"Buying Maine Woodland in Tree Growth: What Do You Have to File Within a Year to Keep It?"

The woodlot runs back from the road for most of a mile: forty-some acres of spruce, fir and a ridge of sugar maple, with an old skid trail cutting through the middle. The tax bill on the listing is small for that much land in Maine, and one word on the town's assessing card explains it. The land is classified in Tree Growth. On the day you close, keeping that classification becomes your job, and the state gives you a year to do it.

If you buy Maine woodland enrolled in the Tree Growth Tax Law, you have one year from the date of transfer to file one of two statements with the municipal assessor. One is a sworn statement that a new forest management and harvest plan has been prepared. The other is a licensed professional forester's statement that the land is managed under the previous owner's plan. Until one is filed, you cannot harvest wood for commercial use.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, NMLS #483943, through C2 Financial Corporation, licensed in fifteen states, including Maine. On Tree Growth land in Maine, this filing is yours, and it comes due after closing, when the purchase is already behind you.

What is Maine's Tree Growth Tax Law?

It is the state program that taxes forest land on what it is worth as forest. Maine Revenue Services' Property Tax Bulletin No. 19 describes Tree Growth as valuing land by its current use as forest land rather than its highest and best use. The aim is to encourage owners to keep and improve their forest holdings. A parcel needs at least ten acres of forest land to be in the program.

That is why the tax figure on a Tree Growth listing can look so low next to a house lot down the road. The town values the land as forest, while the price you pay reflects what the land would bring on the open market.

The classification does not end just because the land sells. The statute asks the new owner to show the town, within a year, that the land is still being managed as forest. The Maine Forest Service's Tree Growth page is the state's plain-language overview.

What does the new owner of Tree Growth land have to file?

One of two statements, filed with the municipal assessor in the town where the land is. If the land is in Maine's unorganized territory, meaning a place with no town government of its own, it goes to the State Tax Assessor instead.

36 M.R.S. §574-B says that within one year of the date of transfer, the new landowner files either:

• A sworn statement that a new forest management and harvest plan has been prepared, or
• A statement from a licensed professional forester that the land is being managed in accordance with the plan prepared for the previous landowner.

The first option starts fresh with a plan built around your own goals for the land. With the second, a forester reads the seller's plan and confirms the land is still being managed under it.

The same section also has you sign a statement about how the land is mainly used. You state that its primary use is growing trees to be harvested for commercial use, or that it fits one of the narrower categories the statute lists. So before you sign anything, it helps to settle what you plan to do with the woods.

The statute counts a transfer as a change in who controls the ownership of the land itself, or a change in who controls the timber rights on it. If you are buying the land outright, the clock starts on your closing date.

You cannot cut wood to sell until the statement is filed

Section 574-B also limits what you can do with the woods in the meantime. It says the new landowner may not harvest, or authorize the harvest of, forest products for commercial use until one of those two statements is filed. A person who owns the timber rights on the land is held to the same limit.

So if part of your plan is to have a logger take out a stand of mature pine the first winter after you close, the filing has to come first.

The filing is not a one-time event, either. Section 574-B calls for the plan to be updated every ten years, and Maine Revenue Services' notices to owners describe a licensed professional forester's statement every ten years that the land is managed under its plan.

Missing the Tree Growth filing deadline

The town sends a certified letter first, then up to two $500 bills, and if the filing still is not made, the land comes out of Tree Growth.

36 M.R.S. §581 sets out how the assessor gives notice before a §574-B deadline, by certified mail. Maine Revenue Services publishes sample letters for assessors. The 120-day notice for a new owner says that failing to comply within 120 days results in a supplemental assessment of $500.

The first supplemental assessment letter imposes that $500 against the parcel for failing to meet the requirements in the certified letter. The second supplemental letter imposes a second $500 for continued non-compliance. Under §581, if the owner still has not complied within six months of that second assessment, the assessor removes the parcel from Tree Growth and assesses a withdrawal penalty.

Withdrawal from Tree Growth brings a penalty under §581, figured by a formula in the statute, and it can run far larger than either $500 bill. I am not putting a percentage or a dollar amount on it here, because the result depends on your town's values and how long the land was classified. The assessor in your town can tell you what withdrawal would cost on the specific parcel before you close.

Buying part of a larger Tree Growth parcel

36 M.R.S. §581-A says that selling a portion of a Tree Growth parcel does not affect the taxation of the resulting parcels, unless one of them has less than ten forested acres. A piece under ten forested acres is considered withdrawn as a result of the sale, and the penalty is assessed against the person who transferred that piece.

Each resulting parcel is taxed to its own owner, and if one is later withdrawn, the penalties apply only to the owner of that parcel. So thirty forested acres bought out of a hundred carry their own classification, and your §574-B filing covers your piece. Field, a house lot and a driveway are not forested acres, so please count forested acres on the survey.

Tree Growth, your tax bill and your mortgage

If you are financing a Maine property that includes Tree Growth land, the classification touches your loan in three practical places.

Your escrow account. Most purchase loans collect property taxes monthly and pay the town when the bill comes due, and how an escrow account collects and pays your property taxes walks through the mechanism. The monthly tax figure gets estimated from the bill that exists when the loan is set up, which on Tree Growth land is the Tree Growth bill. If the classification ends, the town bills the land at its full value going forward, and the escrow analysis raises your payment to catch up. A withdrawal penalty is a separate, one-time bill, and nothing in a monthly mortgage payment sets money aside for it.

The appraisal and the town's value are two different numbers. The appraiser on your loan estimates what the property is worth on the market. The Tree Growth value is a tax figure, and it does not lower what the appraiser says the land is worth. How an appraisal is read covers the lender's side, and what changes about the mortgage when you buy a home on acreage covers wells, septic, outbuildings and comparable sales.

Your own budget. A forester's time to prepare a new plan or to confirm the seller's plan is your cost as the owner. I don't have a figure for it, so please ask a couple of licensed foresters what they charge for your acreage.

The broader picture of how a tax bill can change once you own a home is in why the seller's property tax bill is rarely your bill. If there is a home on the land and you will live there, Maine's homestead exemption has its own timing, and when the Maine homestead exemption reaches your bill covers that clock.

The steps, in order

1. Before you sign the purchase contract, please ask the seller for a copy of the current forest management and harvest plan. That tells you whether continuing it is realistic.
2. You'll want to call the assessor in the town where the land is. Please ask them to confirm the parcel is classified in Tree Growth, how many acres are classified, and what the withdrawal penalty would be if the classification ended.
3. Please talk to a licensed professional forester before closing about whether to continue the seller's plan or prepare a new one, and what that work will cost.
4. After closing, you'll want the statement filed with the assessor well inside the year, and before any commercial harvest.
5. If a certified letter from the town arrives, please answer it promptly. The $500 supplemental bills come from letters that went unanswered.

Common mistakes in the first year

Assuming the classification carries itself forward. It stays on the parcel at the sale, and the statute still expects a filing from you within the year. Nobody at the closing table files it for you.

Scheduling a timber sale first and the paperwork second. The harvest limit in §574-B applies until the statement is filed, so the order matters.

Counting total acres instead of forested acres on a split. Under §581-A, the ten-acre line is forested acres, and a piece that falls under it is withdrawn at the sale.

An example, with invented numbers

Numbers below are made up to show the mechanism. They are not a quote, a prediction, or a statement about any real Maine town or parcel.

Two clients each close in May on fifty acres of Tree Growth woodland in the same Maine town. The Tree Growth tax bill is about $400 a year, and each loan's escrow is set up on that figure.

The first client has a forester confirm the seller's plan in June and files the forester's statement with the assessor in July. A logger thins the softwood the next winter, and the classification and the escrow stay where they were.

The second client sets aside the certified letter that arrives the next spring. The 120 days pass and a $500 supplemental bill arrives, then a second one. By the time the client calls a forester, the town is preparing to withdraw the parcel, and the withdrawal penalty would run far beyond both bills.

Talking it through before you make an offer

Woodland and rural land purchases are not something the pricing tool on this site can quote, so the best next step is a conversation. You are welcome to call me at (843) 765-0000 before you make an offer on Maine land in Tree Growth, and we can talk through the acreage, any home on the property, and how the tax figure reaches your payment.

The Maine mortgage page covers how a Maine closing works, including the transfer tax the statute splits between you and the seller. If there is a home on the land and you are ready to make an offer, getting pre-approved for a Maine mortgage means your income, debts and credit are reviewed rather than estimated. If the land is at the end of a camp road, how Maine handles private road maintenance is worth reading too.

Nothing here is a loan approval, a denial, a commitment to lend, tax advice or legal advice. The municipal assessor applies the Tree Growth rules to your parcel, and a licensed professional forester or your own attorney is the right person to ask about your own land. No letter from anyone is a loan commitment, and final approval depends on the property, the appraisal and full underwriting.

Common questions

Does Maine Tree Growth classification transfer to the new owner when the land sells?

The classification stays on the land at the sale, and keeping it is the new owner's responsibility. Under 36 M.R.S. §574-B, the new landowner has one year from the date of transfer to file a statement with the municipal assessor. It is either a sworn statement that a new forest management and harvest plan has been prepared, or a licensed professional forester's statement that the land is managed under the previous owner's plan.

How long do I have to file after buying Tree Growth land in Maine?

One year from the date of transfer, under 36 M.R.S. §574-B. The statement goes to the municipal assessor, or to the State Tax Assessor for land in the unorganized territory. On an ordinary purchase, that clock starts at closing.

Can I harvest timber right after I buy Maine land in Tree Growth?

Not for commercial use until the statement is filed. Section 574-B says the new landowner may not harvest, or authorize the harvest of, forest products for commercial use until the sworn statement or the forester's statement is filed with the assessor.

What is the penalty if a new owner does not file the Tree Growth statement?

Maine Revenue Services' sample notices show the sequence. After a certified letter, failing to comply within 120 days brings a supplemental assessment, and a second notice brings another one. The amounts are in the section on missing the filing deadline above. Continued non-compliance leads to withdrawal from Tree Growth under 36 M.R.S. §581, with a withdrawal penalty figured by the statute's formula.

What happens if I buy only part of a Tree Growth parcel in Maine?

Under 36 M.R.S. §581-A, selling a portion of a Tree Growth parcel does not change the taxation of the resulting parcels unless one has less than ten forested acres. A piece under ten forested acres is treated as withdrawn because of the sale, and the penalty is assessed against the person who transferred it. Pieces that stay at ten or more forested acres remain classified, each taxed to its own owner.

Does Tree Growth affect my mortgage on a Maine property?

Mostly through your escrow account. The monthly tax figure is estimated from the bill in place when the loan is set up, which on classified land is the Tree Growth bill. If the classification ends, the town bills full value and the escrow analysis adjusts your payment. The appraisal on your loan is a market value, separate from the town's Tree Growth value.