Property Tax Deferral

Most property in Oregon is valued and taxed based on real market value – the price for which land would sell on the open market. But Oregon’s private forestlands are taxed differently than other kinds of property. Because forestlands are important to Oregon’s economic and environmental health, the Oregon Legislature established a special assessment program for forestland. This program was designed to recognize the importance of forestland to Oregon’s economy and respond to the growing pressures that urban growth was putting on the value – and property tax assessments – on natural resource lands.

Oregon’s Forestland Program:

Oregon’s Forestland Program includes two types of forestland classifications – “highest and best use” and “designated” – that qualify for special assessment. During the 1900s, counties identified lands in the state whose best, most economically productive use was to grow timber and other forest products. The counties refer to these lands as “highest and best use” forestlands. Landowners who own forestland that the county does not consider highest and best use may apply to the county assessor to have the land “designated” as forestland.

Under the Forestland Program, land is assessed at a special value based upon the typical price paid for land managed for the production of harvestable timber. This value, known as the “special assessed value,” is often less than the real market value used for taxing other properties. Special assessed values are determined annually by the Oregon Department of Revenue. These values are tied to the productivity of your forestland.

In order to qualify for “designated” forestland, you must own at least two contiguous acres under one ownership name. Also, the land must be growing 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 two acres) of the land meets the standards by the end of the first calendar year in the program 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.Contact your county assessor to learn more about designating your land as forestland:

The Small Tract Forestland (STF) Program:

The Small Tract Forestland (STF) Program is an option designed with the family forestland owner in mind. The STF Program allows family forestland owners to delay paying part of their annual property taxes until the timber is harvested. This tax on harvest is known as the STF severance tax.

Like the Forestland Program, the STF Program applies to both highest and best use forestland and land that qualifies as designated forestland. Under the STF Program, a landowner pays annual property taxes on 20 percent of the forestland’s special assessment value. The STF severance tax is designed to recover the remaining 80 percent when timber is harvested.

The STF severance tax applies to timber harvested from STF Program lands. This tax is assessed in dollars per 1,000 board feet ($/MBF). The severance tax rate changes annually to reflect changes in specially assessed forestland values. The rate for the current year is available after the specially assessed forestland values are set on June 1. Contact the Oregon Department of Revenue for current year rates.

Generally, all logs or chips removed from land under the STF Program are taxed. Log loads sold by the ton are taxed unless they consist of small, utility-grade logs less than five inches in diameter. Such logs are exempt from this tax. The Oregon Department of Revenue has conversion rates for converting tons to MBF.

Tax forms for the STF severance tax are only available through the Oregon Department of Revenue. The agency mails the forms in December of the year of harvest or in January of the following year. The department identifies potential harvesters and mails the returns based on information provided on the Notification of Operations filed with the Oregon Department of Forestry and the STF application from the county assessors. Blank tax forms are not available. The law requires that the completed STF severance tax return be received by January 31 of the year following the harvest. The STF program is available by application to landowners who own at least 10 acres but less than 5,000 acres of forestland. Once the property enters the STF program, it stays in the program until the property is sold or transferred. If the STF property is sold or transferred, the new owner may apply for STF designation. Otherwise, the new owner will be liable for the additional tax assessment.

Your choice of property tax programs – Forestland Program or Small Tract Forestland Program – will have an impact on your annual cash flow. For guidance on making the best choice for your own situation, see the Department of Revenue web page.

State law directs the allocation of STF severance tax receipts. The Department of Revenue distributes severance tax receipts annually.

Additional Resources for Property Tax Deferral

Two other special assessment programs are available for forestland owners:

  • Property enrolled in the Wildlife Habitat Conservation and Management programadministered by the Oregon Department of Fish and Wildlife is eligible for a wildlife habitat assessment. This program is available for owners who wish to manage their forestland for wildlife habitat rather than timber production. Under this program, taxes are assessed at the same rate as farm or forest special assessment.
  • The Conservation Easement is available through the counties. The land is assessed at the same rate as farm or forest special assessment.

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