Long story short: our inherited 40 acres from my late grandfather just had the taxes doubled due to not being a primary residence. The property is 3 hours away and is hunted a handful of times each year. My dad is planning on moving up there after retirement so selling is not an option.

It is mostly mature poplar, some cedar swamp and a wet alder swamp as well. There are some random oaks and maples but not many. I was already considering clear cutting a small chunk of it to provide regeneration food and cover.

Does anyone have any experience with this program? Is it worth it? I'm thinking save a little on taxes and improve the habitat at the same time. Do you have to pay the forester or is that covered? Any details would be helpful. Thank you

Others more versed than me can better steer you in the right direction but in my opinion it is worth it. My place is in the program and there is money available thru the state to have your plan developed and written by a professional. Basically your taxes are lowered for the majority of the property except I believe a piece that the home sits on.

 

You do not want the commercial forest program, you do want the QFP, Qualified Forest Program.

 

Commercial forest program opens the property up to public hunting in lieu of paying damn near no taxes. Like @Rasputin said, look into the qualified forest program. However, if you ever want to take it out of the program, you will have to pay back taxes.

 

Long story short: our inherited 40 acres from my late grandfather just had the taxes doubled due to not being a primary residence. The property is 3 hours away and is hunted a handful of times each year. My dad is planning on moving up there after retirement so selling is not an option.

It is mostly mature poplar, some cedar swamp and a wet alder swamp as well. There are some random oaks and maples but not many. I was already considering clear cutting a small chunk of it to provide regeneration food and cover.

Does anyone have any experience with this program? Is it worth it? I'm thinking save a little on taxes and improve the habitat at the same time. Do you have to pay the forester or is that covered? Any details would be helpful. Thank you

if your dad is planning on making it his primary residence it will not make sense to enroll the property in QFP as the homestead tax rate is lower than the QFP rate. If it will be a second property going forward and he is just planning on seasonally living there than you should definitely do QFP, it’ll save you 16 mil on the property taxes.

 

Long story short: our inherited 40 acres from my late grandfather just had the taxes doubled due to not being a primary residence. The property is 3 hours away and is hunted a handful of times each year. My dad is planning on moving up there after retirement so selling is not an option.

It is mostly mature poplar, some cedar swamp and a wet alder swamp as well. There are some random oaks and maples but not many. I was already considering clear cutting a small chunk of it to provide regeneration food and cover.

Does anyone have any experience with this program? Is it worth it? I'm thinking save a little on taxes and improve the habitat at the same time. Do you have to pay the forester or is that covered? Any details would be helpful. Thank you

As others have said, you surely mean QFP and not CFP, there is a huge difference.

Is there an existing house already on the property that your father is going to move into? That may have a bearing on things. "Improvements" and their relative footprint are not covered under the QFP, only the land itself. If one is going to build a place after putting land under the QFP only the area where the improvements are being placed needs to be withdrawn so under most circumstances the back tax associated with withdrawing an acre or so won't break the bank. Also, doing a harvest after the property is enrolled reduces the withdrawal penalty.

Keep in mind that your management plan needs to be followed. If a harvest is recommended, a harvest needs to take place withing the QFP window. If not, there needs to be a good reason it is not taking place. MDARD understands issues concerning markets and if winter ground, weather conditions. Plans can be and often are modified for those things and can also be modified to harvest early for reasons such as a neighbor is doing a cutting, and it would be beneficial to harvest at the same time.

When it comes to management plans, be careful what is put on them. More than one landowner has asked the plan writer to include harvesting information that cannot reasonably be performed. Things like harvesting very small acreages on yearly or bi-yearly intervals. Loggers are not going to harvest areas where they lose money!

The increase in property taxes mentioned is a good segue into a preemptive way to cap taxes on recreation land purchases if the seller is willing work with the buyer. It does require the seller to enroll in the QFP before the sale is completed therefore the actual transaction might be held up for a short time.

OP, consider not selling any timber until a year after the property has changed hands. It has to do with paying capital gains vs. ordinary income on the timber sold. Consult a tax professional for details. FM

 

I want to second what FM just said. There are today Foresters writing Management Plans, including QFP enrollments, who do not also administer timber sales and then their view of what is and what isn’t a feasible harvest activity is not backed by real world experience. The State doesn’t see this as a problem but I disagree. Source - I asked one of the key administrators about this, in person.

Such issues can be untangled later but there is paperwork to file and multiple signatures involved.

 

....and often additional cost.

 

It surely must have been the qfp. To me personally I think the tax break would be minimal versus the possible wildlife benefit. I just don't want to get into something we would regret. There is a house and a barn here already.

 

Long story short: our inherited 40 acres from my late grandfather just had the taxes doubled due to not being a primary residence. The property is 3 hours away and is hunted a handful of times each year. My dad is planning on moving up there after retirement so selling is not an option.

It is mostly mature poplar, some cedar swamp and a wet alder swamp as well. There are some random oaks and maples but not many. I was already considering clear cutting a small chunk of it to provide regeneration food and cover.

Does anyone have any experience with this program? Is it worth it? I'm thinking save a little on taxes and improve the habitat at the same time. Do you have to pay the forester or is that covered? Any details would be helpful. Thank you

My bad. I get confused and mine is QFP NOT CFP

 

I dont and wont enroll any of my properties in any programs, i just keep paying the taxes as im not gonna be told what i can and cannot do on them

 

Me too @RHRoss

 

We also decided not to enroll in the QFP program after reading all the rules and regulations. It's also a forever program not 10 or 20 years like some people thought at one time. Your plan might be for 10 years and then you need a new plan. We didn't feel that the tax savings were worth the government oversight . Same as RHRoss and big show.

 

I dont and wont enroll any of my properties in any programs, i just keep paying the taxes as im not gonna be told what i can and cannot do on them

Me too @RHRoss

We also decided not to enroll in the QFP program after reading all the rules and regulations. It's also a forever program not 10 or 20 years like some people thought at one time. Your plan might be for 10 years and then you need a new plan. We didn't feel that the tax savings were worth the government oversight . Same as RHRoss and big show.

X4. I've looked into different programs but at the end of the day the cost of the taxes are negligible to have full control of my property. It's a good fit for some, just not for me.

 

I had the first 40 acre parcel in Dickinson County enrolled in the QF program (in 2013 I believe). It saved me a lot of money as the parcel had been enrolled in the Commercial Forest Program for decades prior to my purchasing it. I would have had to pay thousands of dollars in back ad valorem taxes in order to withdraw the parcel from the CFP. By enrolling in the QFP I was able to get a free withdrawal from CFP. As previously mentioned, property enrolled in CFP is open to the public whereas property enrolled in QFP is not. There was no way I was going to continue to keep the property in CF anyway.

The following year I enrolled 3 more 40 acre parcels in the QFP. There was no tax advantage to do so as I was already living on the property so it was classified as Homestead which is essentially taxed at the same rate as the QF classification. Under QF you are exempted from 18 mils of school operating tax, however you have to pay 2 mils to QF so the savings is actually 16 mils. The advantage though is a great selling point as when you sell the property, the new owner can continue to keep the property enrolled in QF and save 16 mils annually, even if they don’t homestead the property.

The requirement of having the property logged once within 20 years was no big deal, and, in fact, we are having a timber harvest on all 4 parcels as we speak. The fact that the Emerald Ash Borer and Beech Bark Disease recently showed up may have prompted the timber sale a little earlier than otherwise but probably not by much. This is going to be a fairly large sale but our goals are more oriented towards deer habitat than future timber sale revenues, however the timber sale revenue has been pretty good over the past 30 years. I expect the proceeds from the current sale will bring the total up to or beyond 100 K since we purchased the first two 40’s 30 years ago.

I haven’t seen anything but benefits to enrolling in QF at this point.

 

...........
I haven’t seen anything but benefits to enrolling in QF at this point.

Same here. As mentioned, it will be a good fit for some but not everyone.

L & O

 

If you live on the property, enrolling in the QFP will cost you more in taxes than not enrolling. This is really only a good program for permanent absentee land owners.

 

I should probably contact MDARD again because there may have been a change since I last discuss that with them a decade ago, there definitely has been a change in personnel, but I was told that homestead still takes priority.