For small land owners and those not interested in the latest and greatest technology:
We focus on traditional forest measurement methods, forest inventory sample, growth and yield projections, harvest volumes, management plans, fire fuel reductions, seedling planting comma and financial valuations for land purchases and sales
Final Report Prepared for: The Intertribal Timber Council 1112 NE 21st Avenue, Suite 4 Portland, OR 97232
By Eric Clippinger, Forester, Northwest Management, Inc
Forestland property taxes, also called timber taxes, in the Inland Northwest are typically codified and administered at the state level. However, local county governments are sometimes responsible for determining if a property qualifies as “forest”. Designating property under a forestland tax category oftentimes allows landowners to pay a smaller amount of property tax because the current use valuation is typically much lower than a fair market valuation. This strategy incentivizes forest landowners to keep their forest stocked, healthy and managed for the periodic harvest of forest products. Landowners that develop or otherwise clear their forest for other uses will not qualify for the timber tax and will likely pay a higher property tax bill.
Most states where forest comprise a large percentage of the vegetative cover utilize potential productivity of a given geographic region to determine a current use value for annual taxation. The primary timber-producing attributes that are accounted for are soils, site indices and equipment operability. Additionally, a tax may be collected at the time of harvest based on the volume or dollar amount of forest products sold. Every state has different tax laws and requirements regarding forestland taxes; consultation with a Certified Public Accountant is recommended to address specific timber tax questions and harvest income scenarios. Below is a synopsis of the timber tax programs in the three primary states that Northwest Management, Inc. works in.
In Idaho, property classified under the forestland tax category must be between 5 and 5,000 acres. (Landowners with property holdings over 5,000 acres are automatically enrolled in the Productivity Tax). The landowner must demonstrate that the primary purpose of the land is to grow and harvest trees of marketable species. Most Idaho counties require a simple yet qualified Forest Management Plan to be submitted to the assessor’s office along with the application.
The landowner has two options when declaring a property to be forested: the Productivity Tax or the Bare Land and Yield Tax. The Productivity Tax is based on the ability of the land to produce an annual income from forest products. The forest landowner pays a certain amount every year based on the productivity of the property which is determined by the state by region and average board foot of growth per acre, per year. No additional tax is collected from the sale of forest products. The Bare land and Yield Tax requires that the landowner pay an annual tax based on the present value of the bare forestland and an additional 3% tax on the stumpage value at the time of harvest. Land is once again graded by region and productivity (even though only bare land value is calculated), and regional, average stumpage values are used for the 3% tax. Once an option is selected, the property must stay under this designation for 10 years. 2022 is the next available time to change designations for the 2023-2033 tax time period.
**Update for Latah County, Idaho**
**Starting January 1, 2020, Latah County, Idaho will require any forestland designation applications submitted to the assessor’s office to have an accompanying Forest Management Plan. The requirements of the forest plan involve describing the timbered stands on the property, as well as addressing the current health of the forest and how to mitigate potential insect, disease and fire hazards, and lastly what steps are recommended over the next 20 years to effectively manage the forest for the eventual harvest of forest products. The plans are required to be either written or reviewed by a professional forester. This rule change will apply to buyers of forested property, changes in ownership (e.g. an individual to a LLC/trust), changes to parcel numbers (e.g. parcels are split and/or combined) and changes in legal descriptions (e.g. potentially from a new survey). Any forested properties designated before December 31, 2019 will not be required to submit a copy of a Forest Management Plan. **
In Washington, property owners seeking to sign up for the designated forest land tax must own at least 5 acres and the property should be used primarily for the growth and harvest of timber. Most Washington counties require an in-depth application to be filled out, application fee and a copy of a simple yet qualified Timber Management Plan. A forest landowner can apply for designation or removal of their property from the designated forestland category at any time.
Once a property is determined to qualify for the designated forestland tax category, two complimentary taxes are assessed: an annual current use (forest) tax and an excise or yield tax at the time of harvest.
Annual forest land values are determined by the state, similar to Idaho, using attributes such as timber species and site index/productivity (which is referred to as land grade) and soil characteristics (which is referred to as operability class).
Harvesting timber is subject to a 4-5% excise tax on the actual stumpage value of the logs sold for a small harvester (<2 MMBF annually), or on average stumpage price tables, for a large harvester (>2 MMBF annually), published by the state. The excise tax must be paid quarterly and be paid by the person who owns the timber at the time that it is scaled. Washington also has a Business and Occupation (B&O) tax which is a tax on gross receipts. Timber owners who harvest timber from their land must report the gross income produced for B&O tax purposes.
Montana also utilizes a current use tax system combined with a minimal tax at the time of harvest for forestlands. Forestland in Montana is defined as property that is 15 or more acres, is in one ownership, and is capable of producing 100 board foot per acre per annual increment. There is no Forest Management Plan required as parcels that fits into these parameters are classified as Class 10 properties and automatically entail the following taxation requirements.
Forestland value is determined by a combination of forest productivity as it relates to geographical forest valuation zones. These figures and tables are produced by the state and result in a total taxable value of the forestland. That value is then taxed (currently) at 0.37% to arrive at the annual tax burden.
A small, severance tax of $0.15 per MBF is collected from the harvest of wood products. This tax is administered by the state as part of its slash disposal program. The proceeds go to the cooperative extension for the state.
References:
Idaho State Tax Commission. Forestlands.
https://tax.idaho.gov/i-2048.cfm
Montana Dept. of Revenue. Classifying Forest Land.
https://www.leg.mt.gov/bills/mca/title_0150/chapter_0440/parts_index.html
National Timber Tax Website. Tax Management for Timberland Owners. State Tax Laws: Idaho, Montana and Washington.
https://www.timbertax.org/statetaxes/property/
Tax Foundation. States Use Gentle Hand in Taxing Timberland.
https://taxfoundation.org/states-use-gentle-hand-taxing-timberland/ March 25, 2009
Washington Dept. of Revenue. Designated Forest Land. Forest Tax.
https://dor.wa.gov/find-taxes-rates/other-taxes/forest-tax
[vc_row][vc_column width=”1/2″][vc_column_text]By Adam Herrenbruck, Northwest Management, Inc
The threat of wildfire is part of life to someone who maintains a home on rural private property, but it does not have to be a prohibitive barrier. Though wildfires will and do occur, landowners can protect their own land and structures through smart development and preventative management.
Those who have yet to experience an immediate wildfire threat may not feel strong motivation to take preemptive fire-safety steps, but acting now is critical to being ready when the fire is close to home – and getting closer. While some of these practices may require significant time and investment, many initial actions are simple and cost-effective.
The area immediately around the home is the place to start when reducing wildfire risk. This area is often referred to as the “Immediate Zone” and is the area from zero to five feet away from all sides of the home. Dead plants and other highly-flammable materials should be removed from this area (including under decks and porches) and live plants and vegetation should be regularly maintained. Grass needs to be watered and mowed regularly. Any tree branches that overhang into the immediate zone, especially those that touch the house or roof should be pruned back or otherwise removed.
Beyond landscaping procedures, there are many other considerations when reviewing the immediate zone. Firewood, barbecues, and propane tanks should not be stored within the immediate zone but should instead be neatly stacked and stored safely apart from the home. Deck and lawn furniture can be extremely flammable and should be stored inside the home or a shed when not in use (especially when no one is home). Routine home maintenance is another critical but often-overlooked aspect to reducing fire risk in the immediate zone. Cleaning the roof and gutters of dead leaves and pine needles is important, as is cleaning up any other debris that could catch fire near the home. Broken, loose or missing shingles or window screens can also pose an increased fire threat so fixing and replacing these is important.[/vc_column_text][/vc_column][vc_column width=”1/2″][vc_column_text]
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]The “Intermediate Zone” makes up the area five feet away from the home and up to 30 feet away. This area might contain more vegetation but it still needs to be maintained in such a way that reduces fire risk, including the prompt removal of dead and dying plants and trees. Grass should be watered and mowed. Trees need to be spaced, not clustered, and mature trees should have branches pruned up to ten feet off the ground. Any stacks of firewood should be isolated from other flammable materials or objects that could worsen the spread of a fire. It is a good idea to store propane tanks and barbecues in areas that are free of vegetation or combustible materials, such as patios. All vegetation should be cleared from underneath or nearby large stationary propane tanks.
The “Extended Zone” is the area out past 30 feet and up to 100 or 200 feet from the home. The property in this zone should be maintained with the goal, not of preventing fire, but of keeping a fire from exploding out of control. This can be achieved through routine management and thoughtful planning. Small conifers growing among larger, mature trees can act as continuous sources of fuel for wildfires. Removing these young trees and periodically mowing down tall grasses can interrupt the path of a wildfire. Dead plant material, especially dead branches or dead trees, should also be removed regularly to lighten the fuel loading around the home area. The live trees growing in the extended zone can be more clustered but as a general rule spacing between trees should increase as they get closer to the home.
When considering what measures to take, each landowner can begin by looking right around the home itself and assess the immediate fire risks. As these issues are addressed then the landowner can take more and more actions to further and further prepare the property for wildfires.
Instructional resources and educational materials that detail different types of fire-resistant landscaping and homeowner practices are available and can be obtained through various state and federal agencies and nonprofit organizations. Sources consulted during the creation of this article include the National Fire Protection Association’s Firewise USA program (firewise.org) and Idaho Firewise, Inc. (idahofirewise.org)[/vc_column_text][/vc_column][/vc_row]
