Tree Growth Tax–April 1 Deadline!

 Posted by at 4:21 pm
Jan 242012
 

Reprinted with permission from WoodsWiseWire, an occasional electronic newsletter provided by the Maine Forest Service, on topics of general interest to woodland owners, foresters, loggers, and others interested in Maine’s forests. For more information on MFS programs, services, and publications, call the Maine Forest Service at 207-287-2791, or 1-800-367-0223, or send an email to forestinfo@maine.gov  Visit our website at www.maineforestservice.gov.

Tree Growth – also known as the Maine Tree Growth Tax Program – is Maine’s current use tax program for productive forestland. The program is administered in organized municipalities by town assessors and in the unorganized territories by Maine Revenue Service’s Property Tax Division. “Current use” means that enrolled land is valued according to its ability to grow trees for commercial use, rather than according to its fair market value. This often results in a significantly reduced property tax bill for enrolled landowners.

Tree Growth can be a beneficial program for landowners who manage their land sustainably for commercial forest products. In exchange for generally lower property valuations, landowners commit to following a written Forest Management Plan prepared by a Maine licensed forester. A licensed forester must also certify that landowners are following their plan.

Landowners are required to submit a signed Tree Growth Application and a supporting map to the assessing agent. The details of the forest management plan belong to the landowner and are not public information, although the Assessor may request a copy of the plan and hold it for a reasonable period of time for review.

The Maine Forest Service (MFS) provides assistance and education about the Tree Growth Tax Program, and forest management and planning in general, but does  NOT administer the Tree Growth Tax program.

Landowners should be aware of some very important requirements:

1) Land enrolled in Tree Growth must be recertified every ten years. Written management plans must be updated at least once in a ten year period. Could this be your year to update your plan and recertify?

2) In addition, when Tree Growth land is purchased, inherited, or otherwise acquired, new landowners must re-enroll within one year of the date of transfer. New landowners may not harvest timber until they have had a new forest management plan prepared or adopted a previous but still valid plan, and re-enrolled. Have you acquired or inherited forest land recently? 

Why is this important?

Because Tree Growth forest land that no longer complies with the program – including failure to recertify or to re-enroll on time– must be withdrawn from the program, with potentially significant monetary penalties to the landowner. Withdrawal can occur even if you were not the owner at the time the land was first enrolled, because Tree Growth status “runs with the land” – the parcel remains enrolled, even if it changes hands. Continue reading »

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Taxation Without Representation?

 Posted by at 7:44 am
Oct 292011
 

When it comes to property taxes, I rarely hear from people who do not think they pay enough. At a town meeting once lots of people were complaining about their assessed value. “There’s no way it’s worth that much!!” I couldn’t help but suggest that I wondered if they’d have that same perspective if they had called me because they needed to list it for sale.

I suppose there’s an interesting discussion to be had regarding the difference between assessed value (for tax purposes), appraised value (for mortgage purposes), and market value (for listing and sales purposes). But for today let’s touch on one aspect of property taxes–with the understanding that I am not the expert or final authority. Questions should be addressed to your local assessor or tax collector.

One area where we have some ability to “control” our taxes is in regards to vehicles such as campers or tractors. Many out of state purchasers are surprised when they get their first tax bill and discover it includes an assessment for the camper they left parked there. “I thought if it had wheels…”

Here’s the deal, as explained to me by one former tax assessor.

If you make the camper immovable (take the wheels off, build an enclosure around it), it can become part of your assessment and property tax bill—for tax purposes it becomes real estate.

 If the camper is “movable” there are two possibilities:

  • If it’s registered (in any state) it would not be taxable as personal property. (If registered in out of state you’d need to provide a copy of the registration to the assessor or have it visible in the window.) Note that if it’s registered in Maine you will pay excise tax. This gives rise to the observation that taxes are inevitable.
  • If it’s not registered it will be taxable as personal property. (Although a lot of times that doesn’t happen because the assessor hasn’t been to the property or otherwise noticed—they can, however, go back and collect those taxes for some period of time.)

 A lot Mainers “shop” those two possibilities to determine which is cheaper since if it’s registered you will pay an excise tax every year. The only way to do that is to ask the town tax collector for both amounts.

The problem with the whole complicated scenario is that enforcement really varies from town to town—and some Mainers can get very creative when it comes to avoiding taxes. I recall complaining to a fellow citizen about needing to register several trailers. He looked at me as if I’d grown a second head and said, “What the heck are you doing that for? All you have to do is register one and then keep switching the plate!”

He did not, of course, add “Just don’t get caught.” I suspect he’d been doing that for so many years he was sure it was proper procedure.

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Cheap Maine Land!

 Posted by at 7:16 am
Apr 252011
 

An “inside joke” among Maine REALTORS has always been out-of-state buyers who call or email asking about “cheap Maine land.” A few years ago I developed a trade show exhibit that involved a bucket of dirt, a scoop, some plastic bags and a sign that read, “Cheap Maine Land-five cents per scoop!”

Whether property is on the market due to foreclosure, short sale, or just a desperate seller, price is now an important aspect of nearly every transaction.  While buyers can find some real bargains, all too often there’s just too much emphasis put on the bargain at the expense of common sense and basic diligence. Sometimes it seems like it’s not about buying a home or property, it’s about getting the lowest possible price.

Some things haven’t changed.  Common real estate logic used to be “location, location, location.” That logic really hasn’t changed. Property values are still dramatically impacted by location both at the macro and micro level.  Unless your goal in life is to live in a cheap home, you ought also to be looking at neighborhoods, school districts, infrastructure, local economy, amenities, etc.

But you aren’t going to live there you say? I recall getting an excited call from a Boston-based buyer back when one of our local towns lost a major employer. He explained that he’d heard you could buy homes there for “pennies on the dollar” and he wanted five of them. When I inquired of his long range plans, he explained his intention was to turn them into rental properties and garner a great return on his investment.  He hadn’t, of course, considered who he was going to get for tenants.  I occasionally have to explain that my “job” sometimes is to talk people OUT of doing things.

There is something to be said for “at this price I can’t afford not to buy it,” but there still needs to be some caution—especially when dealing with vacant homes that can deteriorate quickly.  Again, logic suggests that you should determine the true cost of owning the home you are considering. A professional home inspection will do that by reporting issues that should be addressed immediately and some that will require attention over time.

It’s strangely ironic that in an earlier market one could sometimes stifle interest by pricing a property too low. Buyers would suspect there was something wrong and avoid considering it! This was also a time when buyers would often require prodding and pushing to do the research and make decisions. Buyers were afraid of making a bad decision. Now it seems like many buyers are afraid to purchase because the price might go lower. A bad decision at a rock-bottom price is still a bad decision!

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Maine Forest Service Establishes Online Request Form

 Posted by at 7:18 am
Aug 242010
 

The following article is reproduced with  permission from WoodsWise Wire. WoodsWiseWire is an occasional electronic newsletter provided by the Maine Forest Service, on topics of general interest to woodland owners, foresters, loggers, and others interested in Maine’s forests. To unsubscribe or manage your subscription to the Woodswise wire visit: http://mailman.informe.org/mailman/listinfo/woodswisewire

AUGUSTA, Maine – Woodland owners who would like highly valuable, yet free, professional advice about their woodlots now have a quick and easy online way to request a meeting with a Maine Forest Service (MFS) district forester.

The MFS has a new online request form available on its web site that will get the process started for woodland owners to meet with one of the 10 district foresters around the state, according to MFS officials.

MFS district foresters can meet with woodland owners to walk their property, provide technical assistance and suggest management options, according Morten Moesswilde, district forester for the area including Kennebec, Waldo, Knox and Lincoln counties.

“It’s one of our core efforts, to get people to call and ask for assistance when they are thinking about how to manage their woodland,” Moesswilde said about the new online service. “We’ve always encouraged people to call us for help. This is just one more tool for us to reach them.

“It’s really common to meet with the landowner and have them say they didn’t know the service was available and free of charge,” he added.

Working under MFS’s Forest Policy and Management Division, district foresters provide technical assistance, information and educational services to a variety of clients, including landowners, loggers, consulting foresters, and municipalities. Working directly with landowners is one of their primary functions, Moesswilde said.

“We know from research that the most effective way of providing information to landowners is one-on-one contact with a professional,” he said, adding that of all the possible sources of information available, “an unbiased source of professional advice from a state forester is the source that people prefer to go to.”

The state’s woodland owners are “incredibly important” to Maine, which has 17 million acres of forest and is the most forested state in the U.S, Moesswilde said. There are more than 6 million acres of small family forests, making up about one-third of Maine’s forest ownership, he noted.

“They provide the backdrop for why we have such a beautiful state,” the district forester said about those forest lands. “Family forests provide wildlife habitat, clean water; they provide untold amounts of recreational opportunities of every kind,” as well as significant economic benefits.

Each of the MFS district foresters covers defined areas ranging in size from about 400,000 to 3 million acres. Not only do the district foresters meet with landowners, they also visit schools and work with municipalities and organizations such as land trusts to provide forestland information. All are highly trained specialists who can provide independent advice, Moesswilde said. “We have a tremendous staff,” he said. “The people we have are very knowledgeable, very capable.”

Most of the district foresters do between 50 and 100 visits annually with woodland owners, he said. In the past two and a half months, Moesswilde has conducted 31 visits in his five-county district, he said, adding that the fall season tends to be a busy time for the district foresters.

Woodland owners are interested in a number of issues, the district forester said. They want to know such information as what kind of trees they have; whether they have any timber of value; how to go about harvesting; or how to encourage different kinds of habitats. “The range of challenges that landowners face is pretty broad – we try to help them sort through the issues and prioritize based on their goals,” he said.

Moesswilde cited as an example his recent visit to a landowner in Kennebec County, a sixth-generation owner whose family had owned their land since the late 1700s. He walked the property with the landowner and discussed not only harvest opportunities, but also assistance available for a long-term forest management plan, he said.

“The attachment of the landowners to their family property was very evident throughout the visit, as were the ownership challenges they face,” he said.

MFS district foresters will meet with the landowners and spend anywhere from an hour or two to half a day walking the property, looking at trails, roads and water sources, and considering boundaries, Moesswilde said. The district forester can review wildlife habitat, forest development and forest health, as well as discuss Maine’s Forest Practices Act, water quality laws and the non-regulatory “Best Management Practices (BMPs)” for forestry. “Forest management includes all those decisions that pertain to the woodland ownership,” he said.

They then will review options and often refer the landowner to a private consulting forester to develop a written forest management plan. District foresters provide lists of consultants rather than recommend anyone specifically, Moesswilde said. “The landowner needs to find a forester that they are comfortable with – no two foresters are alike,” he said.

“Frankly, we try to meet people where they are,” the district forester said. “We’re not trying to persuade them to do something if that’s not what they want to do. I’m there to help them see it through my eyes and give them an understanding of what their options are … The more they understand their options, the more confident they can feel about their decisions, including hiring the consulting forester that can best meet their needs.”

The new online form requests basic contact information about the landowner and the land, including acreage and location. Landowners can indicate their goals and intended woodlot use on the form. Landowner information for ownership under 1,000 acres is kept confidential in keeping with Maine law. All requests are responded to as soon as possible, Moesswilde said.

Those landowners who prefer can contact their local MFS district forester by phone and request a meeting. The MFS web site also lists information about the regional offices.

“Forestry is a long-term process,” Moesswilde said. “Getting started is often the hardest part for forest landowners. We’re there to get people the information and resources they need to make informed decisions.”

The new request form can be found at: http://www.maine.gov/doc/mfs/fpm/df_visit.htm

For information about Maine Forest Service district foresters, go to: http://www.maine.gov/doc/mfs/fpm/ff/foresters.htm

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I Saw It On TV!

 Posted by at 10:37 am
May 172010
 

I’ve been reading a book based on a TV series about real estate. It’s actually fairly well written and in many cases downright funny.  But there are also a number of places where it is just plain wrong. That’s one of the joys of receiving advice (whether it’s from a book, TV show, or the agent you are working with). Sometimes it’s just plain wrong.

I chuckled a bit when a potential buyer called me recently to announce that she was ready to buy a house because she’d been watching all the real estate programs on TV and knew “how it worked.” I envied her because I’ve been at this for a while and I still don’t know how it works. Not every time anyway.

Students in my real estate classes learn to remember that we have two hands and that should remind us to consider both sides of a question when giving clients advice. When a buyer asks, “Should I make a really low offer?” we do well when we consider both possible answers. “Yes, because the seller might accept it. But on the other hand… there are some risks associated with really low offers…”

In other words, you should be getting all the information necessary to make a decision that is ultimately yours. If I could give a buyer only one “tip” it would be just that. Get all the information—the pros and cons—before making an informed decision. In simplest form the tip is “be a smart buyer” and that includes surrounding yourself with professionals willing to educate you.

In addition to being a smart buyer, here are some other recommendations—many of which will apply to sellers as well.

  • Read every piece of paper and take everything seriously. This is especially important regarding the offer you sign. Don’t be intimidated into just signing and don’t be too proud to ask questions about any points you don’t understand.
  • Keep legible copies of all paperwork in an organized file. Remember that a real estate transaction is complex. Be prepared to consult professionals: lenders, home inspectors, attorneys, accountants.
  • Don’t just look for a house; look for a community or neighborhood. Unless you are a hermit, what’s around you will have importance. You can add a family room. Changing a community isn’t quite so easy.
  • Be prepared to act quickly and be available to do what needs to be done. Taking a few days off to go to the islands might sound good, but remember your priorities. It’s actually a good idea to set a timetable. I once worked with a buyer who had been looking for seven years. (Not with me!)
  • It will sound self-serving, but have some loyalty to the agent you choose.
  • In Maine, you should be given a one page “Real Estate Relationships Form” that describes various types of relationships the law permits and requirements for them. Selecting the agent and type of relationship is an important decision that should be made early in the process.
  • Understand that there is an emotional and financial component to selecting a home to purchase. In the ideal world, these will be in balance. In the real world they’ll require some juggling. The home you fall in love with may not make the best economic sense. That doesn’t mean you should reject it. (Think, “On the one hand—on the other hand.”)

Ultimately this really is about making an informed decision—your informed decision. Don’t let somebody else tell you the right answer. Oh… and don’t believe everything you see on TV!

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Tree Growth Tax Law — Time to Re-certify?

 Posted by at 6:10 am
Feb 102010
 

Tree Growth – also known as the Maine Tree Growth Tax Program – is Maine’s “current use” tax program for productive forestland. The program is administered in organized municipalities by town assessors and in the unorganized territories by the Maine Revenue Service’s Property Tax Division. “Current use” means that enrolled land is valued according to its ability to grow trees for commercial use, rather than according to its fair market value. This often results in a significantly reduced property tax bill for enrolled landowners.

Tree Growth can be a beneficial program for landowners who manage their land sustainably for commercial forest products. In exchange for generally lower property valuations, landowners commit to following a written Forest Management Plan prepared with a Maine licensed forester. A licensed forester must also certify that landowners are following their plan.

Landowners are only required to submit a signed Tree Growth Application and a supporting map to the assessing agent. The details of the forest management plan belong to the landowner and are not public information.

The Maine Forest Service (MFS) provides assistance and education about the Tree Growth Tax Program, and forest management and planning in general, but does not administer the Tree Growth Tax program.

Landowners should be aware of some very important requirements:

1) Land enrolled in Tree Growth must be recertified every ten years. Written management plans must be updated at least once in a ten year period. Could this be your year to update your plan and recertify?

2) In addition, when Tree Growth land is purchased, inherited, or otherwise acquired, new landowners must re-enroll within one year of the date of transfer. New landowners may not harvest timber until they have had a new forest management plan prepared or adopted a previous but still valid plan, and re-enrolled. Have you acquired or inherited forest land recently? 

Why is this important?
 
Because Tree Growth forest land that no longer complies with the program – including failure to recertify or to re-enroll on time– must be withdrawn from the program, with potentially significant monetary penalties to the landowner. Withdrawal can occur even if you were not the owner at the time the land was first enrolled, because Tree Growth status “runs with the land” – the parcel remains enrolled, even if it changes hands.

NOTE: The assessing agent is required to provide Continue reading »

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Landowner Liability in Maine

 Posted by at 11:21 am
Dec 072009
 

One of the joys of owning land in Maine is that Maine’s Landowner Liability Law offers owners some strong protection. Basically, if someone uses your land for outdoor recreation you assume no responsibility or liability for injuries–whether or not you give permission.

There’s a great brochure developed by the Maine Department of Conservation and the Department of Inland Fisheries and Wildlife on this topic. You can find a copy (along with some other great information) under the landowner relations program web site.

There are, of course, exceptions to everything… and the standard caveats (check with your insurance company, attorney, etc.). One caution to landowners is that you avoid creating clearly dangerous conditions that could be considered “mailicious” failure to guard or warn (or correct) a highly dangerous situation.

A caution to “land users” is that this law does not imply that you have the right to use other people’s land. Access to private land is a privilige, not a right, and you should aways seek permission.

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Title What?

 Posted by at 10:11 am
Nov 112009
 

A recent question from a buyer client suggests it might be a good time to review some very basic concepts regarding title. Let’s start by understanding the word “title” is describing the evidence one has of right of ownership. A “clear title” basically means the ownership of the land is clear and without question.

When a buyer purchases a property, some assurance that the current seller has “clear title” is in order. I could sell you the Brooklyn Bridge, couldn’t I? How do you know whether or not I own it and have the right to sell it? (I could create a fake deed and register it–the existence of a deed is not a guarantee I truly own the property.)

There are three important terms we use when we talk about title.

A title search is performed to establish the links in the chain of title and discover any potential clouds or problems (such as liens) with the title. This is the service buyers and lenders commonly get. (If you are mortgaging your property it will be required by the lender.)

A title opinion may be issued by an attorney. This becomes the attorney’s legal opinion that the title is “good” or clear. Because the attorney is assuming risk; these tend to be expensive. Do not confuse a title search with a title opinion.

Title insurance is a policy issued by a Title Insurance Company. Typically the policy is issued based on the title search. It ultimately is about risk management. Nobody really says “you have a great (clear) title”—the insurance company says “based on the title search we are willing to insure your title.”

If something or someone comes along after you’ve purchased that brings your title/ownership of the property into question, the Title Insurance Company will either defend your title or pay you for the loss of your property – up to the face amount of the policy. The premium for this coverage is a one-time charge and there are numerous options available to the buyer including an “escalating” policy in which the face amount increases automatically.

Don’t let your eyes glaze over when the topic of “title” comes up. These are not difficult concepts, really and you should insist on explanations that you understand well enough to make good decisions.

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Orange Isn’t Just For Pumpkins

 Posted by at 9:50 am
Oct 262009
 

The Irish have the wearing of the green; Maine has the wearing of the orange. When venturing into the woods some orange clothing is always a good idea, but it becomes a requirement during hunting season. In fact, for a few dollars you can pick up a vest, clip a compass to it and maybe carry a small survival kit in one of the pockets. You carry a spare tire in your car, right? Do you think more of your car than you do yourself?

Fall means shorter days, colder weather and a number of hunting seasons. Deer season is open the entire month of November and there will be a lot of hunters in the woods. Think orange! Be safe and be smart.

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