Maine has four current use programs to reduce taxes on land that is used primarily for a specific purpose. The four programs are tree growth, open space, farmland, and working waterfront. The following is a brief explanation of each program with links to guide you to more detailed information.
Tree Growth Tax Law
The most commonly used current use tax program in Maine is the Tree Growth tax program. It may also be one of the most misunderstood. The basis of the program is to assess land of 10 or more acres based on its productive use as commercial timberland. Growing and harvesting must be the primary use.
During 2017, Maine’s Tree Growth tax program came under the scrutiny of the governor’s office as did most
property tax reductions. It is believed, and probably rightly so, that a significant percentage of the properties enrolled in this program may not be in compliance with the law. In order to be in compliance, your forest management plan needs to be up to date and implemented. If you have purchased forestland in Maine and you have never talked with a licensed forester you may already be out of compliance. Bulletin 19 on the state website provides information for those already in the program and those considering enrolling. The web address for bulletin 19 is:
Open Space Tax Law
This program provides for a reduced assessed value based on the property being preserved or
restricted for a public benefit. Qualifying public benefits include recreation, scenic resources, game management and wildlife habitat. The open space program does not have a minimum
acreage requirement. In open space the tax assessor will reduce the value by either researching sale data of parcels all or partially in conservation or preservation and computing a fair value, or by applying a percentage reduction based on the public benefit or benefits being applied. The reduction, depending on the benefit, can be as high as 95% of the assessed value. See Bulletin 21 at: https://www.maine.gov/revenue/forms/property/pubs/bull21.pdf
Farmland Tax Law
This tax law requires the land to be used for agricultural or horticultural purposes and must be of 5 or more contiguous acres. The land must earn at least $2,000 gross income per year to
qualify. The owner must file an income statement with the assessor by April 1 of each fifth year, after qualification, for the previous 5 years income of the owner or lessee.
The assessor can use a number of factors to determine farmland values for current use
including farmer to farmer sales, soil types, land rents, and others. For additional information on this tax law see Bulletin 20 at https://www.maine.gov/revenue/forms/property/pubs/bull20.pdf
Land that qualifies for this current use tax treatment is for land on tidal waters or in the
intertidal zone used at least 50% for access or support of commercial fishing activities.
The assessed value reduction varies from 10%, 20% or 30% depending on the percentage of use and potential deed restrictions for use. See all the details on the state site for Working Waterfront Q&A at: https://www.maine.gov/revenue/forms/property/pubs/workingwaterq&a.htm
If you desire to change the use of your property under any of the first three laws above you can avoid any penalty for that change of use. Property changed from farmland to open space,
farmland to tree growth, open space to farmland, or open space to tree growth will not be
penalized if a parcel also meets eligibility requirements of the new classification.