Legal Definitions - special-use valuation

Definition: Special-use valuation is the process of valuing real property, such as farmland, at its current use rather than its highest potential value. It is an option available to executors of an estate for tax purposes.

Example: Let's say a farmer passes away and leaves behind a large piece of farmland. The executor of the estate can choose to value the land based on its current use as farmland, rather than its potential value as a commercial or residential development. This can result in a lower tax bill for the estate.

Explanation: Special-use valuation allows for a more realistic and fair assessment of the value of certain types of property, such as farmland, that may not be used to their highest potential. By valuing the property based on its current use, rather than its potential use, the tax burden on the estate can be reduced. This can be especially helpful for family-owned farms that may not have the resources to pay high estate taxes.