Montana Taxation Monitored by the Montana Taxpayers Assoication. Information on Montana Taxation.

2009 Forestland Reappraisal

This file will help you determine the 2009 Market and Taxable Values and estimated taxes for the six year phase in: Forestland Calculator

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There are three yellow cells in the spreadsheet. These are the only numbers you need to enter. The cells in teal will be calculated for you. This spreadsheet will provide you with your prior year's value (Tax Year 2008), how much will be phased in, the tax rates and taxable values through the phase in. The last column will calculate the estimated taxes during the phase in, using the 2008 Tax Year Mill Levy. You can print the spreadsheet after you enter your numbers.

To understand how the Department of Revenue determined the market value, we have provided some additional informaton for you. The information was provided to us by the department.

There are four valuation zones for the 2009 Reappraisal. The 2003 Reappraisal had five zones.

2009 Valuation Zones

2003 Valuation Zones

The forest land zones are an attempt to localize income and expense to the various forest land regions of the state. Zones have been used in forestland appraisal since 1993.

Forest Land Productivity Valuation Formula

The valuation formula for commercial forest land is found in 15-44-103, MCA, Legislative intent-value of forest lands-valuation zones. The income approach to value is used to calculate the forest land valuation schedules. Net forest and other agricultural income are capitalized. The formula is V=I/R, where:

V = per acre forest and other agricultural productivity value

I = per acre net income of forest lands

R = capitalization formula

The forest productivity formula can be further defined as:

V=(((M x SV) + AI) – C)
R

Where:

M = mean annual net wood production (based on UM productivity model).

SV = stumpage value - Dr. Jackson's report – price paid in board ft. per acre

AI = per acre agricultural-related income – DNRC grazing lease per acre

C = per unit cost of the forest product and the agricultural product – cost of getting timber off the land.

The valuation approach assumes an all-aged forest. This method assumes in any given year, some stands are harvested, some are planted and some are thinned.

Income and expense data represents averages for each forest valuation zone for a five-year base period. The base period is the most current period in which data is available before a new reappraisal cycle.

The income and expense data is adjusted to constant dollars using the gross domestic product (GDP) price index.

Example1 (in Zone 1, northwest Montana)

M = 200 board feet per-acre

SV = $0.3389

AI = $1.61

C = $14.94

R = 8% (.08)

(((200 X $0.3389) = $67.78 + $1.61) - $14.94) = $54.45 = $680.63 per-acre
8%

Example 2 (in Zone 3, central Montana)

M = 200 board feet per-acre

SV = $0.1682

AI = $1.31

C = $2.71

R = 8% (.08)

(((200 X $0.1682) = $33.64 + $1.31) - $2.71) = $32.24 = $403 per-acre
8%

Board feet per acre X the stumpage value – gross income from timber sale. Next add the agricultural income then subtract forest production costs to get net income. Finally, divide by the capitalization rate to get the per-acre value.

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