Market Value

• Most states determine property tax by multiplying the taxed assessed value of the property (or a portion of it) by a tax rate. The tax assessed value is defined as market value in most places, under most circumstances. Market value is how much a property is worth -- how much it would sell for, often based on recent sales prices of comparable properties.
  
  

Categories of Land Use

• Land use value deferments are specified and defined by state or local law. Not every community offers such deferments. Common categories are agricultural land, forests, horticultural land, open space and historic structures. The categories are chosen by elected officials or voters based on a community's desire to preserve the use. They tend to be use types that make less intense use of the land as opposed to what is referred to as the highest and best use of the land.
  
  

Land Use Value

• A land use or present use value is the value of a property based only on what it is currently used for as opposed to what it could be used for to maximize market value. While in some instances the land use value might be the same as market value, in the context of tax breaks, it is usually less than market value. Farmland, for instance, might be zoned to allow for the development of housing. The market value would reflect the more intense use of housing. The land use or present value would reflect only the value of the land as agricultural land, as if it could not be used for anything else.
  
  

Preservation

• A land use value deferment defers property taxes based on market value for as long as the land remains in its present use. Because the property tax on the current use is lower than it would be otherwise, the deferment promotes preservation of the use. The absence of an ordinance implementing land use deferment has the opposite effect: it puts economic pressure on the landowner to develop the land as extensively as environmental and zoning laws allow.