Maine

Property Classification

In Maine, taxable property is divided into two classes: (1) real property and (2) tangible personal property (Sec. 502, Tit. 36, M.R.S.A.).

Real property is defined in Maine as all land in the state and all buildings, mobile homes and other things affixed to the land, including trailers, improvements on public land, interests in exempt land, and light and power lines (Sec. 551, Tit. 36, M.R.S.A.). Real property is taxed where located.

For valuation purposes, certain types of real property are specially treated in that they are valued at current use rather than at the highest and best use. These categories include wildlife sanctuaries and open space and farm properties.

Forest Lands:

Owners of forest land are eligible for "current-use valuation" in which the land is valued by reference to the market value of similar property rather than in comparison to land priced at a premium, for residential or commercial purposes. Forest land is also subject to excise taxes to cover the costs of fire control and spray programs

Forest land under the Tree Growth Tax Law, is defined as land used primarily for the growth of trees to be harvested for commercial use (Sec. 573, Tit. 36, M.R.S.A.). Land that would otherwise be included within this definition is not to be excluded because of (1) multiple use of the land for public recreation; (2) statutory or governmental restrictions that prevent commercial harvesting of trees or require a primary use of the land other than commercial harvesting of trees; (3) restrictions imposed by deeds, covenants or organizational charters that prevent commercial harvesting of trees and that were in effect prior to January 1, 1982; or (4) past or present multiple use for mineral exploration.

An owner of a parcel containing forest land may have the land valued under the "Tree Growth Tax Law" if the land contains at least 10 acres of forest land, is used primarily for growth of trees for commercial use, and has had a forest management and harvest plan prepared for the parcel to be updated every 10 years (Sec. 574-B, Tit. 36, M.R.S.A.).

To apply for this type of valuation, the owner files a schedule with the assessor that identifies the land to be valued, the number of acres and the location of each forest type (i.e., a stand of trees characterized by a key species of tree) and represents that the land is used primarily for growth of trees to be harvested for commercial use (Sec. 579, Tit. 36, M.R.S.A.).

Valuation and Assessment:

The State Tax Assessor annually determines the 100% valuation per acre for each "forest type" by county or region. The 100% valuation per acre for each forest type for each area equals the value of the annual net wood production divided by a capitalization rate. The capitalization rate applied to the value of the annual net wood production is 8.5%.

Forest type - is a stand of trees characterized by the predominance of one or more groups of key species that make up 75% or more of the saw-log volume of saw-log stands, or cordwood in pole-timber stands, or of the number of trees in seedling and sapling stands (Sec. 573, Tit. 36, M.R.S.A.).

The "assessed value" of the land is determined by adjusting the land's 100% valuation by the currently applicable assessment ratio used in the territory.

2020 Tree Growth Valuation Schedule (Bureau of Revenue Services):

COUNTY	SOFTWOOD ($/acre)	MIXED WOOD ($/acre)	HARDWOOD ($/acre)
Androscoggin	429	458	372
Aroostook	112	159	170
Cumberland	429	458	372
Franklin	258	304	314
Hancock	135	159	122
Kennebec	326	397	257
Knox	326	397	257
Lincoln	326	397	257
Oxford	258	304	314
Penobscot	135	159	122
Piscataquis	112	159	170
Sagadahoc	429	458	372
Somerset	112	159	170
Waldo	326	397	257
Washington	135	159	122
York	429	458	372

Source:Source: Maine Revenue Service https://www.maine.gov/revenue/rules/pdf/rule202.pdf

Hardwood type - means forests in which maple, beech, birch, oak, elm, basswood, poplar and ash, singly or in combination, comprise 75% or more of the stocking.

Mixed wood type - means forests in which neither hardwoods nor softwood comprise 75% of the stand but are a combination of both.

Softwood type - means forests in which pine, spruce, fir, hemlock, cedar and larch, singly or in combination, comprise 75% or more of the stocking.

A landowner may qualify for reduced valuation if the trees on the forest land are destroyed by fire, disease, insects or other natural disaster so that the area contains not more than three cords of wood saleable for forest products. In this instance, the valuation of that specific land area will be reduced by 75% for the first ten property tax years following the loss (Sec. 577, Tit. 36, M.R.S.A.).

Reclassification:

Unless a transfer results from the exercise or threatened exercise of eminent domain, a change in use disqualifying land for current-use classification subjects the owner to a recapture penalty in addition to the annual tax in the year of disqualification (Sec. 581, Tit. 36, M.R.S.A.). The penalty is the greater of

(1) the difference between the amount of taxes that would have been assessed had the property been assessed at its fair market value, and the amount of taxes that were paid for the five tax years (or any lesser number of years starting with the year in which the property was first classified) preceding the withdrawal. Interest from the date on which the taxes would have been payable is also added; or

(2) an amount equal to 30% of the excess of the fair market value of the real estate on the date of withdrawal over the tree growth valuation of the classified land on the assessment date immediately preceding withdrawal for land that has been classified for 10 years or less. For land classified for more than 10 years, the rate is that percentage obtained by subtracting 1% from 30% for each full year beyond 10 years that the real estate was classified prior to the date of withdrawal until a rate of 20% is reached.

The state of Maine does not have a severance or yield tax on timber or timber products.

• Maine Forest Service. Tree Growth Tax Law Information. https://www.maine.gov/dacf/mfs/policy_management/woodswise/tree_growth_tax_law.html

• Maine Revenue Services, Property Tax Division. 2016. Maine Tree Growth Tax Law. Property Tax Bulletin No. 19. https://www.maine.gov/revenue/forms/property/pubs/bull19.pdf

• Maine Forest Service. 2008. Tree Growth Tax Law Plan Review - A guide for municipal assessors. MFS Information Sheet 18.

• Irland, L.C. 2016. References on Forest Taxation and Tree Growth Tax (Maine), NEFIS Publication 363, Center for Research on Sustainable Forests, University of Maine, Orono, ME. https://nefismembers.org/documents/references-on-forest-taxation-and-tree-growth-tax-maine/