Tax incentives available under new state program
ESCANABA – Non-industrial private landowners may now be eligible for a tax incentive under a new state Qualified Forest Property program passed by the Michigan Legislature in early June.
The package of nine forestry bills, which were recently passed in the Michigan House and Senate and signed by Gov. Rick Snyder, bring “great opportunity” to these landowners, according to Rory Mattson, executive director of the Delta Conservation District.
The new program, which is now in effect, replaces a former QFP program administered by the Michigan departments of Treasury and Natural Resources. It now falls under the jurisdiction of the Michigan departments of Treasury and Agriculture & Rural Development and conservation districts, which have been written into the legislation.
Mattson said under the old program, QFP-certified landowners received a tax exemption of 18 mills; under the new QFP program, they will see a 16 mill tax exemption since the additional two mills will be paid back to the treasury and placed in a fund that generates revenue to keep the program going.
“It was 18 mills, so the landowners are going to lose two mills there, but they were going to totally cancel everything out and not even do it,” explained Mattson.
To qualify for the new program, non-industrial landowners must have a forest management plan written for the property, which must span no less than 20 acres and no more than 640 acres, along with an application and four supporting documents that must be filled out. These necessary documents include: the name of the property owner, the legal description of the property, the year the application was submitted for exemption, and a statement that the property owner agrees to manage their qualified forest property according to their approved forest management plan.
Each forest management plan is written by private sector foresters, or “qualified foresters,” noted Mattson. The DCD has a list of these qualified foresters for landowners to choose from. Each one charges a fee to write the plan, though each plan is written with the landowner’s goals and objectives in mind and can also be amended.
“It’s the landowner’s decision who he goes with and how much he pays, but there is a golden opportunity right now to possibly have your forest management plan paid for,” explained Mattson, noting all landowners need to do is contact the DCD office for help in securing the funding for their plan so it’s at no cost to them.
“The applications will be submitted to MDARD. The conservation districts will review those applications with MDARD to make sure that they qualify,” he said.
To claim the tax exemption, landowners must obtain the forest management plan and submit it to the MDARD along with the application, supporting documents, and a $50 fee by Sept. 1 of the year prior to the one for which they want the tax exemption.
“The nice thing about this one is, of course, the landowners will get the tax exemption … but the old QFP had a large recapture fee if you got out of the program and a fine and penalty,” said Mattson, who noted under the new QFP program, the recapture tax has been reworked to the benefit of the landowner.
Another major difference is the new QFP program allows for the inclusion of a building or dwelling on the property, whereas the old program did not.
Those under the old QFP program can withdraw from it and go back on the tax roll with no penalties or transfer to the new program without having to pay the $50 fee.
Those who own land and are under the Commercial Forest program have a one-year window, which expires June 1, 2014, to switch into the new QFP program with no penalty if they desire.
“I would say if you’re not going to sell your property within seven years, it’s probably a good thing to get into,” said Mattson, of the new QFP program. “If you have any plans of maybe selling your property within seven years, QFP is probably not for you.”
Landowners interested in applying for the new QFP program or looking for guidance through the application process can contact the Delta Conservation District by calling (906) 553-7700 or by visiting their office located at 6822 US 2 & 41 & M-35 in Gladstone.