Qualified Forest Program
Changes to Michigan’s Qualified Forest Property program
The Forest Package of Bills was passed recently by the Governor of Michigan, and it included revisions and changes to the Qualified Forest Property (QFP) tax incentive program that may be more enticing to forest landowners in the state. The old program received very limited interest mostly due to the high application fee, the fact that no structures were allowed on the properties, and the high penalties and recapture taxes for removing property from the program.
There are two benefits from QFP enrollment available to forest landowners. The first is an exemption from the school operating tax, which is usually 18 mills, and the second is and exemption from an uncapping, or “pop-up” of taxable value when the property is transferred. A landowner can choose to execute one or both of these benefits.
The new QFP qualifications are, a minimum of 20 acres, and a maximum of 640 acres of contiguous property. If the property is between 20 and 39.9 acres, it must be 80% stocked in productive forest, and if it is between 40 and 640 acres it must be 50% stocked in productive forest. Productive forest is defined as forestland that can produce forest products of at least 20 cubic feet per acre per year. A forest management plan is required for the land, and it must be written by a qualified forester, and must contain certain elements. Timber harvests called for in the management plan must be implemented and completed within 3 years of the date called for in the plan. Harvests not completed in the time specified may result in cancellation of enrollment, and required repayment of tax benefits. Unlike the Commercial Forest Program, public access for hunting and fishing is not required for enrolled property. Buildings are also now allowed on the property, but they are not exempt from the school operating millage or the “pop-up” deferral. The buildings’ taxable value and millage rate will appear on a separate line on the owner’s property tax statement.
The application fee is now $50, payable to the Michigan Department of Agriculture and Rural Development (MDARD). The fee to participate is equal to 2 mills times the taxable value of the parcel is paid annually to the local taxing authority and is deposited into the Private Forestland Enhancement Fund, which is used to operate the Qualified Forest Program. The repayment upon release has changed to only the savings in taxes that the landowner has benefitted from, for a maximum of 7 years, unless no harvests have occurred, then the typical repayment is multiplied by 2.
The deadline for new applications is September 1st, and between now and November 30, 2013, owners of lands which were enrolled in QFP before January 1, 2013, must choose to keep the property in QFP or remove the property from the program. To keep the property in QFP, the landowner must file a new QFP affidavit before November 30th, 2013, but will not be required to pay the $50 fee. Landowners may also opt not to execute new affidavits during this period and the existing affidavits will be rescinded, withdrawing the property from QFP but without the recapture tax being charged.
More information can be found by speaking with your local Conservation District Forester. Nick Ryan covers Chippewa, Luce, and Mackinac Counties, and can be reached at (906) 632-9611 ext. 109 or firstname.lastname@example.org. Nick is also available to provide contact information to the forester for your county.
Below are links to the MDARD website where more specific information can be found about Michigan's Qualified Forest Program.
Private Forestlands Initiative - www.michigan.gov/PFI
-This directs you to a page that outlines all three of MDARD's forestry programs.
Qualified Forest Program - www.michigan.gov/QFP
-This page contains all of the forms and informational material pertinent to QFP landowners.
Qualified Forester Registration - www.michigan.gov/QFR
-This page is designed for the foresters that are/wish to be registerd as Qualified Foresters. Here you will find material directed towards foresters.
Michigan Forestry Assistance Program - www.michigan.gov/MIFAP
-This page contains a map of current FAP forester locations.