Lauren Bunting Associate Broker

Agricultural use assessment in Md.

Thursday, January 28, 2021, Lauren Bunting

The preservation of agricultural land is important to Maryland.

In fact, the Maryland General Assembly declared that “it is in the general public interest of the State to foster and encourage farming activities to maintain a readily available source of food and dairy products, to encourage the preservation of open space as an amenity necessary for human welfare and happiness, and to prevent the forced conversion of open space land to more intensive uses”. And, Maryland was the first State in the nation to formally adopt a policy providing for lower assessments on land that is actively devoted to farm or woodland uses. 

This assessment is called the "agricultural use assessment" and it is granted to farm land or woodland that meets the criteria outlined in State Law. In this case, the land is appraised according to its current use and not according to its actual market value which, is in most cases significantly higher. But, when a property sells, the new buyer must declare if they intend to keep the land with the same use. If their intent is to change the use of the land out of agricultural, then the property is subject to the Agricultural Transfer Tax and Surcharge. 

Worcester County’s website identifies property accounts subject to an Agricultural Transfer Tax on its Real Property Data Search site. Property accounts subject to an Agricultural Transfer Tax will have a Special Tax Recapture area noted as “Agricultural Transfer Tax”. This notation is clearly identified in a red bold format both at the top and bottom of the website’s property screen so that it is not overlooked. 

The Agricultural Transfer Tax and Surcharge are imposed on the value of the land being removed from the agricultural use assessment. The rate of the tax and surcharge are as follows: 

·       5% when the land being removed from agricultural use is 20 acres or more; 

·       4% when the land being removed from agricultural use is less than 20 acres in size; 

·       3% when the land being removed from agricultural use is less than 20 acres and contains site improvements such as well and septic. 

·       An additional 25% surcharge is calculated from the Agricultural Transfer Tax amount and added together for the total amount due. (Note: The Surcharge does not apply to transfers of two acres or less to a child or grandchild of the owner.) 

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  • Lauren Bunting Associate Broker
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