1. Chapter 1 Introduction to Present-Use Value 1

2. Generally, all property in North Carolina is valued at its market value. Present-use value (PUV) is the value of land in its current use as agricultural land, horticultural land, or forestland based solely on its ability to produce income and assuming an average level of management. Introduction 2

3. Deferred taxes are the difference in taxes between the market value and the present- use value. Introduction 3

4. Agricultural Land Horticultural Land Forestland Note: The Wildlife Conservation Program is not part of the PUV program. Classifications 4

5. Ownership Size Income Sound Management Four Tests 5

6. Special provisions or exceptions may apply to: –Evergreens intended for use as Christmas trees. –Certain land enrolled in the Conservation Reserve Program. –Certain conservation easements donated on qualifying PUV land. –Exceptions for turkey disease. –Annexation of present-use value land  –Wildlife conservation land. Separate program. –Principal Business. Exceptions and Miscellaneous Provisions 6

7. Two application scenarios: –Initial Applications –Applications for Continued Qualification Due to Transfer of Ownership Application for Present-Use Value 7

8. When a property is removed from the present-use value program, either voluntarily or involuntarily, the deferred taxes for the current year and the three previous years plus interest become immediately due and payable. Billing of Deferred Taxes Due to Removal from Present-Use Value (or Rollback) 8

9. There are a few limited exceptions where the deferred taxes are not due when a property is disqualified. The term rollback is not used in the present-use value statutes, but it has become the commonly used term to describe the billing of deferred taxes due to removal from the present-use value program. 9

10. Determining Present-Use Value Agricultural and horticultural present-use values are based on cash rents for agricultural and horticultural land. The Use-Value Advisory Board (UVAB) has currently set the capitalization rate at 6.5% agricultural and horticultural land. 10

11. Forestland present-use values are determined by applying a capitalization rate of 9% to the expected net income of forestland. Determining Present-Use Value 11

12. Each county assessor must annually review one eighth of the parcels that are receiving the benefit of the present-use value classification to verify that these properties continue to qualify for the classification. Compliance Reviews 12