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West Virginia

For the complete text of West Virginia statutes and other property tax information please refer to the West Virginia Department of Tax and Revenue.

Property Classification:

Property in West Virginia is divided into four classes (Sec. 11-8-5, Code). Different tax rates are imposed on each class, but there are limitations on the aggregate amount of taxes that may be imposed on each class. The classes are as follows:

Class I -all tangible personal property employed exclusively in agriculture, including horticulture and grazing, products of agriculture while owned by the producer, notes, bonds, bills and accounts receivable, stocks, and any other similar intangible personal property;

Class II - property owned, used and occupied by the owner exclusively for residential purposes, and farms including land used for horticulture and grazing, occupied and cultivated by their owners or bona fide tenants;

Class III - real and personal property not in Classes I or II, and located outside of municipalities; and

Class IV - real and personal property not in Classes I or II, and located within municipalities.

For tax purposes timberland is classified as either Class I, II or III. In order for timberland to be taxed as Class II property, the timberland must be used and occupied by the owner exclusively for residential purposes.

No special provisions apply to forests or open-space lands. However, managed timberlands are assessed at their use value.

Managed timberland - means surface real property, except farm wood lots, of not less than ten contiguous acres "which is devoted primarily to forest use" and which, in consideration of their size, has sufficient numbers of commercially valuable species of trees to constitute at least forty percent normal stocking of forest trees which are well distributed over the growing site, and that is managed pursuant to a plan as described below under "Qualification." (Sec. 11-1C-2)

Timberland - means any surface real property except farm wood lots of not less than 10 contiguous acres "which is primarily in forest" and which, in consideration of their size, has sufficient numbers of commercially valuable species of trees to constitute at least forty percent normal stocking of forest trees which are well distributed over the growing site. (Sec. 11-1C-2)

Farm wood lot - means that portion of a farm in timber but may not include land used primarily for the growing of timber for commercial purposes except that Christmas trees, or nursery stock and woodland products, such as nuts or fruits harvested for human consumption, shall be considered farm products and not timber products. (Sec. 11-1C-2)

Qualification - In order to qualify for identification as "managed timberland" for property tax purposes the owner must annually certify, in writing to the division of forestry, that the property meets the definition of managed timberland and agrees to manage property according to a plan that will maintain the property as managed timberland. In addition, each owner's certification must state that forest management practices will be conducted in accordance with approved practices from the publication "Best Management Practices for Forestry". (Sec 11-1C-10) Timberland that does not qualify as managed timberland is valued at its market value.

Property where the owner of the surface does not include the timber rights or where the owner of the timber rights does not include the surface, is not eligible for managed timberland classification and shall be valued by the assessor as "timberland."

Change in use - The owner will incur a penalty in tax years beginning after 1998 for failing to provide written notice to the county assessor of a change in use that disqualifies the property from treatment as managed property (Sec. 11-1C-11, Code). Effective for tax years beginning after 1998, the amount of the penalty is equal to the amount of additional taxes the owner would have paid if written notice had been timely given, plus interest at the rate of 9% per year (Sec. 11-3-5a, Code). The maximum penalty is five years of additional taxes plus interest.

If the Director of the Division of Forestry determines that the owner of timberland failed to implement a certified managed timberland plan within 24 months of certifying that the property meets the definition of managed timberland, the Director must notify the owner in writing that such certification has been removed, and the owner must pay to the county in which the property is located a fine equal to the amount of property taxes saved due to the property being assessed as managed timberland plus interest calculated at the rate of 9% per year. The county assessor must then reassess the property.

Valuation and Assessment: (Sec. 110-1H-1 thru 14)

Managed Timberland:

The appraised value of "managed timberland" is determined on the basis of the potential of the land to produce future income according to its use and productive potential. Potential future net income is discounted to its present value utilizing a discounted cash flow; this is the appraised value. The ability of a stand of timber to produce wood products for sale or use depends primarily on the quality of the soil and certain topographic and climatic features which can be expressed as a site index. Site index is the principal criterion influencing the appraised value of managed timberland.

Harvest volumes per acre with harvest intervals over and 80 year rotation cycle
Productivity Grade	Site Index	35 yrs	55 yrs	80 yrs	Total
Grade 1 (very good to excellent)	75 or more	4.6 cords 1.5 MBF	2.6 cords 4.4 MBF	3.3 cords 8.6 MBF	10.5 cords 14.5 MBF
Grade 2 (fair to good)	65 - 74	3.3 cords 1.0 MBF	7.0 cords 3.2 MBF	4.6 cords 5.5 MBF	14.9 cords 9.7 MBF
Grade 3 (poor)	less than 65		3.1 Cords 0.8 MBF	15.4 cords 3.7 MBF	18.5 cords 4.5 MBF

Determining Appraised Value:

1. Average stumpage price (five year moving average) is determined by stumpage price report from Division of Forestry, Department of Commerce, Labor and Environmental Resources.

2. End of rotation (80 years) gross income potential per acre is determined for each productivity grade:

Gross Income = Avg. yield x present avg. stumpage price

3. Annual gross income potential per acre is determined:

Annual Gross Income Potential per Acre = Gross Income / 80 years

4. Annual net income per acre is determined by subtracting annual management costs per acre from annual gross income per acre.

5. Appraised value per acre is determined by capitalizing the net annual income per acre.

The appraised value for any grade of managed timberland will not be less than $25 per acre. In no case may managed timberland values for class III and IV property be lower than $225 per acre for Grade 1; $150 per acre for Grade 2; $75 per acre for Grade 3; and class II properties may not be lower than $200 per acre for Grade 1; $140 per acre for Grade 2; and $50 per acre for Grade 3. (Sec 110-1H-10)

Timberland:

The appraised value of "timberland" is determined by the county assessor based upon the Timberland Classification Schedule. The appraised value per acre of timberland is determined based upon market comparables and is estimated by the county assessor. There are at least five (5) various timberland rates based on the timberland classification schedule.

Timberland Classification Schedule:

Class "A" - This land is adaptable for use as forest property. It may be adaptable to other profitable uses. There is a stand of trees of commercial species, the size being from fourteen (14) to twenty (20) inches d.b.h. and above.

Class "B" - This land is also adaptable for use as forest property. It may be adaptable for other profitable uses. There is a stand of trees of commercial species, the size being from ten (10) to fourteen (14) inches d.b.h.

Class "C" - This land is adaptable for use as forest property. There is a stand of trees of commercial species, the size being from six (6) to ten (10) inches d.b.h.

Class "D" - This land is adaptable for use as forest property. There is a stand of trees of commercial species, the size being from four (4) to six (6) inches d.b.h.

Class "E" - This land is adaptable for use as forest property. There are trees of commercial species less than four (4) inches d.b.h. This class of timberland also includes clear cut property and property subjected to total harvest where the remaining commercial species are less than four (4) inches d.b.h

A parcel, or contiguous parcels, of timberland totaling less than ten (10) acres shall not be considered for classification as managed timberland and shall be valued by the county assessor based upon market comparables.

Woodlands tax:

Owners of real property assessed as farm woodlands, farm woodlots, residential woodlands, timberland or managed timberland must pay an annual fee to be included on the property tax bill (Sec. 19-1A-6, Code). The fee must be paid to the sheriff when the property taxes on the property are paid for the first half of the current year.

The fee is $2 per year for each parcel of property assessed in whole or in part as farm woodland, farm woodlot or residential woodland, up to a maximum of three parcels per county. The fee for each parcel of property assessed in whole or in part as timberland or managed timberland, up to a maximum of 20 parcels per county, is $10 per year.

No owner must pay more than one fee for any one parcel in any county. Owners that have property taxes assessed against any individual parcel in more than one of the classifications against which a fee is charged must pay the highest applicable fee for the parcel.

Severance Tax:

The severance tax 3.22% of the gross value of the timber produced, as shown by the gross proceeds derived from the sale. For more information on the severance tax see West Virginia State Tax Department Publication TSD-211.

The basis of the severance tax for timber producers is the gross value of the timber at the point where production ends. Production ends when the tree has been severed and delimbed. If sale occurs at this point, the basis of tax is the actual sales price. If not, gross value is determined to correspond to the gross proceeds from the sale of similar products of like quality or character. Factors that must be considered in determining value are:

(1) the character and quality of the timber as determined by species, size, age, and condition;

(2) the quantity of timber per acre, total quantity, and location of timber;

(3) accessibility of the timber; and

(4) freight rates charged by common carriers to important markets.

If there are no comparable sales to use in determining value, gross value may be determined on a cost basis. All items of cost must be included, including direct and indirect overhead costs. The average markup realized by the taxpayer is then added to the total production cost. At the taxpayer's election, the following rules may be applied to determine the gross value of timber:

(1) taxpayers that produce timber and sell logs, and by-products of timber production and bucking operations, on the ground, either where the trees were felled in the forest or at a central collection point, may report 75% of the gross proceeds of sale;

(2) taxpayers who produce timber and sell and deliver timber products in the same condition as when the products leave the forest, to a sawmill, other manufacturer or consumer, may report 50% of the gross proceeds of sale; and

(3) taxpayers who produce timber and further saw, mill or otherwise manufacture the same into lumber, cross ties, timbers, veneers and other products for sale, profit or commercial use may report 25% of the gross proceeds of sale (if no sale is made, the fair market value of lumber, cross ties, timbers, veneers or other products must be determined and 25% of the amount must be determined if the amount is reportable under the severance tax.