Forestland owners: Take advantage of property tax incentives
Georgia forestland owners generally have access to four property tax incentive programs – Conservation Use Value Assessment (CUVA), Forest Land Protection Act (FLPA), Qualified Timber Property (QTP) and Agricultural Preference, all of which reduce the amount participating landowners pay in property taxes.
Dr. Bob Izlar of UGA’s Harvey Langdale Jr. Center for Forest Business outlined how property taxes are assessed on forestland and the details of the three incentive programs in a presentation during the 2021 Virtual Ag Forecast on Jan. 29.
Georgia is the No. 1 state in timber harvest, with 24.6 million acres of forestland, 90% of which is privately owned. These are bragging points, but also present a thorny tax situation.
“Property taxes remain the top concern for private forest landowners in Georgia, because there are so many of us and we own so much of the land base,” Izlar said.
Even if they participate in one of the four exemption programs available to them, Georgia forestland owners are taxed at higher rates than their peers in neighboring states. Izlar and colleague Yanshu Li published a study on Georgia property taxation rates in 2018 and found that on average, exemption participants pay $5.51 per acre, exceeding those in Alabama, Arkansas, Florida, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginian by more than $1.50 per acre.
Without participating in any of the tax incentive programs and paying taxes based on fair market value, forestland on average is taxed at $15.41 per acre.
CUVA, FLPA, QTP and Agricultural Preference are well worth exploring, Izlar said.
“If you’re in South Georgia/Rural Georgia, outside of the influence of the metropolitan area, all we tell folks is to get with their CPA. Put the pencil to it. Know whether it may be better for you to go into ag pref, or it may be better for you to pay fair market value, because in some counties, FMV is cheaper than CUVA,” Izlar said. “It all depends on where you are. But I can almost guarantee that if you’re north of the Fall Line, one of these programs is going to help you. A big part of the decision is, ‘Do I want to tie my land up for 10 years?’”
A look at the four exemption programs:
- Agricultural Preference: (established in 1983) Land may be used for agriculture or forestry. There is a 2,000-acre maximum, assessment is at 75% of fair market value. A 10-year covenant is required, with penalties for withdrawing the land from the covenant.
- CUVA: (established in 1990) Land may be used for agriculture or forestry. There is a 2,000-acre maximum. A 10-year covenant is required, with penalties for withdrawing the land from the covenant.
- FLPA: (Established in 2008) Land may be used for forestry. A minimum of 200 acres is required, with no maximum. A 10-year covenant is required, with penalties for withdrawing the land from the covenant.
- QTP: (Established in 2018) Land may be used for forestry. A minimum of 50 acres is required, with no maximum. Assessment is 175% of the CUVA value. The agreement is subject to annual certification, and there is no penalty for withdrawing land from the covenant.
To watch Izlar’s presentation, visit https://agforecast.caes.uga.edu/previous-outlooks/2021.html. For a copy of Izlar and Yanshu’s report, “Property Tax Incentives for the Georgia Landowner,” visit www.ugacfb.com/property-tax-incentives-for-the-georgia-landowner/.