Has anyone sold any lately? Seems they are the chosen ones due to the distillery use these days . I'm trying to get an idea of they are worth in layman terms , I.e. A 20 in diameter (on first cut end ) ten foot long . About how much is it worth ?
White oak log prices
- Thread starter SALTMAN
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Os2 Outdoors
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Very very little white oak can be used by the distillery, it must be 3 clean sided staves.
Your log is worth about $75 normal market value. If it made staves it might bring upwards of $150
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Your log is worth about $75 normal market value. If it made staves it might bring upwards of $150
Sent from my SM-G900V using Tapatalk
A 10' white oak saw log is only $75? Seems like it would bring that much for firewood?
treefarmer
Well-Known Member
Timber per tree isn't a lot unless you have a veneer grade log. You make real money when you have 20 acres of them. If you have 10+ acres I suggest you use a consulting forester to administer your sale. They charge about 8% but you get it back in better prices and they make sure the logger has insurance and the clean up is what was expected. You also know the value before bidding and get paid before the trees are cut. If you only have a few acres a logger doesn't have enough work to bring in $1M in equipment, so you'd need to find a logger working in the area and strike a deal. Try to do some chainsaw work before the cut or just after to kill the undesirable elm, maple, hornbeam, etc. so they don't make your next forest. Avoid diameter limit cut if you can (high grading).
treefarmer":32tnbq2z said:
Would you mind expanding on this please? Thanks!
treefarmer
Well-Known Member
Diameter limit cut is where every tree above a certain diameter (usually 16") is cut. This is probably the most common form of timber harvest in Tennessee. Many people think the big trees are the old trees so if you cut only the large ones you think you can have a harvest and 10 or 20 years later you can do a diameter limit cut again because the mid sized trees will have grown to the large size. There are several problems with this. First, frequently all trees in the forest are the same age so if you cut the biggest trees you are leaving behind stunted trees that lost the height war in the forest and they don't resume growing rapidly after the bigger trees are cut. I cut a 75 year old 10" tree on my property and there are 18" trees of the same age nearby. Secondly, In my Humphreys County forest the big trees are White, Red and Chestnut oak and Poplar trees. The understory trees are elm, maple, hickory, sweetgum, sourwood, etc so they will be the next forest. Third, if you only cut a few trees per acre oaks will struggle to come up from seedlings because they require full sun to thrive and a thinning won't generate full sun so the shade tolerant trees will take over - the elm, maple, hickory, sweetgum, sourwood, etc. We recently sold timber and we divided it up into four 10 acre areas instead of one 40 acre parcel and are having it clearcut. Some perform a select cut but you need a knowledgeable person to do the selecting for you otherwise the oaks and poplar may be the only ones selected because they are the money trees. If you are interested in learning more there are several ways - Attend free Healthy Hardwood field days in the spring (contact ag. extension), join the free Tree Farm program (contact Tennessee Forestry Ass'n. in Nashville), join the closest County Forestry Association ( ag. extension or Tenn. Forestry Ass'n.) or ask for a free visit from your TN Div. of Forestry Area Forester. In the last 25 years I've learned that forestry isn't intuitive and there is a lot to learn. There is a lot you can do to improve your forest if you can learn a little about forestry.
Very informative - thanks again.
Bucket":gsdibw62 said:
Another reason a diameter cut might not be desirable, is that different species peak out at different diameters. I you are cutting poplar at 16", you are throwing away a lot of cash. They grow fast and not too far into the future they would be worth a lot more. A lot of pine on the other hand, may never reach 16"....virginia pine, scrub pine, crowded pine, etc.
When I mark trees to cut on our property, I mark injured/sick, crooked and undesirable species first, regardless of value. Then I look to what goals I'm trying to accomplish. In my part of the country loggers cut a lot of pulp, and the last ones we used had a chipper. So nothing goes to waste, even the branhes and laps are chipped, leaves and all. If there is no pulp market in your area, a timber cut is a lot trickier to plan, as nobody is going to put a lot of work into something for no pay.
Boll Weevil
Well-Known Member
Treefarmer said a mouthful there...spot on and great information.
Bigmonts
Well-Known Member
Treefarmer I enjoyed that post. sounded like good info.
Thanks guys , we have a lot of big poplar also so I guess I need to bring in a professional to help access . Tree farmer , would it make sense to do 20-30 acres and see how it looks, pays etc. before turning anyone loose to do all 50-70 acres ? Thx again for your knowledge . Joe
treefarmer
Well-Known Member
It's hard to say without a professional looking at it. Two sales has a couple advantages; since a timber harvest creates great habitat after the first cut you can spend a few winters getting rid of unsalable junk trees in the second harvest area so they don't become part of the next forest and also, you get income in two years so it doesn't push you into a higher tax bracket. The best advice comes from your TN Division of Forestry Area Forester who will visit your property and spend an hour or so with you and give you unbiased advice. I learned 90% of what I needed to know about managing our property that way. We have another 40 acres to cut and I'm waiting 5 years between sales so I extend the time we have a new forest growing. One sale has the advantage of a little better price because the bigger the sale the more timber buyers are interested and it lowers their costs by only getting set up, and moving equipment in and out one time.
I would second contacting your forester. They know everything there is to know. They won't tell you what the monetary value is, but they'll tell you if what you have is worth fooling with, and the best way to go about it.
Best of all, it's 100% paid for by your taxes already. If you can't find who your forester is, your UT extension office can tell you.
Best of all, it's 100% paid for by your taxes already. If you can't find who your forester is, your UT extension office can tell you.
treefarmer
Well-Known Member
My mistake, make sure you do like Pass-thru said and claim the timber income as a capital gain. Basically when you bought or inherited the property the value (basis) was part land and part timber. When you sell the timber you only pay the difference between what you paid/received for the timber and what you sold it for. Even if you don't know what it was worth back then it is still a capital gain which is taxed at a lower rate. A good source of info. for this is http://www.timbertax.org/
treefarmer
Well-Known Member
An additional word on timber taxes. Although I'm not in the tax business I've attended a timber tax seminar, a class, a talk on timber taxes and have read many publications on timber taxes. The first thing you need to do is decide if you are a recreational land owner (few acres owned for fun, not profit), an investor (most landowners), or in the business of growing timber. Avoid recreational ownership because there are very few tax benefits. An investor would be the person with more than a few acres of timber but less than a hundredish acres and you get to accumulate all your timber (and wildlife ?) related expenses over the years and deduct those when you have a sale which is very seldom. I attended a talk on timber taxes at the Dickson County Forestry Association 5 years ago and after the talk the Ag. Extension forester/tax expert convinced me our 300 acre Tree Farm is a business because we make money every year but we are leaving the profit on the stump to be sold in a later year. I thought I needed regular sales but he told me that isn't the case. As a business I can deduct every year all expenses related to forestry and wildlife including mileage, purchase of seed, fertilizer, 4-wheeler, chainsaw, disc, property taxes, etc. If you are an investor or business you need to show you are in it to make money and the best way is to have a management plan that states a goal of growing timber. This is one good reason to join the free Tree Farm program because you will have a professional management plan that states growing timber is one of your objectives. If you are an investor or business keep good records - I keep a log of date, purpose of visit, miles, money spent and keep receipts. Timber taxes are not easy and most accountants are unfamiliar with it. I use the Turbo-tax Business(?) software because it knows what timber is - regular and middle grade Turbo-tax don't handle it very well. Even if you don't do your own taxes learn a little about it so you can tell your accountant a thing or two when you sell timber. I doubt a kiosk tax service at the mall could handle it. Regarding the capital gain - about 6 months ago I searched the internet and I think it works this way: If you are in the 15% tax bracket before capital gain it is taxed at 0% until the timber sale pushes you into the next higher bracket (25%?) at which time your additional timber capital gain is taxed at 15%. I'm not totally confident in this - it's just my take on it. Too many people make the mistake of calling your timber sale regular income and the tax preparer doesn't know any better to tell you otherwise.
Thanks again , now we are totally confused !
Hunter 257W
Well-Known Member
This is some good information all the way around here. Thanks for taking the time to go into such detail for all involved.
Hunter 257W
Well-Known Member
Regarding considering timber sales as Capitol Gains, how do you establish the value of the timber at the time you bought the land? You have to have some defend-able method for separating out the land value vs. timber value at the time of purchase to be able to calculate what your capitol gain is at the time you log your land. All I can think of is to try to find the sale price of comparable land in the area that was sold right after a clear cut???
Hunter 257W":21dd783y said:
You can have a qualified forester submit evaluations. I don't believe it's necessary though. If you own the land for at least a year, and the cut on a pay per load basis, you should be good. I have heard of getting evaluations for the purpose of having timber cuts treated as a reduction in basis.....which would result in no tax to the extent basis is reduced. If that's actually legal. If you sell the stumpage as a boundary, I'm not sure what hoops need to be jumped through to get capital gains treatment.
Hunter 257W
Well-Known Member
pass-thru":2oz3t64z said:
I'm not that up on taxes to fully understand what "reduction in basis" means but if it results in Zero taxes then obviously that is even better than Capitol Gains tax rates. Do you mean that timber values could go down so far compared to when you purchased the land that the loss of value offsets the increase from growth that occurred since the original purchase?? Also not sure what you mean by selling "stumpage as a boundary"? I can see the value in using a forester for all this!
I probably should have said "timber as a boundary." Stumpage is the price paid at the mill. Selling a boundary means you get a fixed price for the timber on the acreage, like a lump sum. Pay as cut means you get paid for each load that is cut, either a fixed price for the load or a percentage, etc.
Tax basis is what you paid for an asset, or what you have invested in it. When you sell the asset, anything over your basis is taxable (with some exceptions). When you die, your assets get a stepped up basis to the value at the time of your death. That is one advantage to holding on to real estate and passing it through your estate, if it is has increased in value since you bought it.
Tax basis is what you paid for an asset, or what you have invested in it. When you sell the asset, anything over your basis is taxable (with some exceptions). When you die, your assets get a stepped up basis to the value at the time of your death. That is one advantage to holding on to real estate and passing it through your estate, if it is has increased in value since you bought it.
treefarmer
Well-Known Member
The best way is to have a forester give you a written value of the timber and then obtain a bare land value and put the two together. If they add up to more than you paid then the accepted practice is to proportionally divvy up the costs. I got a letter from a forester for the timber value and determined my own land value. Using comparable land sales is a defendable method. Foresters can go back in time to determine values.
I was looking at purchasing land that has timber on it. My plan was to gift it to my heirs so that inheritance tax, federal, wouldn't force them to sell it just to pay the taxes. As of January 1st, 2016, inheritance tax in Tennessee went away. Seems to me that it would be a bad thing to get the value of the property stepped up. Am I missing something?
The value of the property is determined by the fair market value. Tax basis pertains to capital gains, which is completely different than estate tax. Estate tax is levied on the gross estate, and it captures the fair market value of the property as well as all other assets. I don't know what the state exemption is on estate tax, but the federal is now over $5 million on and individual, twice that for a couple. By stepping up the basis for capital gains, it reduces the tax liability.
If you bought property years ago for 10k, and sold it now for 100k, then you would have 90k of capital gains that is taxable. If instead you die and it passes to your heirs, they would now have a basis of 100k, and could sell it tax free. Or if they sell it in 10 years for 150k, there would be only 50k of capital gains at that time.
If you bought property years ago for 10k, and sold it now for 100k, then you would have 90k of capital gains that is taxable. If instead you die and it passes to your heirs, they would now have a basis of 100k, and could sell it tax free. Or if they sell it in 10 years for 150k, there would be only 50k of capital gains at that time.
csi-tech
Well-Known Member
GREAT THREAD!!! We are transitioning ownership of a 150 acre parcel from the father in law to the wife. I am purely a recreational landowner and I am pretty happy with our money situation now that the kids are gone. I am always awed at the massive poplars on our land and the volume of mast. One day we may have the timber evaluated. There is no question that some just needs to go. You can see 300 yards in any given direction and the canopy makes it dark in the summer.
