QOTD: What tax benefits are available to forest landowners?

Here is the "question of the day". This is an e-mail I received from a local landowner.


Dear Paul,
We have a small tree farm in Vance County.  I am not certain if there are any land use programs available in Vance County. We would have specific interest if you could direct us regarding programs which may allow specific tax advantage.  At this point, we envision the property remaining in forestry for some time. 
Thank you
Chuck and Sylvia Forest


Dear Chuck and Sylvia,

I am more than happy to help! The local Forest Service office is another great resource, so you should contact them as well.



Your first step is to get a Forest Management Plan, if you don't already have one. The Forest Service can write one for a small fee, or you can hire a consulting forester to do it.

Next, you will want to consider applying for the Present Use Taxation program with the County Tax Office. This will lower your property tax bill (20 acres of forestland is the minimum to qualify).

Next, you can consider applying for cost-share programs that can offset the cost of management activities (e.g. prescribed fire, invasive species management, pre-commercial thinning). These types of programs are available from both the Forest Service, as well as the USDA Natural Resource Conservation Service.

There may also be income tax advantages, depending on how the property is managed. In some cases it may be possible to deduct management expenses each year (I believe you have to file a schedule F to do so). If not, you still may want to keep records of management expenses to offset capital gains taxes if and when you harvest the timber. Consult your tax professional to verify and to get more details. You may also want to visit http://www.timbertax.org.

Please don't hesitate to call or e-mail should you have further questions.

All the best,
Paul