Special Use Valuation

Special Use Valuation

by Richard C. Wilson & Family Offices Group Association Team

Family Office Definition: Special Use Valuation

Special Use Valuation definition:  When the fair market value of farmland greatly exceeds its agricultural value, “special use valuation” may be used for estate tax purposes to lower the value of the asset. See IRS code section 2032A. The land value is calculated at its lower agricultural value instead of fair market value for estate tax purposes.  Years of farm ownership, operations, and farm assets as a percentage of the total estate must meet IRS qualifications. Also, farm management must continue for a number of years after death to avoid tax recapture. Once successfully applied, the lower special use valuation becomes the cost basis of the property, instead of being fully stepped up in basis at the time of death to market value.

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