Cunent Use Timberland Values Change
Alabama Department of Revenue
News Release Oct. 10, 2000
Montgomery, Oct. 10, 200O-Changes in timber prices and interest rates have prompted the state to make adjustments in the current use timberland values,effectivtOct. 1,2000, with taxes on the new values being collected Oct. 1, 200 1.
~~The 2000 adjustment in values follows an increase in last year's values. Subsequent markct pricc increascs and interest ra1c changcs prompted this year's adjustmcnt,~' explained State Revenue Commissioner Michael L. Patterson.
..Owners qualifying for current use status can choose to value their property at its market value or its current use value. Market value is based on sales prices of similar property and includes the development potential of the property. Current use values are assigned by detennining the value of the land based on its present or .current' use. Current use application assumes1ba11be property sucb as timberland or famlland win produce income 1bat can bee capitalize-d to detcrmine an actual land value of the property ," explained Bill Ba$S, director of the department. s Property Tax Division.
In calcuJating current use on timberland property, a fixed fomlu1a set by Jaw is used, but two fluctuating values are contained within the formula-timber price and interest rate. The price used in the fonnul~ calculated by the Alabama Forestry Commission, is based on the weighted average pulpwood stumpage price in Alabama for the previous calendar year .The interest rate is based on a 10.year interest rate average of new loans issued by the Farm Credit Bank of Texas. As required by law, the interest rate value is then decreased by 4.5 percent before it is used in the current use timberland formula. Other factors used in the formula include timber productivity rates and expense ratio, also specified by law. Each timberl~d property is assigned a productivity rate, ranging from 1.38 cords per acre per year tor "good" timberland to a low of 0.60 cords per acre per year for ~'nonproductive.' land. The expense ratio is fixed at 15 percent of the annual income produced from timber sales.
Current Use Timberland Values Change Add One
Oct 10, 2000
Using all of these factors, the department calculated current use values for the 2000 tax year for the four classes of timberland property: Good, Average, Poor, and Nonproductive. Taxes on the 2&00 values win be eoIIeded beginning Oct. I, 2001. 1999 values are also shown for comparison purposes. Taxes on the 1999 values win be conected beginning Oct. 1, 2000, through Dec. 31,2000.
Categories or Timberland
Good Timberland
Average Timberland Poor Timberland Nonproductive Timberland
1999 CurreDt Use Valoes (Apply to taxes collectedOct. 1,2000)
$509 per acre $387 per acre $277 per acre $221 per acre
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2000 Current Use Values
(Apply to taxes collected Oct. 1 J 2001)
$529 per acre $403 per acre $288 per acre $230 per acre
Using a combined average millage rate of 41.5 mills (state, county, and if applicable, city) and 2000 values, the amount of tax calcuJated per acre for "good" timberland would total $2.19. For comparison pmposes, using the same total average millage rate of 41.5 mills, taxes collected this October 2000 on the 1999 value assigned to ..good'. timberland would total $2.11, thus accounting for an eight-cent per acre increase in 2001.
In early October. the Alabama Department of Revenue notified county tax-assessing officials of changes in the current use values on timberland effective Oct. I, 2000. Current use values on crop and pastureland properties will not be affected by changes made in the Current use timberland values because a separate forn1u1a is used to calculate current use timberland values.
For more infonnation concerning current use app licatio~ property owners are encouraged to contact the Property Tax Division of the Alabama Department of Revenue at (334) 242-1525 or their local county tax assessing official
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