Timber Exemption

Land whose primary purpose is continuously growing and harvesting trees of a marketable species may qualify for our Timber Property Tax Exemption, which aims to assess forestland at a value commensurate with its capacity to produce timber, rather than the price the land will sell for. The intent is for landowners to be able to use this savings on actively managing their timber for harvest.

Reference:

Idaho Code 63.1701 Definitions
Idaho Code 63.1702 Lands of Less than Five Acres
Idaho Code 63.1703 Certain Forest Lands to be Designated for Taxation by Owner
Idaho Code 63.1704 Large-Size Forest Tracts
Idaho Code 63.1705 Taxation of Forest Lands Under the Productivity Option
Idaho Code 63.1706 Yield Tax on Applicable Forest Products
Idaho Code 63.1707 Examination of Records
Idaho Code 63.1708 Property Exempt from Taxation

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Must have at least FIVE (5) *CONTIGUOUS, FULLY-STOCKED ACRES of timber that aligns with the definition of “FORESTLAND”.

Forestland Defined:

“Forestland” means privately owned land being held and used primarily for the continuous purpose of growing and harvesting trees of a marketable species. Having met the above criteria, forestland is further identified by consideration of any of the following:

(i) Present forestland use and silvicultural treatment being clearly evidenced.

(ii) A dedicated timber use, further evidenced by a forestland management plan that includes eventual harvest of the forest crop.

(iii) Bearing forest growth or having NOT been converted to another use.

(iv) Trees removed by man through harvest, including clear-cuts or by natural disaster, such as but not limited to fire, which within five (5) years after harvest/initial assessment will be reforested as specified in the Administrative Rules pertaining to the Forest Practices Act.

*”Contiguous” means being in actual contact or touching along a boundary or at a point, except no area of land shall be considered not contiguous solely by reason of a roadway or other right-of-way.

Forestland (Tax) Options:

Upon initial application, you are required to designate between two forestland tax assessment options:

It is required by law that all parcels statewide under the same ownership be put into the same designation. For landowners with ownership of 5,000 or more acres, the forest tax law requires that the land be assessed under the Land Productivity tax option only.

Either option requires landowners to manage their timber as a crop that will be commercially harvested and sold (in part or whole) at some point in time. If landowners do not wish to raise their trees for harvest, they should not apply for this program.

1. Land Productivity Option:

Every year the landowner pays taxes on the assessed value for the land and projected year growth. The owner does not pay taxes on the timber when it is harvested (no 3% yield tax at harvest). When the timbered acres are removed from the timber program for any reason, the land will be assessed at full market value, but the landowner is not required to pay back taxes on the difference in value between full market value and the lower, taxable values placed on the land while it was in the program (no deferred bill). The assessed rate per acre for this program is about 29-48% higher than the Bare Land & Yield option depending on the productivity of the land.

2. Bare Land & Yield Option:

The landowner defers a portion of the property tax to be paid later. The assessed value is calculated using rates much lower than those for the Land Productivity option (29-48% lower).

However, a 3% yield tax is billed on the value of the timber itself when it is harvested. An advantage of this option is that the property tax may be paid partly from the income generated by sale of the timber. The total taxable value depends upon the species of trees and the quantity harvested (by the thousand board feet). Yield tax bills are processed bi-annually.

The first-half billing covers the period of January 1^st – June 30^th. Bills are mailed in October and are due December 20^th.

The second-half billing covers the period of July 1^st – December 31^st. Bills are mailed in March and are due June 20^th.

When the land is removed from the Bare Land & Yield option or the timber program, deferred tax may be billed. This tax is based on the difference in total value between the Land Productivity option and the Bare Land and Yield option for the years the land was in the program, not to exceed 10 years, and less credit for any yield tax already paid. If the land is removed from the program because it is being developed, the deferred tax calculations are based on the difference between the Bare Land and Yield value and full market value.

A possible advantage of this option is that deferred tax may be paid out of the proceeds of the sale of the land. A possible disadvantage is that non-payment of deferred tax may result in a lien against the property.

Deferred taxes are billed annually; sent out in April and due back by June 20^th.

The TIMBERLAND DESIGNATION OPTIONS and DEFERRED RECAPTURE handouts help to further explain the difference between the two options and provide more detail on yield and deferred tax.

(A 3% yield tax is also charged for timber removed from grazing and cropland; explained on our agricultural exemption webpage under YIELD TAX ON AGRICULTURAL PARCELS.)

For more general timber exemption information see our HOW TO’S FOR QUALIFYING LAND IN THE TIMBER CLASSIFICATION. Contact the Timber and Agricultural Department at 208.446.1526/kctimberag@kcgov.us for more information on calculations of yield and deferred tax.

Forest Management Plan:

In order to qualify for the timber exemption, a forest management plan much accompany your initial application.

A forestland management plan shall mean a written management plan reviewed by a professional consulting forester, Idaho Department of Lands private forestry specialist, professional industry forester, or federal government forester, to include eventual harvest of the forest crop.

Professional forester is defined as an individual holding at least a Bachelor of Science degree in forestry from an accredited four (4) year institution.

The plan shall include as a minimum:

Date of preparation
Name, address & phone number of land owner and person preparing and/or reviewing the plan
Property legal description
Map of property (not less than 1:24,000 scale)
General description of forest stand(s) including species and age classes
General description of potential insect, disease, and fire hazards that may be present and the management systems which shall be used to control them
The forest management plans of the landowner over the next twenty (20) years

Here is a list of CONSULTING FORESTERS who commonly do forest management plans for Kootenai County landowners.

You are required to submit one application for each individually assessed parcel but you may submit one Forest Management Plan to cover each group of contiguous parcels (adjacent, or sharing the same parcel border) that you will manage as a single stand of timber.

After Being Accepted into the Timber Program:

When land is accepted into the timber program, it is classified as timberland and is assessed at a lower rate per acre than full market value rates. The intent is to enable landowners to use the tax dollars saved to actively manage the timber for harvest. The rates vary in Idaho according to your land's location in one of four value zones within the State. Kootenai County is in Zone 1. The assessment rates per acre within each zone vary according to whether the land is graded as good, medium or poor production ground (production is how much tree growth occurs per acre, per year.). These production grades are measured and assigned by the Assessor's Office. Please see the IDAHO’S FORESTLAND TAXATION LAW pamphlet provided by the State Tax Commission for further explanation.

ONCE IN THE PROGRAM, IT IS THE LANDOWNER’S RESPONSIBILITY TO NOTIFY THE COUNTY ASSESSOR OF ANY SUBSTANTIAL CHANGE IN USE OF SAID FORESTLAND NOT CONFORMING TO THE DEFINITION OF FORESTLAND WITHIN 30 DAYS OF SAID CHANGE.