Who pays rollback taxes in Virginia?

The property must be dedicated to the production of plants/plant products and/or animals/animal products that are useful to humans and are primarily for commercial sale. Products include typical field crops such as hay, grains, corn, soybeans, and animals such as cattle, swine, poultry, equine, etc. Horses kept for pleasure and not in a commercial use (such as boarding, breeding, or training) do NOT qualify. A qualified use must be established before an application can be approved. The use must be shown to be able to support the $1,000 annual minimum gross sales or value.

Land used for agricultural use must consist of a minimum of 5 acres under use and meet prescribed standards for a bona fide production for sale of crops and/or livestock or receive rent payments under a federal or state soil or water conservation program such as CRP or CREP.

Homesites including all lawns, driveways, landscaped areas and supporting (non-agricultural) structures are excluded from the qualified areas. This determination is made by the Assessor’s office.

Land under lakes and ponds are generally included as agricultural land, however they are not considered in the determination of the five-acre minimum.

If the use of your land changes in any way,  you MUST contact this office within sixty (60) days to discuss reapplication, fees, and possible roll-back tax.

ROLL BACK TAX: (§58.1 – 3236)

• When real estate qualifying for land use taxation changes to a non-qualifying use or the zoning changes to a more intensive use at the request of the owner or his agent, it will be subject to a roll back tax
• Examples of changes in use include but are not limited to:
  • Change in zoning
  • New dwelling or trailer
  • Farming to non-farming 
  • No production for sale 
  • Changes in acreage (number of acres remaining or number of acres sold is below the minimum requirements) Examples:  acreage sold or transferred by deed of gift or will, resurvey of property boundaries
  • Changes in ownership (buy out an owner, remove/add an owner on the deed, or convey interest)
  • Name change on contiguous parcel (number of acres remaining or number of acres sold is below the minimum requirements) 
• The roll back taxes are assessed against that portion of real estate which no longer qualifies for land use taxation.
  • The roll back tax is assessed against, and must be paid by the owner of the property at the time the change in use occurs.
  • The roll back tax is equal to the difference between land use tax and the fair market value tax, for each of the five most recent complete tax years including simple interest. In addition, the taxes for the current year will be based on the fair market value which may be accomplished by means of a supplemental bill. The supplemental bill is based upon the difference between the land use tax and the fair market value tax. 

In that the tax break given in the Land Use Program is the difference between the use value and the fair market value, the savings represents a “deferred tax” and not a discount. Should qualifying land use change to non-qualifying use, such acreage will be subject to rollback taxes. The rollback tax includes the current and up to the 5 previous years in its calculations, as well as interest. (If the land has only been in the program for 2 years, then the rollback would consist of the tax which was deferred for those 2 years.) This may be accomplished by means of a supplemental assessment based on the difference between land use value and fair market value.

Changes to non-qualifying use include such situations as:

• the cessation of farming activity (farming operation being no longer productive)
• the owner harvesting timber with no provision to reforest
• the landowner causing pollution by not following accepted best management practices
• the property being developed, subdivided or sold

The only way for the property owner to be removed from the Land Use Program without having the rollback tax levied is for him/her to elect to be removed from Land Use, and from the tax benefits, while continuing with a qualified use for the next consecutive 5 years (or however long they were in Land Use if it was less than 5 years) until all tax liens are clear. This would allow the land owner to work his way out of the program without paying rollback taxes.

Rollbacks are not levied when change in ownership (FULL transfer) occurs, as long as the qualifying use is still met.

As of the date of the sale, the new owner will have 60 days to apply for Land Use. If he/she elects not to apply, then the taxable value will revert to the fully assessed value effective the date of transfer. The new owner will be sent a supplemental bill for property taxes based on converting the value back to the full fair-market assessment.

A new owner does not have to apply for Land Use to prevent paying rollback taxes. As long as they do not change the use of the land for the first 5 years of owning it, they will not be charged rollback taxes. However, if a plat is filed or a building permit is issued to do with this parcel within 5 years from the date of purchase, the new owner will be charged rollback tax on the number of acres involved in this change of use.

When the zoning is changed to a more intensive use at the request of the owner or agent, only the acreage which has changed use (rezoned or split-off) is subject to the rollback tax, providing there is sufficient acreage remaining to meet the minimum acreage requirements to continue to qualify for Land Use.

The owner shall report any change in use/zoning within 60 days or a failure to report penalty shall be applied. If it is discovered that a property owner has misled the locality by providing false or misleading information, the current application on file is void and fair market values are to be applied. The rollback tax (including interest and penalty) shall be levied plus an additional penalty of 100% of the rollback total. The rollback is to be levied on the portion of the parcel on which the change was made and is to be paid within 30 days. “Who is billed for rollback taxes?” Land is subject to a lien; however, the owner will be billed if his action triggered the rollback. Interest shall accrue from the date of transfer of ownership until tax is paid in full.

“Who is billed for rollback taxes?” Land is subject to a lien; however, the owner will be billed if his action triggered the rollback. Interest shall accrue from the date of transfer of ownership until tax is paid in full.

*We include here a reference to the Code of Virginia §58.1-3237 D:

“Liability to the roll-back taxes shall attach when a change in use occurs, or a change in zoning of the real estate to a more intensive use at the request of the owner or his agent occurs. Liability to the roll-back taxes shall not attach when a change in ownership of the title takes place if the new owner does not rezone the real estate to a more intensive use and continues the real estate in the use for which it is classified under the conditions prescribed in this article and in the ordinance.”

“The owner of any real estate which has been zoned to more intensive use at the request of the owner or his agent as provided in subsection E, or otherwise subject to or liable for roll-back taxes, shall, within sixty days following such change in use or zoning, report such change to the commissioner of the revenue or other assessing officer on such forms as may be prescribed. The commissioner shall forthwith determine and assess the roll-back tax, which shall be assessed against and paid by the owner of the property at the time the change in use which no longer qualifies occurs, or at the time of the zoning of the real estate to a more intensive use at the request of the owner or his agent occurs, and shall be paid to the treasurer within thirty days of the assessment. If the amount due is not paid by the due date, the treasurer shall impose a penalty and interest on the amount of the roll-back tax, including interest for prior years. Such penalty and interest shall be imposed in accordance with §§ 58.1-3915 and 58.1-3916.

Changing to a non-qualifying use, rezoning to a more intense use (Sec. 58.1-3237 of the Code of Virginia) and the split off or subdivision of lots (Title Sec. 58.1-3241) may trigger roll-back taxes. When roll-backs are issued, the taxes owed are based on the difference between land use value and fair market value for the current year, as well as the previous five tax years. Roll-Back taxes will equal the deferred tax plus simple interest of five-sixths of one percent per month.

On December 15, 1999, the Loudoun County Board of Supervisors adopted an amendment to the county’s Land Use Assessment Ordinance, Section 848.036, allowing property owners currently enrolled in the Land Use Assessment Program the opportunity for an additional deferral of taxes. This deferral of additional taxes requires a recorded commitment to keep the property in a qualifying use for a term of years according to the following scale:

• A commitment to hold the property in its qualifying use for more than 10 years, but not exceeding 20 years, 99% of the use value taxes otherwise assessed may be deferred for the term of the commitment.
• A commitment to hold the property in its qualifying use for more than five years, but not exceeding 10 years, 50% of the use value taxes otherwise assessed may be deferred for the term of the commitment.

The additional deferral applies to qualifying land and does not include ineligible land or buildings assessed at fair market value. See important roll-back information below.

Prospective applicants are encouraged to call (703-737-8557) or email the Exemptions and Deferrals Division for further information and to obtain the appropriate documents. It is strongly recommended that applicants consult legal or tax professionals for assistance in completing the agreements.

The circumstances listed above (changing to a non-qualifying use, rezoning to a more intensive purpose, or subdivision) may trigger roll-back taxes for properties enrolled in the sliding scale option. For these properties, however, the roll-back will include the current tax year plus the previous five tax years or each year from the date the sliding scale agreement was signed, whichever is greater. For example, if a property enrolled in the sliding scale option effective beginning tax year 2015 changes to a non-qualifying use in 2019, roll-back will include the year 2019 plus the previous five years, 2014 through 2018. If a property enrolled in the 10 year sliding scale option effective beginning tax year 2015 changes to a non-qualifying use in 2023, roll-back will include the year 2023 plus each year from 2015 through 2022, a total of eight years.