A lot of Tennessee farmland is taxed under greenbelt, which can save owners a meaningful amount every year. When that land sells, greenbelt becomes a negotiating point. Here's what sellers need to know.
What greenbelt is
Greenbelt is the common name for Tennessee's Agricultural, Forest and Open Space Land Act of 1976. Instead of taxing qualifying land on its full market value, the county taxes it on its value in its current use. The Tennessee Comptroller outlines three classifications:
- Agricultural: generally at least 15 acres being actively farmed
- Forest: at least 15 acres managed for growing timber
- Open space: at least 3 acres, either designated for open space by local or state planning authorities or protected by an open space easement
Applications go through the county assessor's office.
What happens when the land sells
Greenbelt does not automatically carry over to a new owner. When ownership changes, the new owner has to apply to keep the classification. If they do and the land still qualifies, the lower assessment continues.
What rollback taxes are
If land comes out of greenbelt, the county collects rollback taxes: the difference between what was paid under greenbelt and what would have been owed at full value. Per the University of Tennessee's County Technical Assistance Service, that covers:
- The preceding three years for agricultural and forest land
- The preceding five years for open space land
Rollback can be triggered when the land no longer qualifies, when the owner withdraws it, when it is developed, or when a new owner does not file to keep the classification.
Who pays
Under Tennessee law, the seller is responsible for rollback taxes unless the contract says otherwise. If the buyer states in writing at the sale that they intend to keep the land in greenbelt and then fails to file within 90 days of the sale, the buyer becomes responsible. In practice, who pays is often negotiated, especially when a builder or developer is the buyer and the land is certain to come out of greenbelt.
Selling land in greenbelt?
Jack can help you figure out how greenbelt affects your price and how to handle rollback in the contract. Request a land valuation to get started.