The state Department of Revenue has agreed to allow a large portion of Seven Gates Farm in West Tisbury to be classified as a working farm and recreational land under chapter 61A and 61B of the Massachusetts General Laws, a decision that will cost the town of West Tisbury some $100,000 in lost property tax revenue.

Effective July 1, the changed classification will apply to some 930 acres of common land at Seven Gates, a residential community that spans the towns of Chilmark and West Tisbury and includes some 1,600 acres.

The reclassification will place 112 acres under Chapter 61A, which protects and preserve farmlands, and around 820 acres under Chapter 61B which protects recreational land. All the land that is reclassified lies in West Tisbury.

Seven Gates Farm has a long history as a working farm, dating back to the early 1900s when it was first a sheep and then an award-winning dairy farm. The common land has been actively farmed for hay and livestock for decades, although the farm corporation has not sought the agricultural classification until now.

A conservation restriction was placed on the common land at the farm in 1975; the restriction is held by The Trustees of Reservations.

Farm president Brendan O’Neill explained yesterday that the state of Massachusetts allows wide latitude in assessing conservation land, essentially leaving the matter to the judgment of town assessors. He said rapidly escalating property values in West Tisbury in the last five years were a factor in the decision to seek the agricultural classification. Mr. O’Neill said the homeowners at the farm (there are approximately 48 homes) share equally the tax burden for the common land.

The agricultural and recreation reclassification will not apply to the private homes.

“In the last several years we have watched the tax bills begin to mount [on the common land], and so the decision was made to apply for the reclassification,” Mr. O’Neill said. He noted that the escalating values were confined to the West Tisbury part of Seven Gates Farm; there was no similar pattern in Chilmark.

The new classification is expected to reduce the West Tisbury tax base by around $25 million, according to principal assessor Kristina West. Because of the reclassification, seven different parcels in Seven Gates have now been combined to a single file in the assessor’s office, with an approximate value of around $34 million, Ms. West said.

The town has yet to approve the tax rate for fiscal year 2010 which began July 1, but using last year’s tax rate Ms. West said the reduction will translate to a loss of approximately $100,000 in tax revenue this year for the town. The Seven Gates corporation will now pay taxes on approximately $8 million worth of commonly held property, she said.

“Because they have Chapter 61 protection, they will pay taxes on only a fraction of the [appraised] value . . . although the amount of the value of their property will remain the same. If [an individual property owner] were to drop out of the program, they would have to pay the town back the difference,” Ms. West said.

Chapter 61A applies to land in agricultural use, while Chapter 61B applies to recreation land. Assessments are set according to a state formula.

One of the earliest planned communities on the Vineyard, Seven Gates has a rich history dating back to the late 1800s when Nathaniel Shaler, a Harvard geology professor, purchased a large tract on the upland between North Road and Vineyard Sound to use as a summer school for his university students.

Mr. Shaler continued to buy up old farmland in the area; the name derives from the fact that the original access to the property passed through seven gates.

Mr. Shaler formed the Seven Gates Farm Corporation; some descendents of the original corporators still live on the farm today. Mr. Shaler sold his lots to selected friends and played a role in developing each lot, making sure each home was isolated so as not to disturb its neighbors.

The goal of Chapter 61A, according to the state Web site, is to: “encourage the preservation of the state’s valuable farmland and promote active agricultural and horticulture land use, by assessing agricultural property at use-value for farm owners who keep their land as active agricultural use.”

Currently Ralph Packer runs cattle on a portion of Seven Gates Farm that fronts the eastern terminus of North Road. The farm has contracts with Alan Cottle and David Douglas for haying the large fields.