Idaho

Property Classification:

The State of Idaho classifies all property within Idaho as either (IC Sec. 63-204):

Class 1 - Real Property

Class 2 - Personal Property

Class 3 - Operating Property

Real Property: means land; and all standing timber thereon, including standing timber owned separately from the land on which it stands; and all buildings, structures and improvements, or other fixtures of whatever kind on the land (IC Sec. 63-201). Property that is physically attached to the land or other improvements affixed to the land in such a manner that it may not be removed without materially damaging the real property or is of such a nature that it would normally be expected to be sold together is treated as real property.

Forest land: means privately owned land being held and used primarily for the continuous purpose of growing and harvesting trees of a marketable species. Having met the above criteria, forest land may be further identified by the consideration of any of the following criteria:

(a) Forest land is land evidenced by present use and silvicultural treatment.

(b) Forest land is land which has a dedicated use that is further evidenced by a forest land management plan that includes eventual harvest of the forest crop.

(c) Forest land is land bearing forest growth or land which has not been converted to another use.

(d) Forest land is land which has had the trees removed by man through harvest, including clearcuts or by natural disaster, such as but not limited to fire, and which within 5 years after harvest or initial assessment will be reforested as specified in the Forest Practices Act (Chapter 13, Title 38, Idaho Code)

Valuation and Assessment:

The valuation and assessment of forest land depends on the size of the parcel.

Taxation of parcels less than 5 acres: (IC Sec. 63-1702)

Land parcels of less than five (5) contiguous acres must be appraised, assessed and taxed as real property, without regard to its ability to produce timber or forest products. Buildings and other improvements located on forest lands of less than five (5) contiguous acres shall be appraised, assessed and taxed as provided by applicable laws, rules and regulations.

Taxation of parcels greater than 5,000 acres:

Parcels of forest land over 5,000 acres are appraised, assessed, and taxed using the "productivity valuation" method discussed below. (IC Sec. 63-1704)

Taxation of parcels over 5 acres and under 5,000 acres:

Owners of parcels of forest land over five acres and under 5,000 acres in size, whether or not contiguous, may choose between two methods of assessment, appraisal, and taxation. The two methods of valuation are (1) productivity valuation and, (2) the bare land and yield tax. (IC Sec. 63-1705)

A forest landowner cannot have parcels in both designations. The designation must be made by December 31st of the year preceding assessment and lasts for a period of 10 years. If forest property is held in joint ownership, all co-owners must mutually agree on the property designation and must each file a timely designation. If a taxpayer fails to make a designation by December 31 or should co-owners fail to agree on how the land should be designated, the property will be subject to appraisal and assessment as real property using the market valuation method.

Productivity Valuation:

Under the "Productivity Valuation" method forest land is taxed as real property but the inventory value of timber and other forest products on the land are not included as part of the total forest asset. (IC Sec. 63-1705) Instead, a productivity value for the timber is calculated and included in the property's assessed value.

The productivity value of the forest is determined using an income approach that capitalizes the value of the average annual net wood production over a reasonable rotation period plus other agriculturally related income, if any, less annualized expenses including the establishment, protection, maintenance, improvement, and management of the crop over the rotation period.

Each year the forest landowner will pay property taxes amounting to about 1% of the productivity values shown below. The yield tax does not apply to timber harvested from land under this option.

2020 Forest Value and Stumpage Value Zones ($/Acre)

		Land grade
Zone	Good	Medium	Poor
1	600	329	148
2	549	298	134
3	228	120	49
4	227	125	61

Source: Idaho State Tax Commission, 2020.

Under the "Bare Land and Yield Tax" forest lands are valued as real property at rates that reflect only bare forest land value, and all timber severed from the land and delivered as logs or semi-processed forest products is subject to a forest products yield tax in lieu of ad valorem taxes on the timber. (IC Sec. 63-1706)

The yield tax rate is 3% of stumpage value as determined by the State Tax Commission. The county assessors supply to the county treasurers the yield tax amounts on or before November 15 for timber that was severed from January 1 through June 30, and on or before May 15 for timber severed from July 1 through December 31 in the year following severance. Payments become due and payable on December 20 and June 20, respectively. A yield tax exemption of up to $25 is available for Christmas trees, nuts, berries, foliage, cones, and other forest products harvested for the landowner's domestic use (IC Sec. 63-1708).

2020 Bare Land and Yield Values ($/acre)

		Land grade
Zone	Good	Medium	Poor
1	172	120	70
2	172	109	56
3	117	74	39
4	90	58	29

Source: Idaho State Tax Commission, 2020.

Deferred Taxes Penalty:

A designation may be changed if the land is transferred to a new owner that does not own any other forest land with the same classification (IC Sec. 63-1703). In addition, a forest landowner may change the tax designation of all forest lands in common ownership at the end of any ten-year designation period, subject to the recapture of any deferred taxes due as a result of such change (IC Sec. 63-1703). The forest landowner must notify the county assessor of any change in forest land designation after January 1 and no later than December 31 of the 10th year of each designation period. Failure to notify the county assessor results in the continuation of the current designation until the end of the next designation period. If the designation of land subject to the yield tax is changed, the amount of deferred taxes due as a result of the designation change accrues through the designation period and is recaptured, up to a maximum of 10 years.

If there is a change in ownership or a removal of the timber yield tax designation, a forest land owner is liable for the deferred taxes. The amount of deferred taxes subject to recapture is determined by calculating the amount of taxes that would have been due under the productivity valuation method (IC Sec. 63-1703). If there was a change of use with no change of ownership, the amount of deferred taxes is calculated by determining the amount of taxes that would have been due if both the land and timber had been assessed as real property. Recapture applies to the most recent ten years in which the parcel of land has been designated as forest land, and a credit is allowed for yield taxes paid during the designation period.

Property exempt from taxation:

The following property is exempt from the yield tax:

Christmas trees, annual forest crops to include nuts, berries, foliage, cones and other forest products harvested for domestic use of the landowner; provided that the taxes exempted from any one ownership shall not exceed $25.00 in any one year. (IC Sec. 63-1708)

• Idaho State Tax Commission. 2020. Idaho's forestland taxation law. FT-104.

• Idaho State Tax Commission. 2005. User's guide to the Timber Productivity Option's Valuation method.