Property Tax Relief for Woodland Owners

Property taxes pay for important local government services authorized by elected officials, but they are a significant annual cost for forest landowners. Landowners may not fully recover management investments, including property taxes, when trees grow 30 to 100 years before harvest and ownership changes about every 20 years. In addition, your land management provides wildlife habitat, watershed protection, aesthetics, and biodiversity that benefit many Minnesotans who pay no forest management costs. Because of the public benefits your forest land provides, the Minnesota Legislature created the Sustainable Forest Incentive Act (SFIA) and the Managed Forest Land Classification (Class 2c) to reduce ownership costs on sustainably managed forest land.

Key elements of SFIA and Class 2c:

SFIA Class 2c
20 acre minimum 20 acre minimum
No maximum acreage enrolled 1,920 acre maximum enrolled
Public access required if greater than 1,920 acres enrolled Public access not required
Exclude 3-acre minimum for building Exclude 10-acre minimum for building
8-year minimum enrollment; 4 years to end agreement 1 year minimum enrollment
Pay usual property tax. Get $7.00/acre/year minimum incentive payment ($8.61 average payment in 2008) Pay 0.65% Property Tax Class Rate
Property tax qualifies for itemized deduction on federal income tax return, but SFIA payment is taxable income Property tax qualifies for itemized deduction on federal income tax return

Both options require a Forest Stewardship Plan written and updated every 10 years. These are long-term plans designed to achieve the landowner’s forestry goals—whether income or recreation—while maintaining the sustainability of the land. Kanabec SWCD can help you get an eligible plan in place for your land. Call (320) 679-3982 for more information.

 

Enrollment:

SFIA:  Apply by September 30 to receive a payment the following year. Once enrolled the Minnesota Department of Revenue sends out letters July 1 – return this letter by August 15 certifying that you are following the SFIA requirements of your Forestry Stewardship Plan. Payment made by October 1.

 

2c:  Applications must be made to the County Assessor by May 1 to qualify for Class 2c to reduce property taxes payable in the following year.

(April 2016. Credit: Mel Baughman, University of Minnesota)

You may also like...