Guidance for Assessing Officials on How to Determine Fair Market Value
When land enrolled in the Current Use Program is developed or withdrawn from the program, it is subject to a penalty, the Land Use Change Tax (LUCT), under Vermont law at 32 V.S.A. § Section 3757(a). The LUCT is a percentage of the full fair market value of the changed land.
To help assessing officials estimate fair market values for LUCT purposes, we are providing examples and scenarios. This calculation is not the same and should not be confused with the process of land use allocation of values.
The following are basic guidelines for estimating value for LUCT purposes:
- Assessing officials will receive LUCT information from the Current Use Program through U.S. Postal Service mail. This will include information about the amount of land subject to the LUCT (including a map) and a value request form.
Assessing officials must do the following:
- Assign a value on Line C of Form LV-314, Notice of Withdrawal from the Use Value Appraisal Program and make the calculation on Line D. When the form is returned to the Vermont Department of Taxes, the Current Use Program will make the calculations on Lines E-H.
- Notify the property owner of the value and grievance rights by sending a copy of the “Fair Market Value and Land Use Change Tax Calculation" on page 3 of the LV-314, along with a letter of explanation.
- Mail the form back to the Current Use Program within 30 days.
Property Valuation and Review
Current Use Appraisal Program
133 State Street, Montpelier, VT 05633-1401
- Due to the language written in 32 V.S.A. § Section 3757(a), land subject to LUCT must be assessed as a separate parcel.
This means you must do the following:
- Look at the parcel subject to LUCT without regard to any of other land owned by the property owner. This means you also must not consider other lands excluded, land previously removed from the program, or any other land listed to the property owner.
- Consider all existing attributes of land subject to LUCT as a separate parcel including but not limited to the following:
- Availability of utilities
- Restricted covenants/easements
- Water influence—positive or negative
- Value this land that is subject to penalty as a separate parcel according to your land schedule.
- Understand your land schedule, how it functions and what the coding in your appraisal system means in terms of value. If you do not understand these or the impact on value, you should consult your contractor or your district advisor before you assign a value for this purpose.
- Set up a test or sample parcel in your appraisal software to use your land schedule and value these parcels. This will allow you to add notes about the attributes you considered and how you valued the parcel according to the statute.
Please send a copy of this value sheet to the Current Use Program when you return your estimate of value.
- Use the date of withdrawal as found on the value request form to make the value estimate for LUCT purposes. Value should consider the land to be removed from the Current Use Program as of this date with all existing attributes.
If land subject to LUCT is more than one piece of land, and the pieces are not contiguous to one another, these pieces of land should be considered as separate parcels. These parcels are independent of each other and independent of all other land owned by the property owner or previously excluded.
- Compare the value with parcels of similar size in your town. The fair market value of the withdrawn land should be a similar value to the other parcels of similar size and attributes.