Taxes

For information beyond what this site provides, visit the National Timber Tax Website, developed to be used by timberland owners, as well as a reference for accountants, attorneys, consulting foresters and other professionals who work with timberland owners regarding the tax treatment of timber related activities. The site includes information regarding federal income taxes, state tax laws, estate planning, tax policy as well as professional research regarding timber taxes.

 

Present-Use Valuation Program

Most land in North Carolina is taxed at a rate based on highest and best use, the market value of the land to developers, for example. Under the Present-Use Value Program (PUV), forestland is taxed at a substantially lower rate based solely on its ability to produce income from timber.

North Carolina’s Forestry Present Use Valuation (PUV) Property Tax Program (NC State Forestry Extension)
This document covers the major provisions of the law, forestry qualifications, and eligibility requirements for deferring property taxes through the forestry PUV program. The interpretations are based on administrative guidance from the N.C. Department of Revenue as of January 2019.

Present-Use Valuation Program Guide (North Carolina Department of Revenue)
Effective January 1 1974 the General Assembly enacted a voluntary program that allows certain agricultural land, horticultural land and forestland to be assessed at its present-use value. The Present-Use Valuation Program Guide seeks to provide a thorough, but not exhaustive, explanation of the present-use value program as it exists at the time of publication.

Taxes and Your North Carolina Woodlands (My North Carolina Woods)
This Healthy Woods Fact Sheet discusses the Forestry Present-Use Valuation Program as well as other tax incentives available to woodland owners, in addition to sources of more information.

 

Tax Tips For Woodland Owners

Income Tax Deduction on Timber and Landscape Trees Loss From Casualty (Southern Regional Extension Forestry)
Timber or landscape trees destroyed by the hurricane, fire, earthquake, ice, hail, tornado, and other storms are “casualty losses” that may allow the property owners to take a deduction on their federal income tax returns. Here Dr. Linda Wang, National Timber Tax Specialist, USDA Forest Service discusses the “adjusted basis” of timber and tax deduction rules for casualty loss.

Estate and Gift Taxes (U.S. Forest Service)
Learning and understanding the tax laws helps minimize the estate taxes and the income taxes of woodland property upon the death of the landowner.  Here Dr. Linda Wang, National Timber Tax Specialist, USDA Forest Service discusses federal estate taxes, state inheritance and estate tax, federal gift tax, generation-skipping tax and appraisals  – with examples for each.

Property Decisions for Estate Planning (N.C. State University)
This article discusses the process needed to crate an estate plan, beginning with taking a complete inventory of non-titled personal property, real property, and financial assets. It discusses bequests and devises, dividing property among children, physically dividing the property, giving a beneficiary full or limited ownership rights, and planning for contingencies should your beneficiary precede you in death.

Timber Tax Basis (webinar forestrywebinars.net)
This webinar is designed to give you a detailed and clear understanding of timber tax basis, a deduction that many landowners struggle with after timber sale or loss of timber from fire, theft or storm. Properly and timely setting up your timber basis is an important step in saving taxes, time and hassle.

Understanding Your Basis (American Forest Foundation, My Land Plan)
Many landowners have never heard of “basis,” but knowing what it is and how to use it can save you money at tax time.

Tax Tips for Forest Landowners for the 2019 Tax Year (USDA Forest Service)
This publication provides forest owners, foresters, loggers, and timber businesses a guide of the applicable Federal income tax laws, including the latest tax law changes, for filing their 2019 tax returns.  The information is not intended to render legal or accounting advice and is current as of September 30, 2019.

Conservation Easements and Taxes (American Forest Foundation, My Land Plan)
If your conservation easement meets certain requirements, it can qualify as a tax-deductible charitable donation—and that can translate into significant state and federal income tax savings.

More Information on Taxes (N.C. Tree Farm Program)
Learn more about North Carolina’s Present Use Value tax program and other tax tips for woodland owners.

Federal Income Tax on Timber: A Quick Guide for Woodland Owners (USDA Forest Service)
This publication provides a quick reference on timber tax laws that are important to woodland owners. The intended audience includes woodland owners, loggers, and consulting foresters who need a basic understanding of Federal income tax rules on the management of woodland property. It is prepared to help woodland taxpayers and their professional advisors learn and use these tax laws.

How Do Taxes Affect America’s Private Forestland Owners? (Journal of Forestry)
If Americans are to continue to enjoy all the benefits they get from America’s private forestlands, then reasonable returns from forestland investments are needed. Such returns are possible only if tax policies are sound.

Tax Reform Issues for Forest Landowners and the Forest Products Industry (U.S. Forest Service)
Taxes have been consistently listed as one of the top concerns for the nation’s 10+ million individual and family private forest owners. Ultimately, taxes play an important role in influencing forest investment, land tenure, ownership structure, timber management, and rural jobs. This article discusses 12 tax provisions that are important to promote and encourage timber resource management and investment.

What are Capital Gains? (American Forest Foundation, My Land Plan)
Capital gains income comes from the sale of property you own for personal or investment use—for example, your house or your furnishings—and have had for more than a year. Capital gains get special treatment at tax time.

The Benefits of Capital Gains (American Forest Foundation, My Land Plan)
As a woodland owner, you stand to benefit from the special rules that apply to capital gains income. Your land and its standing timber are both considered property that, if sold, creates capital gains income—and is eligible for special tax treatment that can save you money.

Capital Gains and Timber Sales (American Forest Foundation, My Land Plan)
Many woodland owners—and even their tax preparers—don’t realize they can treat timber sale income as capital gain. Doing so can make a big difference in your profit, but it can take a few extra steps.

Understanding Your Forest Management Expenses (American Forest Foundation, My Land Plan)
It takes resources to realize the dreams you have for your land. Whether you’re building roads or habitat, thinning your trees or replanting them, there are financial costs to keeping your woods healthy. Current tax laws include benefits that can help you offset those costs.

What are Reforestation Tax Benefits? (American Forest Foundation, My Land Plan)
Planting trees on your land is an important part of keeping it healthy. Whether you’re restoring an area damaged by a natural disaster or replenishing a stand that has been harvested, your reforestation efforts benefit your woods—and require an investment on your part. The IRS recognizes that investment and gives landowners a chance to recover some of the costs through reforestation tax benefits.

Tips on How to Get the Most From Your Timber Harvest (Purdue University)
This fact sheet provides information on the financial aspects of timber sales, including different selling and bidding processes and the basics of how to appraise your timber.