Forest and Farmland May Qualify for Reduced Property Taxes

Many states offer owners of forest and farmland a reduced property tax rate for owning their property for the primary purpose of producing a crop, be it forestry, agriculture, or even horticulture. While most taxes are collected locally, many states have laws regarding how timberland and agricultural land can be taxed. This is commonly called ad valorem tax or use value taxation. These programs tax the property on its value in the current use versus market value rate taxation for the most profitable or market use. This can result in a substantially lower annual tax bill especially on properties that are close to urban areas and have high market land values. This enables land to stay in the current use of timberland production or agriculture. Without these, the annual tax may become such an expense that it could force the owners to convert the properties to a more profitable market use or sell to someone who would. A few states utilize a flat tax program where each owner pays the same rate per acre regardless of market value and the flat rate for timberland and agriculture is lower.

The rules to apply and participate in the program vary by state. Some states have a minimum acreage requirement to enroll, a minimum ownership period, annual proof of income through completion of forms, maintenance of a written forest management plan, periodic auditing of operations to prove use, and other requirements. See the link below to the National Timber Tax Website for a summary of programs by state:

https://timbertax.org/statetaxes/quickreference/

Landowners with forest or agricultural land currently paying market tax rates should investigate what programs are available in their states. American Forest Management can offer advice and assist landowners in the enrollment and qualification process in the areas where we operate. Our professional foresters can prepare forest management plans and substantiate that the property satisfies the requirements of these programs. These laws are important as they enable landowners to maintain ownership of property and continue to produce the timber and crops our society needs. Without these laws, we may lose more of our productive timber and farmland to higher uses like development.