2002 – Decision Time for Idaho Forest Owners

Fall 2002

Idaho forest owners have the option to change property tax categories in 2002. This opportunity only occurs every ten years.

As most of you know, in Idaho, a landowner has the option of selecting from the following two property tax categories:

  • Productivity option (category 6) – In essence, this property tax uses a forestland value that is based upon the ability of land to produce income. Actual land values vary by location and site productivity. For example, a good site in Kootenai County was valued at $675/acre (Productivity option) during 2001.
  • Bare Land and Yield option (category 7) – This option taxes the bare land on an annual basis, with a 3% timber yield tax assessed at time of harvest.

Again, the actual bare land values vary by location and site productivity. For example, the Bare Land value of a good site in Kootenai County was set at $179/acre during 2001.
Consequently, under the Productivity Option a landowner pays a higher annual tax. With the Bare Land and Yield Option, a landowner pays a lower annual tax but must pay a yield tax when harvesting timber. As we all know, taxes are never simple!

With this information in mind, it can be to a landowner’s advantage to change categories during 2002. If a landowner is currently in Productivity and does not plan to harvest much timber within the next ten years, a change to Bare Land and Yield may be advisable. The only catch is that a deferred tax can be due under the Bare Land and Yield Option if you change land use (for example, subdivide) or sell your property to someone who doesn’t initially maintain this designation.

In another scenario, a landowner currently under Bare Land and Yield who is planning a large timber harvest may be ahead to adopt the Productivity Option, thus avoiding the 3% yield tax at the time of harvest. This approach must be closely evaluated since a deferred tax is likely due when making this change.

There are many other factors to consider when determining whether a forestland tax category change is in your best interest. Unfortunately, we don’t have the space here to address all the “what ifs.”

If you would like further information on this complicated subject, please contact our office, your county assessor, or the Private Forestry Specialist at your local Idaho Department of Lands office.

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