When a North Carolina county has already built a Rural Land Schedule that shows present-use value is lower than market value, does a farmer still have to prove anything else to get the present-use appraisal on his farm?

Plain-English summary

George Weaver asked the AG about North Carolina's present-use-value (PUV) program for agricultural land taxation. PUV lets qualifying farm, horticultural, and forest land be appraised for ad valorem taxes at its value in its current use, rather than at its higher-value possible use (the "highest and best use" value that controls under ordinary G.S. 105-283 valuation rules).

The specific question was whether a taxpayer applying under G.S. 105-277.4 must do more than (1) show the property fits one of the classifications in G.S. 105-277.3 and (2) supply other relevant information the Tax Supervisor requires. Or does the taxpayer also have to prove parcel-by-parcel that the property has higher value for some other use?

The AG answered that the taxpayer's burden is limited. If the property fits a G.S. 105-277.3 classification and the county has adopted a valid Rural Land Schedule that shows a difference between present-use value and highest-and-best-use value, the taxpayer does not need to prove the differential separately. The schedules establish the difference.

The reasoning runs through Chapter 105's framework. The county is required to prepare schedules of values, and Rural Land Schedules are part of that framework. Once the Rural Land Schedule is properly built (using comparable sales data, applying the standards of Chapter 105 as interpreted by the North Carolina Supreme Court), it captures the difference between present use value and highest-and-best-use value at the county-wide level. The General Statutes do not require the taxpayer to redo that work parcel by parcel.

Because the answer to the first question is yes (the schedule alone is sufficient), the AG did not reach the second question (whether the taxpayer would have a burden to prove higher-use value if the schedule were not sufficient).

The signing officials were Attorney General Rufus L. Edmisten and Special Deputy Attorney General Myron C. Banks.

Currency note

This opinion was issued in 1984. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. North Carolina's present-use-value program has been amended many times since 1984. Acreage minimums, classification rules, qualifying owner provisions, deferral and rollback mechanics, and procedural rules around assessor decisions have all changed. The PUV statutes are now far more detailed than they were in 1984. The basic principle (that schedules of values do interpretive work the taxpayer does not have to repeat) likely survives, but specific application should be verified against current statutes and assessor procedures.

Historical context: what the AG concluded

The 1984 opinion does these things:

It accepts the county's own valuation work. The county must build schedules of values under Chapter 105. Once those schedules are properly built and adopted, the AG treats them as the authoritative statement of values across the county. The taxpayer is not required to second-guess the schedules.

It limits the taxpayer's burden to classification. The taxpayer's job under G.S. 105-277.4 is to show that the property falls within a class enumerated in G.S. 105-277.3 (agricultural land, horticultural land, forest land, with the specific acreage, income, or use tests that apply). That is the affirmative showing the application form is designed to elicit.

It notes a hypothetical perfection problem. The opinion acknowledges that if sales data were truly comparable and the schedules truly captured all relevant value information, the "present use value" and "highest and best use" schedules should be theoretically close or identical. The fact that they differ in real life is a function of imperfect sales data or imperfect analysis, not a flaw in the legal framework. So the difference the schedules show is real, but it reflects data limitations as well as substantive value differences. That observation does not change the legal answer, because the General Statutes accept the schedules as the operative valuation tool.

It does not reach question two. Because the AG answered question one in the taxpayer's favor, he expressly did not decide whether the taxpayer would carry a burden to prove higher-use value if the schedules did not capture the differential. That question was left for another day.

Background and statutory framework

North Carolina's ad valorem property tax system runs on appraisals of all taxable real property. The general rule under G.S. 105-283 is that property is valued at its "true value," interpreted as the market value of the property in its highest and best use. For most parcels in most counties, this rule produces a tax bill that reflects the highest-use potential of the land, even if it is currently used for something less valuable.

For farmland and similar land, that approach can produce taxes that exceed what the land actually earns in its current use. A 100-acre farm on the edge of a growing city might have highest-and-best-use value as a subdivision but produce only farm income. Taxing the farm at subdivision value pushes the farmer toward selling.

The present-use-value program, codified at G.S. 105-277.2 through 105-277.7, addresses that tension. It lets qualifying agricultural, horticultural, and forest land be appraised at present use value rather than highest-and-best-use value, deferring the difference in tax until the land changes to a non-qualifying use. The program has acreage minimums, income thresholds, ownership requirements, and other qualifying criteria.

G.S. 105-277.3 sets out the classifications. G.S. 105-277.4 sets out the application procedure. G.S. 105-317 deals with schedules of values. G.S. 105-286 sets the cycle of revaluations. G.S. 105-283 sets the true-value standard.

By 1984, the PUV program had been in place for about a decade (the statutes were enacted in 1973 and substantially revised in 1975). Counties had built up Rural Land Schedules in their revaluation cycles. The question Weaver asked was a procedural one about how those schedules interacted with the taxpayer's application burden under G.S. 105-277.4.

Common questions

Does the taxpayer still have to show the property is in actual use?

Yes. G.S. 105-277.3 sets out classification requirements that include actual use of the land (commercial agricultural production, horticultural production, or sound management of a forest). The 1984 opinion did not eliminate the use-and-acreage tests; it limited only the value-differential proof requirement.

What if the county has not adopted a Rural Land Schedule, or its schedule is defective?

The 1984 opinion turned on the assumption that the schedule was properly built. If a county had no schedule, or its schedule was successfully challenged as not following the Chapter 105 standards, a different analysis would apply. The opinion left the second question (the taxpayer's burden in that case) unreached.

Does this affect the rollback tax that applies when land leaves the program?

No. The opinion addresses qualifying for PUV, not the deferred tax mechanism. Land that qualifies for PUV gets the lower current appraisal but is subject to rollback tax if it later changes to a non-qualifying use. The rollback mechanism is separate from the qualifying-for-PUV question this opinion addressed.

Can the Tax Supervisor reject an application even if the taxpayer meets all the requirements the opinion identifies?

The opinion describes the legal minimum. A Tax Supervisor cannot impose additional burdens beyond what the statute requires. But the Tax Supervisor can ask for "other relevant information," and incomplete applications can be denied. Disputes go through the county Board of Equalization and Review and, ultimately, the Property Tax Commission and the courts.

What about properties added through the program after 1984?

The basic answer the 1984 opinion gave (that a properly adopted Rural Land Schedule establishes the value differential without the taxpayer having to re-prove it) has been the working assumption in most North Carolina counties since. Subsequent statutory changes have refined the application process, classification thresholds, and rollback mechanism, but the schedule-as-authoritative-valuation-tool framework remained.

Source

• Landing page: https://ncdoj.gov/opinions/taxation-ad-valorem-taxes-exemption-agricultural-land-present-use-value/

Citations

• N.C.G.S. § 105-277.2
• N.C.G.S. § 105-277.3
• N.C.G.S. § 105-277.4
• N.C.G.S. § 105-283
• N.C.G.S. § 105-286
• N.C.G.S. § 105-317
• Chapter 105 of the General Statutes

Original opinion text

Subject:

Requested By:

Conclusion:
1. The figures contained in the Rural Land Schedule were arrived at in accordance with the standards set forth in Chapter 105 of the North Carolina General Statutes as interpreted by the North Carolina Supreme Court;
2. The property in question is within one of the classifications contained in G.S. 105-277.3.

He then asks, "Are all taxpayers, who file an application under G.S. 105-277.4 entitled to have their property appraised at its present use value, if the application shows only: (1) that the property comes within one of the classes set forth in G.S. 105-277.3 and if (2) other relevant information required by the Tax Supervisor is provided?" He further asks whether the taxpayer has the burden in this case of proving that his property has a greater value for other uses, if the answer to the first question is "no."

If such sales were truly comparable, there should theoretically be little or no difference between the "present use value" and the "highest and best use" value of farm land and the two schedules should be, in that case, quite close, or identical. Here the problem, if there is one, lies in the fact that either there was insufficient data available dealing with truly comparable sales, or there was insufficient data collected, or it was insufficiently analyzed and applied, and more than likely the first instance was the case. That being so, and it being given that the schedules were properly arrived at, the schedules themselves establish the difference in value which brings the statute into play. Consequently, the taxpayer need show nothing on that subject which the County has not already established in its schedules.

Since the answer to the first question is "yes," the second question is not reached.

RUFUS L. EDMISTEN
Attorney General

Myron C. Banks
Special Deputy Attorney General