Virginia

Property Classification:

Although there is only one classification of real property, real estate devoted to agricultural, horticultural forest, or open space uses may be eligible to receive special tax treatment.

Real estate devoted to forest use means land including the standing timber and trees thereon, devoted to tree growth in such quantity and so spaced and maintained as to constitute a forest area under standards prescribed by the State Forester pursuant to the authority set out in § 58.1-3240 and in accordance with the Administrative Process Act (§ 2.2-4000 et seq.). Real estate upon which recreational activities are conducted for profit, or otherwise, shall still be considered real estate devoted to forest use if the recreational activities conducted on such real estate do not change the character of the real estate so that it no longer constitutes a forest area under standards prescribed by the State Forester. Real property that has been designated as devoted to forest use shall not lose such designation solely because a portion of the property is being used for a different purpose pursuant to a special use permit or is otherwise allowed by zoning, provided that the property, excluding such portion, otherwise meets all the requirements for such designation. The portion of the property being used for a different purpose pursuant to a special use permit or otherwise allowed by zoning shall be deemed a separate piece of property from the remaining property for purposes of assessment. The presence of utility lines on real property shall not be considered in determining whether the property, including the portion where the utility lines are located, is devoted to forest use. In determining whether real property is devoted to forest use, zoning designations and special use permits for the property shall not be the sole considerations.

Qualifications:

The area must be a minimum of 20 acres and must meet the following standards to qualify for forestry use.

PRODUCTIVE FOREST LAND: The real estate sought to be qualified shall be devoted to forest use that has existent on it, and well distributed, commercially valuable trees of any size sufficient to compose at least 40% normal stocking of forest trees. Land devoted to forest use that has been recently harvested of merchantable timber, is being regenerated into a new forest and not currently developed for non-forest use shall be eligible. To be qualified the land must be growing a commercial forest crop that is physically accessible for harvesting when mature.

NON-PRODUCTIVE FOREST LAND: The land sought to be qualified is land devoted to forest use but that is not capable of growing a crop of industrial wood because of inaccessibility or adverse site conditions such as steep outcrops of rock, shallow soil on steep mountain sides, excessive steepness, heavily eroded areas, coastal beach sand, tidal marsh and other conditions that prohibit the growth and harvesting of a crop of tree suitable for commercial use.

To qualify for forest use, the owner shall certify that the real estate is being used in a planned program of timber management and soil conservation practices which are intended to:

1. Enhance the growth of commercially desirable species through generally accepted silvicultural practices.

2. Reduce or prevent soil erosion by Best Management Practices such as logging road layout and stabilization, streamside management zones, water diversion practices and other best management practices which prevent soil erosion and improve water quality.

Certification of intent by the owner can be shown by:

1. A signed commitment to maintain and protect forestland by documenting land-use objectives to include methods of resource management and soil and water protection or,

2. Submitting a plan prepared by a professional forester.

Application: Property owners must apply for taxation based on use assessment to the local assessing officer at least 60 days preceding the year for which such taxation is sought. However, in any year in which a general reassessment is being made, the property owner may submit such an application until 30 days have elapsed after the notice of increase in assessment is mailed, or 60 days preceding the tax year, whichever is later. In any locality that has adopted a fiscal tax year but continues to assess as of January 1, such application must be submitted for any year at least 60 days preceding the effective date of the assessment for such year. An application must be submitted whenever the use or acreage of such land previously approved changes.

Rollback Tax: If forest land that is valued at its use value is subsequently used for a non-qualifying use, additional "roll-back" taxes must be paid. In localities that have not adopted a sliding scale for use value assessment and taxation, the roll-back tax payment required is equal to the difference between the tax assessed based on the use valuation and the taxes that would have been payable had property taxes been assessed based on the property's fair market value for the current year and for each of the five years immediately preceding the year of the change. (Code of Virginia § 58.1-3237)

Valuation and Assessment:

In determining the total area of real estate actively devoted to forest use all real estate under barns, sheds, silos, cribs, greenhouses, public recreation facilities and like structures, lakes, dams, ponds, streams, irrigation ditches and like facilities will be included. Real estate under, and any additional real estate used in connection with the farmhouse or home or any other structure not related to such special use, shall be excluded in determining such total area. (Code of Virginia § 58.1-3236)

Land devoted to forest use is categorized as either fair, good or excellent with regards to growing timber. The Virginia Department of Forestry is responsible for providing the estimated forest use values to the State Land Evaluation Advisory Council (SLEAC). Timber yield tools are used for volume determination. A forestry financial analysis model is used to calculate the present value of future timber crops for each soil qualify type based on parameters including forest type, growth rate, timber prices, management expenses, forest management regimes, harvest revenue, interest rate, inflation rate, and taxes. The SLEAC publish a range of suggested values. Participating jurisdiction’s Assessment Office is required to consider the SLEAC estimates but no required to use them.

The forest land use values by county for each of the three site classifications are available on the Virginia Department of Forestry website. Additionally the application for land use assessment is provided by the State Land Evaluation Advisory Council for the Commonwealth of Virginia.

To provide further for the conservation of the natural resources of the Commonwealth by the protection and development of forest resources and reforestation of forest lands, there is hereby levied, in addition to all other taxes imposed, a forest products tax. The tax shall be paid once on any forest product. Unless the tax has previously been paid by a severer, the tax shall be paid by the first manufacturer using, consuming, processing, or storing the forest products for sale or shipment out-of-state. No manufacturer shall be liable for the tax if the manufacturer has received proper documentation from a severer that the tax has been paid. A severer that sells or delivers forest products to any person that is not a manufacturer registered for the forest products tax shall be liable for the tax.

Any out-of-state manufacturer may register to pay the forest products tax and shall be liable for the tax until, upon his request or otherwise, his registration is terminated by the Department.

Tax Rates:

The tax hereby imposed shall be assessed at the following rates (Sec. 58.1-1604):

1. On pine lumber in its various sizes and forms, including railroad switch ties, bridge timber, and dimension stock, the rate per 1000 board feet measure shall be $1.15; or at the election of the taxpayer, 20 cents per ton of logs received.

2. On hardwood, cypress and all other species of lumber the rate per 1000 board feet measure shall be 22 1/2 cents; or at the election of the taxpayer, 4 cents per ton of logs received.

3. On timber sold as logs and not converted into lumber or other products in the Commonwealth, the rate per 1000 feet log scale, International 1/4" Kerf Rule, shall be $1.15 on pine; and 22 1/2 cents on other species; or at the election of the taxpayer, 20 cents per ton of pine logs received; and 4 cents per ton of logs of other species received.

4. On logs to be converted into veneer the rate per 1000 board feet log scale, International 1/4" Kerf Rule, shall be $1.15 for pine and 22 1/2 cents for other species; or at the election of the taxpayer, 20 cents per ton of pine logs received; and 4 cents per ton of logs of other species received.

5. On pulpwood, excelsior wood, chemical wood, bolts or billets, fuel wood, tanbark, and other products customarily sold by the cord, the rate per standard cord of 128 cubic feet shall be 47 1/2 cents for pine, 11 1/4 cents per cord on all other species; or at the election of the taxpayer, 20 cents per ton of pine logs received; and 4 cents per ton of logs of other species received.

6. On chips and mulch, including products such as biomass chips and fuel chips, the rate shall be $0.20 per ton for pine, $0.04 per ton for other species, and $0.10 per ton for loads consisting of both pine and other species.

7. On railroad crossties the rate per piece shall be 3 8/10 cents on pine, and one cent on all other species; or at the election of the taxpayer, 20 cents per ton of pine logs received; and 4 cents per ton of logs of other species received.

8. On posts, mine ties, mine props, round mine collars, and other types of timber used in connection with mining and ordinarily sold by the piece, the rate per 100 pieces shall be as follows: 38 cents for pine, and 9 cents for other species, where each piece is 4' or less in length; 61 3/4 cents for pine and 14 1/4 cents for other species, where each piece is more than 4' but not over 8' in length; and 76 cents for pine and 18 cents for other species, where each piece is more than 8' in length. If the taxpayer so elects, he may pay the taxes due on the above forest products at the rate of $1.045 for pine and 24 3/4 cents for other species, per 1000 lineal feet; or at the election of the taxpayer, 20 cents per ton of pine logs received; and 4 cents per ton of logs of other species received.

9. On piling and poles of all types the rate shall equal 2.31 percent of invoice value f.o.b. loading out point; or at the election of the taxpayer, 20 cents per ton of pine logs received; and 4 cents per ton of logs of other species received.

10. On keg staves the rate per standard 400-inch bundle shall be 3 8/10 cents for pine and 1 1/2 cents for other species; the rate per 100 keg heads shall be 11 5/10 cents on pine and 4 1/2 cents for other species; and on tight cooperage, 4 1/2 cents per 100 staves and 9 cents per 100 heads; or at the election of the taxpayer, 20 cents per ton of pine logs received; and 4 cents per ton of logs of other species received.

11. On any other type of forest product not herein enumerated, severed or separated from the soil, the Commissioner shall determine a fair unit tax rate, based on the cubic foot wood volume relationship between the product and the cubic foot volume of 1000 feet board measure of pine when the product is pine, or on the unit rate of cedar or hardwood lumber when the product is a species other than pine.

Optional rates for certain manufacturers and severers: (Sec. 58.1-1606)

Notwithstanding the provisions of §§ 58.1-1604 and 58.1-1605, any manufacturer of rough lumber who during any one calendar year, manufactures 500,000 or less board feet may elect to pay a flat tax of $460 when the amount cut is between 500,000' and 300,000', and a flat tax of $230 when the amount cut is 300,000 board feet or less. The tax shall be payable to the Department of Taxation within thirty days after December 31 of each year and the manufacturer shall submit to the Department with said tax, forms prescribed by the Department, certifying that he had actually manufactured a quantity of rough lumber in accordance with the foregoing schedule during the preceding calendar year.

Any person who severs for sale 100 or less cords of fuel wood, or 500 or less posts for fish net poles, during any one calendar year may elect to pay the tax due within the thirty days after December 31 of each year and submit to the Department with said tax, forms prescribed by the Department, certifying the quantity of product severed during the preceding calendar year.

Virginia's Use-Value Assessment Program. Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics: https://aaec.vt.edu/extension/use-value.html.

Virginia land use taxation. Virginia Department of Forestry: http://www.dof.virginia.gov/land/usetax/index.htm