Tennessee

Property Classification:

To preserve open space in or near urban areas, Tennessee authorizes the special assessment of real property used as forest or open space land under the same general provisions that apply to agricultural land. However, no person may have more than 1,500 acres of land within any one taxing jurisdiction classified and assessed as forest, open space, or agricultural land. (Sec. 67-5-1002, T.C.A.; Sec. 67-5-1003, T.C.A)

Forest and Open Space Lands (Sec. 67-5-1002)

Forest land - means land constituting a forest unit engaged in the growing of trees under a sound program of sustained yield management or any tract of 15 or more acres having tree growth in such quantity and quality and so managed as to constitute a forest.

Open Space Land - is defined as a parcel of land (1) that is at least three acres in size; (2) that is characterized principally by open or natural condition; and (3) the preservation of which would provide the public benefits such as the study and enjoyment of natural areas and the conservation of natural resources, water, air, and wildlife.

Property may be classified as open space land if it is situated in a designated open space area and if, between the date of designation and the date of classification, there is no change in the use of the land that adversely affects its essential character as open space land. (Sec. 67-5-1002, T.C.A.; Sec. 67-5-1007, T.C.A; Sec. 67-5-1004, T.C.A.)

Application - Any owner of land may apply for its classification as forest land by filing a written application with the assessor of property by April 1 of the first year for which the classification is sought. Reapplication thereafter is not required so long as the ownership as of the assessment date remains unchanged. New owners of the land who desire to continue the previous classification must apply with the assessor by April 1.

In determining whether any land is forest land, the tax assessor shall consider, among other things, the acreage of such land, the amount and type of timber on the land, the actual and potential growth rate of the timber, and the management practices being applied to the land and to the timber on it.

An application for classification of land as forest land shall include a description of the land, a general description of the uses to which it is being put, aerial photographs, if available, and such other information as the tax assessor or state forester may require aiding him in determining whether the land qualifies for designation as forest land.

If an assessor denies an application for forest land, the denied owner must appeal to the state forester's appeal is not made to the State Board of Equalization. The state forester's decision can be appealed to chancery court within 90 days after the decision is issued.

Change in Use - A portion of the tax savings attributable to an open space or forest land classification is recaptured when property is converted to a non-qualifying use. Upon conversion, the tax assessor must (1) compute the difference in the present use value assessment and the value assessment using general valuation provisions for each of the preceding three years for forest land or five years for open space land and (2) notify the county trustee of the amount of "rollback taxes" payable by virtue of the conversion.

If the converted land constitutes only a portion of a parcel classified as open space or forest land, the assessor apportions the assessment of the parcel and enters the apportioned amount as a separately assessed parcel on the assessment roll. The apportionment is made for each of the years to which rollback taxes apply.

If property is disqualified because of a sale, such as a sale for development of a subdivision or a sale that makes a greenbelt parcel too small or the buyer does not desire to apply for greenbelt, the seller is responsible for both the rollback taxes and the regular taxes for the year of sale. However, the land is subject to the lien for both the regular and rollback taxes. Just as the regular property taxes for the year of a sale are prorated at closing, rollback taxes also may be prorated between the seller and buyer. The assessor can provide an estimate of these taxes.

If the buyer of greenbelt property declares in writing at the time of sale an intention to continue the greenbelt classification but fails to file any necessary documents with the assessor within 90 days of the sale, the buyer becomes liable for any rollback taxes resulting from the sale (i.e., the seller can pass the personal liability of rollback taxes to the buyer). Rollback taxes are a first lien against the disqualified property until paid.

If property that is classified for greenbelt is taken by eminent domain or other involuntary proceeding, then the agency or body doing the taking shall be liable for the rollback taxes.

Valuation and Assessment: (Sec. 67-5-1008 T.C.A.)

A parcel of land classified by the assessor as agricultural, forest or open space land shall be valued by dividing three (3) into the sum of: (The formula is the same as that used for agricultural land)

(i) two times the use value as defined in this subsection, plus

(ii) the farm land value as defined in this subsection.

A parcel of land classified by the assessor as agricultural, forest or open space land under this part shall be valued by dividing three (3) into the sum of two (2) times the use value as defined in this subsection (c), plus the farm land value as defined in this subsection (c). The rate of increase in per acre present use values as determined under this subsection (c) shall not exceed a factor measured by the number of years since the last general reappraisal or updating of values in the county, times six percent (6%).

Use value shall be determined by dividing:

(i) The annual agricultural income estimate for such parcel as determined by the division of property tax assessment by;

(ii) The capitalization rate as determined herein.

The capitalization rate shall be the maximum allowable rate on loans for terms in excess of five (5) years guaranteed by the federal Farm Service Agency or its successor, as of the assessment date for the year in which the use value schedule is being developed. The rate may be adjusted by no more than one hundred (100) basis points to reflect differences in land classes within a jurisdiction.

Once the land is classified as forest land the assessor will appraise the land and compute the taxes each year based upon both:

1. The twenty-five percent (25%) of appraised value applicable to property in the farm classification and present use value; and

2. Farm classification and value as determined under part 6 of this chapter, but taxes shall be assessed and paid only based on farm classification and present use value. (NOTE: This second calculation is done solely for determining the rollback tax if the property were to no longer qualify as forest land.)

The state of Tennessee does not have a severance or yield tax on timber or timber products.

Farm Bureau Tennessee. 2016. Understanding Tennessee's Greenbelt Law.

Tennessee Comptroller of the Treasury. 2016. Greenbelt Handbook for Assessors of Property.

Tennessee Comptroller of the Treasury. 2010. Greenbelt: A Taxpayer's Guide.