Can Owning Wetlands Decrease a Homeowner's Property Taxes?

Mother Nature put her own version of flood mitigation and erosion control into place when she created wetlands. If you have wetlands on your residential property, which are delineated on your deed or survey, your use of the property is encumbered to a certain degree. That encumbrance may benefit you in the form of lowered assessments, as long as the presence of wetlands is properly documented. Wetlands are generally found on larger parcels, not the smaller lots typical of a subdivision. State and federal agencies encouraging wetlands preservation and/or restoration offer benefits that may include wetlands tax credits, outright compensation and a reduction in land values that affect property taxes.

First, let’s define wetlands. While these are lands in which water covers the soil for a substantial part of the year, they vary a great deal due to differences in climate, vegetation and other issues. Tidal wetlands are found along coasts, while non-tidal wetlands are in floodplains, marshes and low-lying areas. Fish, wildlife and native plants find a welcoming habitat in wetlands.

Whether a property qualifies as a wetland depends on its size, its wildlife habitat potential and its overall effect on the environment. Wetlands help improve water quality and aid in water filtration. They are crucial parts of the natural ecosystem.

Property taxes are based on the assessment by your local taxing entity. If your property contains wetlands, that limits what you can do with it. For example, your local zoning may permit you to build a barn, storage building or similar structure on your property, but the presence of wetlands does not give you sufficient buildable land. Perhaps your lot is large enough for subdivision, if it were not for the presence of wetlands which makes putting up another house or houses out of the question. If wetlands affect your property’s land use, visit your tax assessor’s office and make sure any restrictions were noted on your assessment. If that was not the case, you may receive a somewhat lower assessment and save some money on property taxes. Regulations for appealing an assessment vary according to local law.

The federal National Resources Conservation Service (NRCS) offers funding for landowners who opt to place a permanent easement on their property, a 30-year easement or restore lost or diminished wetlands. For a permanent easement, property owners may receive the fair market value of their land as determined by a licensed appraiser. When a landowner agrees to a permanent easement on the property, the U.S. Department of Agriculture (USDA), which oversees the NRCS, pays not only the cost of the easement but the full cost of restoring the wetlands. For a 30-year easement, the USDA usually pays 75 percent of the property’s appraised value and 75 percent of wetland restoration costs. If the landowner does not want to place an easement on the property but does want to participate in a wetlands restoration plan, the USDA will generally pay up to 75 percent of the restoration costs. This agreement is in place for a minimum of 10 years.

Besides the money the landowner receives for an easement and wetlands restoration, such easements often affect the property’s value for tax purposes. Easements severely restrict what the landowner may do with the property, and no construction is allowed. Your local NRCS office and tax assessor can provide more information on possible tax adjustments for an easement.

Governments periodically review criteria for critical areas in need of protection. It may turn out that your county or state determines certain parcels that did not previously qualify as wetlands now make the designation. If this is the case with your property, you can approach your tax assessor to see how the new designation affects your assessment and subsequent property taxes.