Fueled by an aggressive market for many northern hardwood species, the sale of standing timber is one of the most profitable activities a private landowner can undertake. Yet. if the sale is not properly managed, federal capital gains tax can consume up to 28% of a landowner's timber sale income. This can represent a significant loss of revenue for the landowner. What most landowners don't realize is that they can qualify for significant tax savings on the sale of timber. But few landowners take advantage of these tax savings because they don't know that they exist.

Landowners can save a considerable amount of income tax by using 'depletion allowances' when they sell their timber. The depletion allowance is a deduction from taxable timber sale income based upon the landowner's initial investment in their trees. The value of this initial investment is known as the 'original basis'.

If you own forest land, and are considering a timber sale at some point in the future, an original basis evaluation is something you should consider and discuss with your tax accountant. Also, seek out a Consulting Forester to determine your property's timber volumes and values to establish your original basis evaluation and depletion account for tax savings when selling timber from your forest land.

Even if you purchased your property for recreational purposes there may be some timber value on your parcel. Whether or not you plan to harvest this timber you will want a timber cruise and appraisal to set your basis.