[WSBARP] RCW 84.34.070 - Conversion from Farmland by a Non-Profit Org - Compensating Tax - Withdrawal from classification

[Jeanne Dawes]

The new owner can continue the use.  The non-profit could arrange for a tenant farmer to farm the land (If the Non-Profit is purchasing to hold the property for a future use.)  The buyer can then give a 2-year notice of intent to withdraw and save the 20% penalty.  During the 2-year withdrawal period, continue to farm the land, after which the compensating tax would still need to be paid.  At least it used to be that way, I know they did a revamp of the open space WAC’s within the past few years.  One thing to watch out for is the annual assessment.  The county has been increasing the market value of farm land pretty significantly in certain areas, and the farmer doesn’t notice it because, they continue to pay the same tax on the reduced value which doesn’t change.  Then when they go to withdraw it, the compensating tax can be pretty hefty, and the period to appeal the valuation long gone.

If it is under 20 acres, it will need to generate the requisite amount of income to continue the use.

Depending on what the non-profit plans to do with the property they might be able to convert to another open space category such as pasture land.

Just a couple of suggestions, but they may not be helpful in your situation.

One other idea, I believe when a non-profit applies for a tax exemption with DOR that they can go back 2 years.  Maybe there is something there that helps.

Jeanne

Jeanne J. Dawes
Attorney at Law
Gore & Grewe, P.S.
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From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Rob Rowley
Sent: Thursday, August 10, 2017 3:43 PM
To: WSBA RPPT <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] RCW 84.34.070 - Conversion from Farmland by a Non-Profit Org - Compensating Tax - Withdrawal from classification

Assume 10 acre parcel which has always been farmland (wheat) is about to be sold to an adjoining nonprofit organization who currently qualifies for reduced property taxes.  Purchasing nonprofit organization wants to avoid the over $20,000 in compensating tax recapture which will be due when converted from farmland to a new usage by the nonprofit organization.

In speaking to the clerk in the assessor's office who specializes in open space she indicates there is no mechanism for this sale to be exempt from recapture.  After the sale the nonprofit can apply for a reduction in future property taxes with the Department of Revenue. I’m familiar with this process.

Your thoughts?


[cid:image001.jpg at 01D311FB.0778D820]Robert R. Rowley | Attorney at Law
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Practice concentrated on business, real estate and general legal matters in Washington and Idaho.

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