By Philip M. Hastings
Current use taxation is a special New Hampshire tax program for property owners who maintain their land in an undeveloped condition. Farm land, forest land, wetlands and open space of 10 acres or more are eligible for current use, under which the land is taxed significantly below its current market value. When current use land is developed or changed to a non-qualifying use, a land use change tax (“LUCT”) is assessed against the property in an amount equal to 10% of the property’s full and true value. The current use designation runs with the property, so land ordinarily does not lose its status when transferred.
Current use can be an important tax savings tool for landowners, but it can also be a trap for the unwary. Although a landowner must apply with the municipality to have the property put into current use, once land is so classified it cannot be voluntarily removed without an actual physical change to the property. In addition, the timing of the development of land in current use may have a significant impact on the amount of the LUCT and when it is collected. Any plan to purchase or develop current use land should include careful planning with counsel.