By James Watson, Senior Counsel in our Atlanta office.
Georgia has a new forest land dedication program for reduction of real property taxes on timber land. This complex program can be beneficial to many land owners but qualified legal guidance is recommended. Quite a number of land owners scurry to their local tax offices to sign the over-simplified forms for such dedications without fully understanding the effects or the risks.
"Emergency" regulations were adopted in May 2009 and similar final regulations are proposed and pending as of June 2009 under the forest land statute that was passed (without broad attention) in 2008. The new program is under O.C.G.A. §48-5-7.7. The new law augments and compares with two other Georgia tax-reduction dedication plans – "agricultural" dedication under Section 48-5-7.1 and "conservation" dedication under Section 48-5-7.4, which have been in effect for a number of years. View the new statute (click through Georgia statute links to Section 48-5-7.7) or the proposed regulations.
Compared to other dedication programs, the new law has numerous detailed differences with improvements in some important respects. Some of the differences are listed below. The new law also includes some dangerous pitfalls.
Major Differences
The new Georgia forest land dedication program:
- is available to more land owners, who need only be individuals or an entity registered to do business in Georgia, whereas for entity ownership the other programs apply certain income-from-the-property thresholds that must be satisfied and require certain family relationships among the entity owners
- requires a tract minimum size of more than 200 acres, while the other programs either establish no minimum size (agricultural) or allow counties to establish a minimum size up to 25 acres (conservation)
- allows certain approved "secondary uses" for less than half of the dedicated property, such as an ecology "mitigation bank," and "carbon sequestration," which have commercial purposes mixed with environmental improvement purposes, and are not specifically allowed under the other programs, where such uses can raise violation issues
- allows transfers of part of the property to other individuals or Georgia-registered entities who agree to continue the dedication, whereas transfers under the other programs raise more issues of violation
- requires a 15-year dedication period, compared to 10-year periods under the other programs
- provides that developing and constructing a cellular communications tower on the property using only six acres or less per 2000 acres of dedicated land is not a violation of the dedication, whereas the comparable exception for "conservation" land is six acres regardless of tract size, and no such exception applies for land dedicated under the "agricultural" category
Major Pitfalls
If the owner of dedicated forest land transfers part of it and either the transferor or the transferee breaches the dedication requirements, penalties apply to the whole original tract, including the non-breaching owner's portion of the land. The board of tax assessors for the county where the property is located may pursue the breaching owner for penalties and foreclose on the breaching party's property. If that does not satisfy the penalties, the board may lien and foreclose on the other party's property.
The new law will be implemented by the local board of tax assessors for each county. As in the case of any new statute, some experience in applying the law is necessary to work out uncertainties in meaning when the statute is applied to particular circumstances. There is the possibility of errant or inconsistent interpretations of the new law at the county level.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
