Land Use Change Taxes

Land, which has been classified as open space land and has been assessed at current use values, is subject to a land use change tax when the use of the land changes such that it no longer qualifies for a current use assessment. Over the last few years, there have been many changes in how the land use change tax (LUCT) is assessed and when it becomes due and payable.

The general rule is that the LUCT is assessed against land which was in current use and no longer qualifies. The tax is due and payable upon the change in use. The LUCT is 10% of the full and true value of the property determined without regard to the current use value.

When does the change in use occur? Basically, the change in use occurs when there is conduct inconsistent with the current use classification. Usually that is when “actual construction begins” or when excavations occur. It may also occur by reason of size. However, the date that the change in use occurred is an important date because at that date there must be an assessment of the full and true value which will establish the base figure for the 10% tax.

How much land is subject to the LUCT? When a land owner has a development of land that is in current use, the first question is whether the use changes and the second question is how much of the land must be taken out of current use. The statutory rules and interpretations of those rules are complex. For standard subdivisions, the courts have been inclined to allow towns to assess each lot as the change in use applies to each lot. For cluster developments the statute is less clear. There is a question as to how common area must be handled and there is a question as to the impact of improvements which physically touch one of the sites but not all of them. With regard to condominiums, there are recent changes in the law which suggest that towns may have the right to apply a similar lot by lot tax. However, the matter is not completely resolved.

What is the full and true value? One of the obvious questions that need to be addressed is whether the full and true value is before betterments or after betterments. There is disagreement and dispute on the matter. It may depend upon when the construction occurred.

Once there is a change in use which justifies a LUCT, the Town has an obligation to assess the land and send a bill for the tax. If the Town misses the 18 month window, the Town will likely be precluded from sending a bill for the LUCT. However, the dates are not always clear. Officials are entitled to receive notice of the change in use or the time begins after they actually discover the change in use. The tax bill must state clearly whether all or only a portion of the land is being released from current use and subject to the LUCT.

Author: Attorney Thomas J. Leonard

Welts, White & Fontaine, P.C.

© 2024  The Law Offices of Welts, White & Fontaine, P.C.
29 Factory Street Nashua, New Hampshire 03060
Telephone: (603) 883-0797 | FAX: (603) 883-8723 | [email protected]

"*" indicates required fields

How Did You Hear About Us*
Privacy Policy*
This field is for validation purposes and should be left unchanged.