About the Forestland program
The 1999 Legislature established the Forestland program as a special tax assessment. Landowners in this program have a reduced property tax assessment that's intended to recognize the importance of forestland to Oregon's economy and respond to the growing pressures that urban growth was putting on natural resource lands. Information specific to the Western Oregon Forestland Program is located in ORS 321.257-390, and ORS 321.805.855 contains information specific to the Eastern Oregon Forestland Program.
How the program works
During the 1900s, counties identified lands in the state which the best and most economically productive use, was to grow timber and other forest products. The counties refer to these lands as "highest and best-use (HBU) forestlands."
Forestland classified as HBU is automatically classified by the county assessor as HBU forestland and qualifies for forestland special assessments. There is no application for the HBU forestland program. The land is assessed at a special rated based on the typical price paid for land managed for the production of harvestable timber.
How forestland is taxed in Oregon
Property in Oregon is valued and taxed based upon the real market value (RMV). The RMV is the price the land would sell for on the open market. The Legislature recognized that urban areas are encroaching on lands capable of growing timber and this drives up the value of the land for other purposes. This makes maintaining the land as timberland more expensive. As an incentive to preserved the land as timberland, Oregon offers special assessment programs to forestland owners. These programs reduce the property tax the landowner pays annually- if the agree to manage the property primarily for growing and harvesting timber.
Most forestland owners have their property taxed under the HBU or the DFL the forestland program. This program is available to owners with at least two acres of forested land. The property tax is based upon a special assessment value that represents the price a knowledgeable purchaser would pay for land that is primarily used to grow and harvest timber. This is typically much lower than the RMV. The landowner is required to be actively growing a marketable species of trees on the property or have a plan for growing trees that will eventually be harvested.
HBU land declassification
HBU land may be declassified to another land class by the assessor. You may be able to qualify for another special assessment program in the event you are disqualified. Contact your county assessor for options.
Landowners who own forestland that the county does not automatically classify as HBU forestland, can apply to the county assessor to have the land "designated" as forestland (DFL forestland). Upon meeting the qualifications, a landowner is enrolled in the DFL program and are qualified for the same special assessments as HBU forestland.
Two other special assessment programs are available for forestland owners
Owners who want to manage their forestland as a wildlife habitat can enroll in the Wildlife Habitat Conservation and Management program administered by the Oregon Department of Fish and Wildlife. Under this program, taxes are assessed at the same rate as farm or forest special assessment. This program may not be available in all counties. Please contact the county assessor to check for availability for your area.
A conservation easement is available through the counties. The land is assessed at the same rate as farm or forest special assessment. See ORS 308A.450—308A.465 for more information.
How to apply for the Designated (DFL) Forestland Program
If your land has not already been classified as highest and best use (HBU) forestland, and you wish to get into the Designated Forestland Program, apply to the assessor of the county in which the forestland is located. The application is needed to help the assessor determine if your land qualifies.
To qualify for the program, the area to be designated must be at least two contiguous acres with the same ownership.
The land must contain enough trees to meet the stocking standards of the Oregon Forest Practices Act. If your land doesn't currently meet these standards, you can still qualify if at least 20 percent (minimum two acres) of the land meets the standards by the end of the first calendar year in the program and there's a written management plan to plant enough trees to meet the standards within five years. Lands that aren't adequately stocked within five years will be disqualified.
Disqualification from DFL/STF or removal from HBU classification
The county assessor may disqualify DFL/STF 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. This additional tax will be 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.
Forestland productivity classes
About productivity classes
People who buy or sell large tracts of forestland in Oregon consider the productivity of the land to determine price. Higher productivity land is generally more valuable. Buyers and sellers generally appraise forestland based on the acres and value in each productivity class. Note: The terms land class and productivity class are used interchangeably.
Western Oregon ORS 321.257
For the purpose of property taxation, we assign value to forestland in western Oregon by classifying land into eight productivity classes.
Within the forest industry, a common way of expressing site quality in western Oregon is using five classes of site ranking.
During the 1960s and 1970s, Revenue staff visited private forestland in western Oregon to classify each 40-acre block of land into a site class. The average site class was determined by using site measurements of trees, topographical features, vegetation types, and soil types. The five site classes are related to Revenue's eight productivity classes as shown in the table below.
The FX class is used for non-productive forestland within a forested property. Examples of non-productive land valued as forestland include rock outcrops, swamps, ponds, utility easements, and some rock pits.
Forestland in eastern Oregon is not assigned productivity classes. Consequently, there's no productivity classes. At least 80 percent of the total area must meet minimum stocking requirements. For details on stocking requirements, see pages 2-8 of our Forestland Manual, 150-303-424.
Choosing a program
Several factors influence whether you should remain in the Forestland program or choose the STF Program.
Small Tract Forestland Program (ORS 321.700-754)
About the program
The Small Tract Forestland (STF) Program 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 timber is harvested. Landowners in this program have a reduced property tax assessment that's intended to recognize the importance of forestland to Oregon's economy and respond to the growing pressures that urban growth was putting on natural resource lands.
Small Tract Forestland (STF) program is available to landowners who own at least 10 but less than 5,000 acres of forestland. Under the STF program, the landowner only pays 20% per annum of the specially assessed value, When harvesting, they must pay the STF severance tax when they harvest timber from the property.
How the program works
Landowners in either the HBU or DFL forestland programs may apply for the STF program.
Qualified landowner pays a reduced annual property tax of 20% of the forestland special assessment value.
To account for the annual property tax reduction, the landowner pays both the STF severance tax and the FPHT when they harvest the timber from the property.>How to apply for the STF 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'll need to complete both the Application for Designation of Land as Forestland and the Application for Small Tract Forestland.
You must own at least 10 but less than 5,000 acres of forestland within the state. For any lot you put into the program, you must also include all land you own that's contiguous to that tax lot.
Once your property qualifies, you can't remove it from the program until you sell the property or transfer it to a new owner.
Disqualification from the STF Program
The county assessor may disqualify lands that no longer meet the standards for the STF program. The owner of the disqualified lands will be required to pay an additional tax assessment. Once you are disqualified from the STF Program you can't reenter the program for five years. Failure to re-apply means they will be liable for the additional tax assessment upon the disqualification. To calculate the additional tax assessment, follow this 3 step calculation:
If an STF property is sold or transferred, the new owner will be liable for the additional tax assessment if they don't apply for STF designation. The additional assessment is a 3-step calculation:
- Find the difference between the tax paid under the STF Program 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 taxes that would have been paid under the Forestland Program 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. (The number of years calculated would be the lesser of the number of consecutive years the land was forestland or five years.)
- The additional assessment is the sum of the amounts calculated from step 1 and 2.