special-use valuation

special-use valuation

For purposes of ad valorem (real estate) taxes,and for estate taxes,property may sometimes be valued at its current use rather than the highest and best use.This is called special-use valuation, as opposed to fair market value. Most often, this special consideration is granted for agricultural land, so that farmers and their families are not forced to sell their land because they are unable to pay the taxes that might be imposed if the property were valued as a potential subdivision development,industrial park,or shopping center,as examples.

References in periodicals archive ?
For an estate of a decedent dying in calendar-year 2006, if the executor elects special-use valuation, the aggregate decrease in the value of qualified real property cannot exceed $900,000.
Beryl elected the special-use valuation (IRC section 2032A), which more than halved the farm's value for estate tax purposes.
Section 2032A special-use valuation requires, among other things, that the property pass to or be acquired by a "qualified heir' (a family member) from the decedent.
The special-use valuation election allows qualifying real property to be valued according to its actual use, rather than its highest or best use, subject to restrictions.
This provision, called special-use valuation, can reduce or eliminate estate tax for estates containing qualified property used in family farms and businesses (e.
For example, if 98% of a decedent's farm passes to a qualified heir and a 2% interest passes to a nonqualified heir, the special-use valuation election is allowed if the 98% is used for a qualified use.
1040(c), the property's basis will be lower after electing special-use valuation.
Gifting and special-use valuation provisions vary not only among death tax systems, but also among the states within a category.
Although New Jersey does not allow special-use valuation, it values forest land according to comparable forest land sales and requires a recalculation of the estate tax if the land's use is changed.
Many of the other inheritance and estate tax states have laws similar to the Federal special-use valuation provisions.
2032A special-use valuation rules, if the triggering event occurs within two years of the decedent's death.
2032A recapture rule (previously discussed) applies, special-use valuation is completely disregarded for property valuation purposes.