Oregon Broker PSI Practice Exam

What must a buyer do to maintain the tax deferral on a 40-acre parcel zoned for exclusive farm use?

1. The buyer must inform the county assessor

2. Include a provision in the sales contract for the transfer of deferral

3. Wait for a designated period after the purchase

4. Pay off any existing taxes on the property

The correct answer is: Include a provision in the sales contract for the transfer of deferral

To maintain the tax deferral on a 40-acre parcel zoned for exclusive farm use, the buyer must include a provision in the sales contract for the transfer of the deferral. This is crucial because tax deferral programs are typically linked to the use of the land for farming or agricultural purposes. When the property is sold, the new owner needs to ensure that they will continue to use the land in compliance with the requirements of the tax deferral program. The inclusion of this provision in the sales contract serves as a formal agreement that recognizes the ongoing eligibility for tax deferral, thereby protecting both the buyer and the seller. This step ensures that the new owner understands the obligations associated with maintaining the tax status and that it is officially documented. The other options may not effectively ensure continued tax deferral. Informing the county assessor is important but is typically done after securing the deferral through the appropriate contractual provisions. Waiting for a designated period after purchase could lead to a lapse in the deferral, which would result in loss of the tax benefits. Paying off any existing taxes does not influence the ability to maintain the tax deferral status; rather, it is an obligation that should have been met prior to the sale or was likely already handled by the seller