Understanding the Pennsylvania Clean & Green Act
Property Tax Reductions that Help Create a Clean and Green PA
With property taxes in Pennsylvania at an all time high, property owners are fighting to keep their property assessments and their property taxes low. This article will help readers understand the basics of the Pennsylvania Clean & Green Act - an act that provides tax advantages to clean and green PA properties and businesses. The Deadline for Clean & Green applications is June 1st of each tax year, so it’s time to start evaluating your eligibility. Learn more about what it takes from the PA property tax assessment experts, Flaherty & Fardo.
About the Clean & Green PA Statute
- Agricultural Use
- Agriculture Reserve
- Forest Reserve
The advantage for property owners is that the Act allows the property to be assessed at the value it has for that use, rather than at fair market value.
The intent of the act is to encourage the keeping of land in one of these 3 uses. In almost all cases, an owner of enrolled land will see a significant property tax reduction, most notably when a reassessment occurs.
The 3 Categories for Clean & Green
Agricultural Use is defined as “Land which is used for the purpose of producing an agricultural commodity: such as:
- Agricultural, apicultural, aquacultural, horticultural, floricultural, silvicultural, viticultural and dairy products.
- Livestock and the products thereof.
- Ranch-raised fur-bearing animals and the products thereof.
- Poultry and the products of poultry.
- Products commonly raised or produced on farms which are intended for human consumption or are transported or intended to be transported in commerce.
- Processed or manufactured products of products commonly raised or produced on farms which are intended for human consumption or are transported or intended to be transported in commerce.
Agricultural Use also includes any land under a residence and/or woodlot.
Land that is in agricultural use is eligible for preferential assessment under the act if it has been producing an agricultural commodity (as defined above) and is one of the following:
- Comprised of 10 or more contiguous acres (including any farmstead land and woodlot), OR
- Has an anticipated yearly gross income of at least $2,000 from the production of an agricultural commodity. (3 year history of income is also necessary)
Agriculture Reserve is defined as “noncommercial open space lands used for outdoor recreation or the enjoyment of scenic or natural beauty and open to the public for that use, without charge or fee, on a non-discriminatory basis.”
Land that is in agricultural reserve is eligible for preferential assessment under the act if the land is comprised of 10 or more contiguous acres (including any farmstead land and any woodlot).
Forest Reserve is defined as “Land, 10 acres or more, stocked by forest trees of any size and capable of producing timber or other wood products.” This does include land situated under a residence, farm building or other building.
Land that is in forest reserve is eligible for preferential assessment under the act if presently stocked with trees and the land is comprised of 10 or more contiguous acres (including any farmstead land).
Forest reserve land also includes land that is rented to another person for the purpose of producing timber or other wood products.
What’s the Disadvantage of the Clean and Green PA Statute?
The disadvantage of being in the Clean and Green program is if the use ever changes, roll back taxes are owed. Roll-back taxes are defined as:
The amount equal to the difference between the taxes paid or payable on the basis of the valuation and the assessment authorized under the act and the taxes that would have been paid or payable had that land not been valued, assessed and taxed as other land in the taxing district in the current tax year, the year of change, and in 6 of the previous tax years or the number of years of preferential assessment up to 7.
What this means is that if the use changes, property owners are responsible for the past 7 years of property taxes PLUS interest, on the property tax savings they just obtained.
The Clean & Green Act can save property owners substantial property taxes, but there are also significant restrictions and consequences if the property use changes. Applicants should be careful about roll-back taxes, plus interest, and need to adhere to the specific language of Pennsylvania Statute 72 P. S. § § 5490.1. If you have any questions about the Clean and Green PA Act, get in contact with Flaherty & Fardo for a free consultation where we will help answer all your questions regarding the Clean & Green Act.