The Small Tract Forestland Option (STF Option) was developed to accommodate the varying needs of small-woodland owners. This program allows the landowner to delay paying part of their annual property taxes until after the landowner harvests timber.
Purpose: The 2003 Legislature established the Forestland Program as a special tax assessment. This reduced tax assessment was intended to recognize the importance of forestland to Oregon´s economy and to respond to the growing pressures urban growth was putting on natural resource lands.
How the program works: Like the Forestland Program, the STF Option applies to land classified by the county as either "highest and best use" forestland or designated forestland. (See the Forestland Program description for more information)
A landowner pays an annual property tax on 20 percent of the forestland special assessment value. The STF Severance Tax is paid when the landowner harvests the timber from this property.
How to get into the STF Option tax program: Apply to the assessor in the county in which the land is located. In the case where land was not previously classified as forestland, you will need to complete two applications, the application for designated forestland and the application for the STF Option.
Once your property qualifies for the STF Option, you cannot remove it until you sell the property or transfer it to a new owner.
Ownership size: You must own at least 10 acres of forestland but less than 5,000 acres.
You may choose to put property into this option on a tax-lot basis; however, you must include all land you own that is contiguous to this tax lot. The determination of contiguous property includes owning the land as an individual and/or owning the property through a corporation in which you have a majority interest.
Forestland criteria: The land must contain enough trees to meet the stocking standards of the Oregon Forest Practices Act. If your land does not currently meet these standards, you can still qualify if at least 20 percent (minimum of two acres) of the land meets the standards and there is a written management plan to plant enough trees to meet the standards within five years. Lands that are not adequately stocked within five years will be disqualified.
Annual property tax: Land under this program is taxed at 20 percent of the special assessment value, which is based upon the typical price paid for land managed for the production of harvestable timber. Property taxes under this program will range from 8 cents per acre to $1.35 per acre, depending upon the ability of your property to grow timber.
- Eastern Oregon land will be taxed at an average of 11 cents per acre.
- Western Oregon land will be taxed at an average of 68 cents per acre.
Severance tax at harvest: The STF Severance Tax applies to timber harvested from lands classified under the STF Option.
The tax rates are intended to recover the unpaid property tax projected over a typical rotation length for an average productivity class.
Eastern Oregon rate: $ 3.21 per MBF (2006 rate)
Western Oregon rate: $ 4.11 per MBF (2006 rate)
These tax rates will be indexed annually at the rate that the specially assessed forestland has increased or decreased from one year to the next.
Disqualification or removal: The county assessor may disqualify lands that do not continue to meet the standards for this program. The owner of the disqualified lands will be required to pay an additional tax assessment. This additional assessment for the STF Option is a two-step calculation:
- The difference between the tax paid under the STF Option and the tax that would have been paid under the Forestland Program for the number of years the property has been in the STF Option, up to a maximum of 10 years.
- The difference between the tax paid for the previous five years and the tax that would have been paid for the same five-year period had the land been taxed at the real market value.
Example
Step 1
Tax on a 50-acre tract of land at forestland value
10 years x $150 per year $1,500
Tax on a 50-acre tract of land at STF Option value
10 years x $30 per year $ 300
______
Difference (back tax step 1) $1,200
Step 2
Tax on a 50-acre tract of land at real market value
5 years x $1,500 tax per year $7,500
Taxon a 50-acre tract of land at STF Option value
5 years x $30 tax per year $ 150
______
Difference (back tax step 2) $7,350
Total (back tax due) $8,550
Once you are disqualified from the STF Option you may not get back into the program for five years.
Change from one forestland option to another: Properties under this option will remain classified under this program unless the property ownership is transferred or is no longer being used as forestland.
Links:
Forestland Values
Productivity class explanation
Designated Forestland application
STF Option application
Choosing a forestland program
Last revised June 2, 2006.
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