Now that you own some Forest Land, What's Next?
Often times I get calls from people who have recently acquired a parcel of Forestland and recognizing that they have a prized asset, seek to find some expert advice on how to maximize this asset.
The first critical step is to have an appraisal completed.
The best time to have an appraisal is before purchasing a property, but if this has not been done then the second best time is NOW.
Folks who have an appraisal completed before the purchase often do it at the insistence of their lender, to substantiate the collateral for a purchase loan.
But there is a second reason to have an appraisal done when purchasing or inheriting land that is to establish a “timber basis” for the IRS.
If a basis is correctly established at the time that the property is acquired then you can use the depletion allowance for a portion of any timber income taken from the property, or for catastrophic losses from storms or fires.
Then next step that should be completed and often combined with your appraisal is a Forest Management Plan, you don’t start or run a business without a business plan, why would you leave your valuable forest to random chance.
A Forest Management Plan details what you have in your Forestland Asset, details what the potential is for your Forestland Asset, and details the steps that must be taken to achieve your goals for the property.
This Forest Management Plan will guide you in creating the wildlife, recreational, and income producing paradise that is desired for your Forestland.
There are many other things to consider for your forestland success, but the most important first steps do include an Appraisal and a Forest Management Plan.
Give us a call and we can help you get started.
