If you own at least 5 acres of forested land in Washington State, your property may be eligible to enroll in the Current Use Program, which could significantly reduce your annual property tax bill. The program is intended to provide a tax break for those who grow trees for harvest, much like the tax incentive offered to those who produce agricultural products. The portion of your property (approximately 1 acre) on which your home sits would be taxed at the “highest and best use” rate, while the balance of your property, provided it meets certain criteria, could be taxed at a much lower rate.
If you are purchasing forested property that is already enrolled in this program, you can apply to continue the classification as long as you submit an application and provide a timber management plan before closing. Some counties allow new landowners as many as 60 days after closing to submit an acceptable management plan. Such plans are usually prepared by an accredited forester at a cost ranging from approximately $600 to $1,500. The plan includes descriptions of the current timber stand, maps of forested areas and wetlands, identification of soil types, and a plan for future forest stewardship. In most cases, it is beneficial for the owner to keep the property enrolled in the program, although there are situations where removing it may be advantageous.
Since each plan is prepared specifically for the individual owner, the cost of creating a new timber management plan is usually borne by the purchaser, even though doing so saves the seller from paying compensating taxes at closing. Each time a property is sold, it is automatically removed from this tax classification unless the new buyer signs a continuance agreement and meets the program requirements. Although there appears to be very little monitoring or enforcement of a timber management plan, the county may request proof of compliance or remove the property from the program and levy compensating taxes if the landowner fails to meet the requirements.
To qualify, the property must contain at least 150 viable trees that are at least 4 feet tall and consist of species that are marketable for lumber. The owner’s intent must be to eventually harvest the timber, much like raising an agricultural crop. Each county maintains a list of accredited foresters who are qualified to prepare these plans.
Contact your real estate professional for more information on this topic!