You’re headed in the right direction. Always start with a plan, generated by a resource pro. Including young forests on your 80 will benefit lots of species, don’t be afraid to clear cut!
Scott, thank you for your comment. Like many things in life, effective property management is a process. Setting goals is a critical step, then evaluating your current position is needed before developing the plan to get you toward your goals. My forest is far from an even stage mature forest. It has been timbered at least a couple of times, probably with less than ideal forest management practices. There may be a time in the future when a clear cut may make sense, but for now my focus on invasive control will provide opportunities for early succession practices. I also have extensive edge habitat throughout the property.
So if you purchase the land for $100,000. Have the timber appraised at $40,000. After a year you harvest $20,000 timber. Later you sell the property for $120,000, are you paying taxes on a $20,000 gain or a $40,000 gain?
I am not a tax expert, but this is what I understand. If you pay $100,000 for the property that includes $40,000 of timber, your land cost allocation will be $60,000 and timber allocation will be $40,000. If you sell $20,000 of timber you may have a gain depending on what portion of the timber value you sell. If you sell 1/2 of the timber value, then no taxable gain, but you reduce your basis be $20,000. Now you have the land at $60,000 and the timber at $20,000 for a total basis of $80,000. If you sell the property for $120,000 you will have a taxable gain of $40,000.
Ronny, this is a good question. The appraised value is based on the value of the trees to a buyer, such as a saw mill. The cost to harvest and deliver would be separate. Think of it like when you get your house appraised. The appraiser does do not factor in the cost to sell. You have multiple means to handle the costs and negotiate them separately.
Personally, i dont see any marketable trees there. Certainly not the ones that are marked. They are all way to small to be of any interest to loggers or mills.
Where I live most any hardwood tree is marketable. The appraisal evaluates both the type of tree as well as the size. The different sizes are valued based on the potential use. For example there is a market for smaller or irregular shaped trees for hardwood pulp for a lot of uses like pellets or fiberboard. Trees that are in the 9” to 12” or 15”might be sold as firewood poles. The larger trees have more value as saw logs for pallets or finished lumber. The appraisal covers all of these uses. Your market might be different. Thanks for watching and for sharing your thoughts.
You’re headed in the right direction. Always start with a plan, generated by a resource pro. Including young forests on your 80 will benefit lots of species, don’t be afraid to clear cut!
Scott, thank you for your comment. Like many things in life, effective property management is a process. Setting goals is a critical step, then evaluating your current position is needed before developing the plan to get you toward your goals. My forest is far from an even stage mature forest. It has been timbered at least a couple of times, probably with less than ideal forest management practices. There may be a time in the future when a clear cut may make sense, but for now my focus on invasive control will provide opportunities for early succession practices. I also have extensive edge habitat throughout the property.
Thank you. Good information
So if you purchase the land for $100,000. Have the timber appraised at $40,000. After a year you harvest $20,000 timber. Later you sell the property for $120,000, are you paying taxes on a $20,000 gain or a $40,000 gain?
I am not a tax expert, but this is what I understand. If you pay $100,000 for the property that includes $40,000 of timber, your land cost allocation will be $60,000 and timber allocation will be $40,000. If you sell $20,000 of timber you may have a gain depending on what portion of the timber value you sell. If you sell 1/2 of the timber value, then no taxable gain, but you reduce your basis be $20,000. Now you have the land at $60,000 and the timber at $20,000 for a total basis of $80,000. If you sell the property for $120,000 you will have a taxable gain of $40,000.
See Pie & Slice clip from Growing Deer TV.
When you say 50% of land cost is recovered by trees is that after paying a logger or before there costs?
Ronny, this is a good question. The appraised value is based on the value of the trees to a buyer, such as a saw mill. The cost to harvest and deliver would be separate. Think of it like when you get your house appraised. The appraiser does do not factor in the cost to sell. You have multiple means to handle the costs and negotiate them separately.
Personally, i dont see any marketable trees there. Certainly not the ones that are marked. They are all way to small to be of any interest to loggers or mills.
Where I live most any hardwood tree is marketable. The appraisal evaluates both the type of tree as well as the size. The different sizes are valued based on the potential use. For example there is a market for smaller or irregular shaped trees for hardwood pulp for a lot of uses like pellets or fiberboard. Trees that are in the 9” to 12” or 15”might be sold as firewood poles. The larger trees have more value as saw logs for pallets or finished lumber. The appraisal covers all of these uses. Your market might be different. Thanks for watching and for sharing your thoughts.
Good presentation. Thanks for explaining it in such a way that non-professionals like myself can benefit from it.