§ 1101 - 1121 (Farm and Open Space Tax Law), and 7 M.R.S. chapter 2-B (Registration of Farmland).
In addition to the Farmland program, a municipality may enact a Voluntary Municipal Farm Support Program to help farmers with their property tax burdens.
See 7 M.R.S. chapter 2-C (Voluntary Municipal Farm Support Program), and the Department of Agriculture, Conservation and Forestry Rule 37 (PDF) (Rules Governing the Voluntary Municipal Farm Support Program).
There is no minimum acreage requirement with this program. However, minimum areas and setbacks must be excluded from classification.
The parcel must be preserved or restricted in use to provide a public benefit. Benefits recognized include public recreation, scenic resources, game management, and wildlife habitat.
The municipal assessor is responsible for determining the value placed on open space land. In the determination of that value, the assessor must consider the sale price that a particular open space parcel would command in the open market if it were to remain in the particular category or categories of open space land for which it qualifies.
If an assessor is unable to determine the value of a parcel of open space land based on the valuation method above, the assessor may use the alternative valuation method. Using this method, the assessor reduces the fair market value of an open space land parcel by the cumulative percentage reduction for which the land is eligible according to certain categories. Those categories are as follows:
- Ordinary Open Space - 20% reduction
- Permanently Protected - 30% reduction
- Forever Wild - 20% (cannot be combined with Managed Forest)
- Public Access - 25% reduction
- Managed Forest - 10% reduction (cannot be combined with Forever Wild)
In other words, if the property met all of the above requirements, the owner would see a cumulative reduction of up to 95% on the classified land.
If property no longer qualifies as open space, a penalty will be assessed using the same methodology as is used for removal from the Tree Growth program (see below).
See Bulletin 21 (PDF) (Open Space Tax Law) and 36 M.R.S. §§ 1101 - 1121 (Farm and Open Space Tax Law).
Application for Open Space Land Classification (PDF)
This program provides a benefit for owners of at least ten acres of forested land used for commercial harvesting. A forest management and harvest plan must be prepared and a sworn statement to that effect submitted with the application. Applications must include a map of the parcel indicating the forest type breakdown as well as all other areas to be excluded from the tree growth program.
Each year, the State Tax Assessor determines the valuation per acre for each forest type by county. For a list of current Tree Growth rates, see Rule 202 (PDF).
If forest land no longer meets the criteria of eligibility or the landowner opts to withdraw from the tree growth program, a penalty will be assessed. Depending upon the length of time that the parcel has been enrolled, the penalty is between 20% and 30% of the difference between the 100% Tree Growth value and the fair market value of the land.
See Bulletin 19 (PDF) (Maine Tree Growth Tax Law) and 36 M.R.S. §§ 571 - 584 (Tree Growth Tax Law).
"Working waterfront land" means a parcel or portion of a parcel of land abutting tidal waters or is located in the intertidal zone (located between the high and low water mark) the use of which is more than 50% related to providing access to or in support of the conduct of commercial fishing (including commercial aquaculture) activities.
Working waterfront land used predominantly (more than 90%) as working waterfront is eligible for a 20% reduction from just value. Working waterfront land used primarily (more than 50%) as working waterfront is eligible for a 10% reduction from just value. Working waterfront land that is permanently protected from a change in use through deeded restriction is eligible for an additional 30% reduction.
If property no longer qualifies as working waterfront, a penalty will be assessed using the same methodology as is used for removal from Tree Growth classification.
See Working Waterfront Q & A and 36 M.R.S. §§ 1131 -1140-B (Current Use Valuation of Certain Working Waterfront Land).