Managed Forest Law (MFL) is a state program that encourages long-term sustainability of private woodlands through a tax incentive. In exchange for having and following a written forest management plan, landowners receive a reduced property tax rate on enrolled woodlands. On average, in Wisconsin, productive forest land is taxed at $34/acre. This same land, if enrolled in MFL, is taxed at $1.90/acre for open land, and $9.49/acre for closed land, along with a small tax on any income from a timber sale. (Open land is open to the public for limited recreational uses: hunting, fishing, hiking, sight-seeing, and cross-country skiing.) To be eligible to enter the program, you must enter a minimum of 20 acres of woodland and work with a certified forester who will write a management plan. Learn more about the MFL program.

Many landowners are attracted to the MFL program for the tax benefits to the land. However, access to certification through the American Tree Farm System and the Forest Stewardship Council, along with the external affirmation of sustainable forest management, are an extra bonus if you want to feel more certain about your decisions and the future of your woods.

With forest certification, you have someone looking over any forester’s and logger’s shoulder making sure they are making sound forestry decisions for the long-term health of the woods. Even if you are unsure what is sound forestry and what isn’t, someone else with more training is watching out for you. For the average woodland owner of under 80 acres, having your woods independently certified can be a barrier to entry. However, since the state signs off on a management plan entered into the MFL program, those woods qualify under an umbrella certification.

One important note: if you are interested in the MFL program because of the certification, note that you have to opt in to the certification program in addition to enrolling in MFL.

Many forestry activities have tax implications, so the National Timber Tax website is a valuable tool for every woodland owner. The site discusses the difference between owning woodland for personal use, business, or investment property, and what that means for the associated taxes. Depending on how you hold property, you may be able to access deductions for planting and costs associated with maintaining the forest. The US Forest Service maintains the site, which provides annual tax fact sheets and also has other resources including archived webinars and more publications. This would also be a good website to share with your CPA. The site also has an overview of federal income tax issues related to woodland property.

One concept to be aware of is basis, which is defined as the value of the trees separate from the land. Equivalently, it is the proportion of your property purchasing price that was trees (rather than land). Basis comes into play when selling timber—you only pay taxes on the increase in value of the trees sold.

Let’s say you hold a timber sale on your parcel and make $50,000 from the sale. If you didn’t know your basis, you would have to pay taxes on the $50,000 as regular income.  But if you know your basis was $30,000 when you bought the property a decade ago, you only pay taxes on the gain in value of that timber, which was $20,000.  And you report that as capital gains just like any other investment that might have.

The concept is pretty simple, but there are a few necessary calculations that may make figuring out your basis difficult. For instance, you will need a pretty good estimate of the volume of timber on your property. You will also need to know the fair market value of that timber at the time when you bought the property. The volume estimate is something most landowners can do with a bit of training, but the other part is more difficult.

That is where you probably want to enlist the services of a forester. They have knowledge of what different trees are going for in the market and can calculate a value for your timber. They can also help figure out what your timber was worth when you bought or inherited the property several years ago.

The process for determining basis becomes more difficult the longer it has been since the land was bought or if the land was inherited or received as a gift. You definitely want to work with a professional forester under these circumstances.

Several laws in Wisconsin relate to woodland owners and use of property. 

The Trespass Law (Wisconsin State Statute 943.13 1997) defines trespass as “anyone who is on your woodland property without permission.” In 1996, the law was changed to place the burden of knowing property boundaries on recreationists; landowners are not required to post their property.

The Recreational Use Statute, also known as the Berry Picker Law, “limits private property owners’ responsibility for injury to people who use their land for recreation.” This is relevant if you give permission to others to use your property, or if the property is categorized as open under the Managed Forest Law program. If you accept payment (such as a hunting lease) of more than $2,000 for use of your property, you are excluded from this law. Consider liability insurance if you host recreational users on your property.

The Fence Law (Wisconsin State Statute) applies to woodland owners with property bordering agricultural lands. If the neighboring property is used for grazing or crops, woodland owners may have responsibilities for fencing. Payment of fencing is divided equally along the boundaries requiring fencing. The law defines fence materials, who is responsible, and what to do if both parties agree not to fence. To protect yourself and your property, we recommend that you regularly walk your property boundaries.

To learn more about boundaries and these three laws in more detail, watch the webinars in the “Additional resources” section below.

If you are interested in the Managed Forest Law (MFL) program or have more questions, you can use the DNR Forestry Assistance Locator. In the locator, a “DNR Tax Law Forestry Specialist” is someone who works for the DNR and can answer your questions about MFL. Alternatively, a “Cooperating Forester” is an independent consulting forester, and in this case you will want someone with the additional certification of “Certified Plan Writer,” which means they can write management plans for the MFL program. 

When working with an accountant or CPA, ask if they have forestry-specific experience. You may also wish to talk to other landowners for references on who they work with. Alternatively, you can share the National Timber Tax website with your professional.

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