Minnesota woodland property tax: Overview

April 21, 2007 at 4:47 am Leave a comment

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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 30-100 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 2c Managed Forest Land Classification (Class 2c) to reduce ownership costs on sustainably managed forest land.

This section of the site explains these laws to help you decide whether one or the other fits your needs.

How your property tax is determined

Review your current property tax statement for a summary of how your tax was determined. Some of these steps may be applied to your land:

  1. Estimated market value determined by assessor
  2. Plus value of new improvements, if any
  3. Minus limited value deductions, if any
  4. Equals taxable market value
  5. Multiplied times class rate %
  6. Equals property tax before state aid and credits
  7. Minus deductions for state aid, homestead and agricultural credits, if any
  8. Plus special assessments, if any
  9. Equals property tax payable

Step 5 involving the class rate % is one step that a forest landowner may influence. The lower your class rate %, the lower your property tax. Below are class rates that most commonly apply to family forest land in 2009, depending on the property’s current use.

Class rate Class description
0.50%
1.00%
2a. Agricultural Homestead, (farmland only, not considering house, garage & one acre):
first $890,000
over $890,000
1.00% 2b. Rural Vacant Land & Non-homestead Agricultural Land
0.65% 2c. Managed Forest Land
1.00%
1.25%
4c(1). Seasonal residential recreational, non-commercial
first $500,000
over $500,000

Note: Other class rates and descriptions not shown here may apply to certain commercial uses of land that may be forested.

As a woodland owner, you should insist that your property be correctly classified according to its current use so that you pay a fair tax and no more. Enrolling your forest land in SFIA or Class 2c offers cost savings to some landowners.

Other pages in this series:

Overview
Sustainable Forests Incentive Act (SFIA)
2c Managed Forest Land
Comparing SFIA and 2c MFL
More information

Some useful links:

Perspective: Jeff Forester on problems & solutions with MN’s property tax code
MN DOR’s SFIA Fact Sheet
Sustainable Forests Incentive Act: Natural Resource Report (PDF) and SFIA FAQs (18 p. PDF)
More on 2c Managed Forest Land on our blog
Timbertax.org
MDA Conservation Funding Guide

The Minnesota woodland property tax series is authored by Mike Reichenbach and Mel Baughman.

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News and information of interest to Minnesota woodland owners. Sister site to MyMinnesotaWoods.org.

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