Most of us know someone who has been involved in martial arts even if it is just a relative or the kid of a neighbor or coworker.
Those who put in enough time and effort are rewarded by advancing through a system of “belts”, ranked by different colors. Everyone starts with white and dreams of achieving black.
Depending on which martial arts style they’re doing, a green belt lets them know they are roughly halfway there.
This post is not about any of that.
As a CPA firm with offices all across West Tennessee, we regularly serve farmers interested in knowing “What is the Tennessee Greenbelt exemption?” While we admire people who do well in martial arts, we know much more about accounting. So we’ll stick to that.
Read on to learn all about the Greenbelt tax exemption in Tennessee and how it could affect your property taxes this year.
What Is The Greenbelt?
Let’s start by defining what a “Greenbelt” is in the first place. Generally speaking, it is any area of land around a city or town where building or development is restricted.
According to the California-based organization, Greenbelt.org: “Greenbelt” is a general term that refers to natural, undeveloped, and/or agricultural lands that surround urban areas. These lands may include open spaces, parks, farms and ranches, wildlands, or a combination thereof—as designated by cities, counties, special districts, and other jurisdictions.”
“Greenbelt” is a general term that refers to natural, undeveloped, and/or agricultural lands that surround urban areas.
The State of Tennessee (where we have multiple offices: Jackson, Dyersburg, Paris, Brownsville, Martin, and Milan) determines greenbelt property to be “agricultural, forest, or open space” land that is preserved for various benefits to the community.
Greenbelt Program
The Greenbelt program in Tennessee was established in 1976 when our state passed the “Agricultural, Forest, and Open Space Land Act.” Its goal was to preserve land and reduce urbanization. Under this legislation, landowners can apply to have some or all of their property designated as “greenbelt” land in order to receive some relief on their property taxes.
Typically, land is taxed at its “fair market value” (what it is worth to someone who is willing to buy it). Greenbelt land, however, is taxed based on its current use.
(Note: the Greenbelt program does not exempt included land from taxes; it only lowers the rate at which they are taxed.)
Greenbelt Requirements
To qualify for Greenbelt status in Tennessee, the land in question must meet certain conditions in the three categories we mentioned above.
- Agricultural – For land to qualify as “agricultural” in the State of Tennessee it must be at least 15 acres, and “constitute a farm unit engaged in the production or growing of agricultural products”; or have been farmed by the owner or the owner’s parent or spouse for at least 25 years and is used as the residence of the owner and not used for any purpose inconsistent with an agricultural use.” Additionally, assessors will look to see how much of that land is involved in active agricultural production and whether the land has produced at least $1500 over any 3 years.
(Read more: We did an earlier post on 9 Questions To Help You Know Whether Or Not You’re Really A Farmer To The IRS.) - Forest – Forest land is required to be 15 acres (either contiguous or made up of 2 tracts of land separated by a road, stream, or body of water) that is “engaged in the growing of trees under a sound program of sustained yield management.” The type of timber being grown, the amount, and its growth rate are also important considerations.
For more information on developing a Landscape Management Plan, take a look at this PDF from the TN Department of Agriculture. - Open Space – Open space land is “land, other than agricultural or forest land, containing at least three acres characterized principally by an open or a natural condition and whose preservation would tend to provide the public with one or more of the following benefits”:
- Improving the use, enjoyment, and benefit of surrounding land
- Conservation of natural resources
- Preservation of land in an open condition for the general welfare
- Relief from the monotony of urban sprawl
- Opportunity to study and enjoy natural areas that urban and suburban residents may not otherwise have available
To apply for your land to be considered agricultural, forest, or open space under Tennessee’s Greenbelt law, you will need to fill out the appropriate form (depending on which type of land you’re submitting) with the TN Comptroller of the Treasury’s Board of Equalization.
There are also county-specific applications that you may need to send in as well depending on where your land is located. If you have property in multiple counties, you will have to apply with each county separately.
What Is The Tennessee Greenbelt Tax Exemption?
As we mentioned at the beginning of this post, once your land qualifies for the “Tennessee Greenbelt Tax Exemption” (actually, it’s a reduction), your property will be taxed at a different rate than regular land.
It will be taxed based on its current use rather than market value. How much of a reduction it taxes landowners will realize is dependent on where the property is located, how many acres are affected, and how it is being used.
Tennessee Greenbelt Tax Rate
The TN Greenbelt tax rate is determined using the following formula, according to TCA 67-5- 1008 Sec. (c)(1):
Greenbelt = (use value x2) + (land schedule value) / 3
Greenbelt property cannot be reappraised at a rate higher than 6% per year from the last assessment (which is usually done on a 4, 5, or 6-year cycle).
If you really want to get into the weeds, here’s a link to the official TN Greenbelt Manual.
Call Us For Help With Greenbelt Taxes
We get it. You’re busy trying to run a successful ag operation, and things like the Tennessee Greenbelt tax exemption can get confusing pretty quickly.
Fortunately, our team of accounting pros has been helping landowners all across TN minimize their tax burden and maximize their money for over 40 years. We’ve got what it takes to help you make the most of your farm, forest, or open land. To see if you qualify and to have a pro help you through it all, schedule a call today.
