Question

A broker lists 45 acres of land that is in current use. A buyer purchases the land with the intent to subdivide the acreage into 26 lots. 6 months after closing, the buyer receives approval for the 26 lot subdivision and immediately the developer begins excavation for the road. Which of the following is true regarding the current use assessment?

A. The seller must pay a 10% tax to the town at the time of the closing
B. The buyer must pay a 10% tax for change in use to the state at the time of subdivision approval and registration
C. The developer incurs no tax until he or she begins excavation for the road
D. The buyer and seller share any tax due at the time the deed is recorded

Answer 1

The question addresses current use assessment after the subdivision of land for development, where a tax implication is expected either upon approval of subdivision or when development begins.

Step-by-step explanation:

The question concerns the current use assessment following the subdivision of land which was originally in current use.

Given the scenario where a buyer purchases land with the intention to subdivide it and subsequently receives approval and begins development, the applicable tax policies would depend on local laws and regulations. Without specific jurisdictional data, the correct answer cannot be determined.

However, typically, property tax implications such as a change in use tax or a deferred taxation penalty may apply once there's a change in the land's designated use or when development starts.