Riparian Buffer Tax Credit

Introduction | Buffer Valuation | Frequently Asked | How To Qualify | How To Apply | Required Documents | Required Information | Hardcopy Map Requirements | Review Process | Code of Virginia

Frequently Asked Questions

Here is a summary of questions on the Riparian Buffer Tax Credit.

What Qualifies

  1. Are there any application fees?
    Yes, a $150 application fee is charged per application. It is suggested that landowners seek the assistance of a professional consulting forester.
  2. Can the buffer extend to the upland 300 feet even though the flood plain is only 100 feet wide?
    Yes, The buffer, measured from the stream bank can be a minimum of 35' or maximum of 300'.
  3. Can the owner of neighboring land sharing the waterway take the credit even though they did not harvest timber?
    No, the landowner receiving the tax credit must have harvested timber adjacent to the buffer.
  4. In some areas waterways are property lines. Can I receive the tax incentive for retaining a forest buffer along my side of the stream, even though the other side does not belong to me, and a buffer is not left or maintained by the neighboring landowner?
    Yes, the buffer can be on one side.
  5. This program provides an incentive to landowners to leave a riparian buffer strip when conducting timber-harvesting operations. Does this tax credit also apply to landowners, who have a Stewardship Plan, in which the recommendation for the stand bordering the riparian area does not include harvesting the area for several years?
    No, The landowner must harvest timber adjacent to the buffer.
  6. Can I receive a credit for a buffer on one side of a stream if I did not leave a buffer on the other side?
    Yes, the landowner is not required to leave buffers on both sides of the stream.
  7. Does a thin, linear forest that passes through open land also qualify for the tax credit?
    No. The landowner must harvest timber adjacent to the buffer(s) being left.
  8. If the topographic map is wrong, and a stream exists, where none are shown on the topographic map, does the area qualify?
    Yes, as long as the stream meets the definition of a perennial or intermittent stream according to U. S. Geologic Survey.
  9. To qualify must 50% of the canopy or 50% of the basal area be left?
    The BMP Handbook calls for 50% of the canopy and the requirement for this tax credit is the same. More than 50% of the basal area must be cut in the harvested area.
  10. Is the width of the stream included in the measurement of the buffer?
    Yes, if the canopy overlaps from both sides of the stream and the buffer is on both sides of the stream. No, if the stream is wide enough that the canopy does not overlap.
  11. The buffer is on both sides of the stream and the total width is less than 300 feet, but on one side the distance from the stream bank to the outside drip line is less than 35 feet, does that side qualify?
    No. The buffer must be a minimum of 35 feet from the stream bank to outer drip line.
  12. If a tract is thinned and 50% of the basal area is taken out, does it qualify?
    Yes, but if a more intensive harvest is performed within the 15 years, it may be more cost effective to claim the tax credit during the later harvest.
  13. If a thinning is made and the tax credit is taken, can a tax credit be taken if the area is clear-cut within the 15 years?
    No, the tax credit can only be taken once within 15 years.
  14. Is a developer or farmer harvesting timber eligible for the tax credit if they have a Forest Stewardship Plan identifying the areas to be developed or cleared and buffers to be retained?
    Yes, as long as the buffer is maintained, no paved walking trails, underground power lines, brush clearing, or livestock, and more than 10 acres are to be retained in forest. Ten acres of forest is the minimum for a Forest Stewardship Plan.
  15. Do estates or Trust qualify?
    The Code states, "…individual…partnership or S Corporation." Estates and Trusts are not eligible for this tax credit, but Family Partnerships and Limited Liability Corporations are eligible.
  16. Do beaver swamps, or grass marsh count as water ways and are they eligible?
    These areas may need to be looked at on an individual basis. In general the beaver pond would count as a waterway and the buffer would be measured from the edge of the pond. A buffer along a grass marsh will be eligible if there is a perennial or intermittent stream within the grass marsh. The forested buffer would be measured from the edge of the grass marsh.
  17. Do buffers around sinkholes qualify?
    No, the Code states "adjacent to perennial or intermittent stream"
  18. How many acres must be harvested in the harvested area to qualify?
    At least as many acres must be harvested as are retained in the buffer area. If 5 acres are harvested, with at least 50 % of the basal area being taken out, then a tax credit could be claimed on 5 acres.
  19. Do I have to give harvest notification when harvesting starts and do I have to comply with the Seed Tree Law to qualify?
    The landowner does not have to provide harvest notification to qualify. The landowner does have to be in compliance with the Seed Tree Law to qualify.

Procedures for Applying

  1. Are there any application fees?
    Yes, a $150 application fee is charged per application. The landowner must complete the application form and submit it along with the required supporting documentation to the Area Forester for the VDOF. It is suggested that landowners seek the assistance of a professional consulting forester to assist them with the timber value determination as well as to map the buffer.
  2. How do I submit an application?
    Landowners are required to submit the form 179 “Application for Riparian Forest Buffer Tax Credit” along with supporting documentation (Location of Property, Legal description / Plat Reference, timber valuation, Harvest Identification Number, Stewardship Plan) to the local VDOF Area Forester.
  3. What information should I have ready when using the Online Application?
    The landowner is required to have proof of a Stewardship Plan, location of the property, legal description of the property and Plat Reference, value of timber retained in the buffer, Harvest Identification Number and date of harvest completion.  In addition, the landowner will need to have names and Social Security Numbers for all owners of the property (if there are multiple owners).
  4. What if the property is owned by a mixture of individuals and S-Corporations / Partner-ships?
    The Application is designed for Landowner information for the following scenarios:
    • One or more individuals or a Corporation owns the property
    • One S-Corporation or Partnership owns the property and passes the Tax Credit to its shareholders/partners
    • One S-Corporation or Partnership owns the property and passes the tax credit to another S-Corporation/Partnership, who then passes the credit to individual shareholders/partners. (Additional nesting is possible.)
    • The property is co-owned by one S-Corporation/Partnership AND individual(s). The S-Corp/Partnership passes its portion of the tax credit to its shareholders/partners.
    • Two or more S-Corporations/Partnerships split the property ownership; all tax credit gets passed to their shareholders/partners.

    For any ownership scenarios more complex than those described above please contact your local VDOF Forester for assistance.

  5. How do I submit a map of the buffers?
    Landowners (or their consultants) are encouraged to submit a shape filemap of their buffers. A hand drawn map is also suitable (see Number 6) although landowners are no longer required to use GPS to map the buffers, landowners are still responsible for ensuring that the map submitted is an accurate reflection of the true buffer boundaries on the ground.
  6. How can I submit a map?
    A landowner can choose to submit a hardcopy map of the buffer boundaries. Landowners must show the buffer boundaries on a copy of a USGS 7.5" Topo Quad that has not been reduced from its original scale (enlarging is okay). The Quad Name must be included. Landowners are still responsible for ensuring that the map submitted is an accurate reflection of the true buffer boundaries on the ground. If the map is not clear, VDOF reserves the right to request a better map.
  7. How does the VDOF verify the reported acres?
    Acres of buffer will be determined from the map, either supplied to VDOF as a shape file, or supplied to VDOF in the form of a hardcopy map.

    If the Landowner supplies a hardcopy map, the Area Forester will enter (draw) the buffers into the system using the Intergrated Forest Resouce Information System (IFRIS) mapper using the hardcopy map as a guide. IFRIS Mapper will calculate the acreage.

  8. How does the VDOF verify the reported harvest value?
    The Area Forester will determine if the Harvest Value figures are reasonable based on timber sales in the area.
  9. How long will the riparian tax credit records be kept?
    15 years.
  10. How does VDOF handle the annual inspection?
    Annual inspection of riparian buffers will be performed using multiple sets of satellite imagery and software that allows changes to be detected from one image to the next. If the analysis shows a buffer or portion of a buffer has been removed, the Area Forester will be notified and a field inspection will take place.
  11. Can an S-Corporation or Partnership claim the tax credit for itself?
    No. Any S-Corporations or Partnerships applying for the tax credit MUST pass the credit onto its shareholder or partners. VDOF needs to know (for reporting to Department of Taxation) the percent of the tax credit each individual is to receive (be they affiliated with an S-Corp/Partnership or not).
  12. If a husband and wife own property can each take the $17,500 maximum if filling separately?
    No, "For the purposes of this section, the amount of any credit attributable to qualified buffer protection by a partnership or electing small business corporation (S Corporation) shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S Corporation."
  13. Will the 35 feet minimum requirement supercede the 50-foot requirement in the Chesapeake Bay Act?
    No. Any other requirement is not affected by this code.
  14. What is meant by, "Forest Stewardship Plan to be certified by the State Forester"?
    The Area Forester will review the Forest Stewardship Plan to see if it complies with the national standards.
  15. If the buffer is destroyed by natural causes am I liable for repayment of the credit?
    The landowner is not liable for repayment of the credit. If they are aware of the natural destruction, they should notify VDOF and explain the circumstances. If they want to salvage the timber, then they must notify VDOF so the Area Forester can modify the Forest Stewardship Plan (an addendum will allow the salvage and regeneration of tree species). If compliance monitoring shows a failure to maintain the buffer, VDOF will perform an on-site inspection.
  16. Where are the Forest Stewardship Plans approved?
    The Area Forester reviewing the Riparian Tax Credit Application will approve The Forest Stewardship Plan. If the plan is submitted for payment by VDOF then the Assistant Regional Forester will certify it and forward invoice to VDOF's Headquarters Office.
  17. Can someone with less than 10 acres use the tax credit?
    No, 10 acres is the minimum for a Forest Stewardship Plan.
  18. If an area is harvested and the buffer is left and there are plans to selective harvest the buffer in the next few years, is the harvest eligible for the tax credit? For example, the logger will be different on the two areas. Pine is in the main harvest and hardwood will be harvested from the buffer.
    Yes, but the delayed harvest should be explained in the Forest Stewardship Plan.
  19. Can there be a 300-foot buffer on each side of the stream?
    Yes, each side is a separate buffer and each buffer can be up to 300 feet wide. If the canopy overlaps over the stream then the buffer could include both sides but the total width could not exceed 300 feet. If the buffers on each side total more than 300 feet it should be counted as a separate buffer for each side.
  20. Will the encumbrance of the 15-year requirement be recorded at the courthouse?
    No. Nothing will be recorded at the courthouse.
  21. How will acres be determined?
    The buffers will be drawn using IFRIS mapper. The mapping software will calculate the acreage.
  22. How will fractions of an acre be counted?
    Round up to the nearest whole acre.
  23. Can a consulting forester or others do the final harvest inspection?
    No, VDOF personnel must do the final harvest inspection for the tax credit.
  24. If a buffer is left and the harvested area is prescribed burned and part of the buffer is burned in the process, is it eligible for the tax credit?
    Yes, the area is eligible for the tax credit. If the overstory is killed in the prescribed burn, tree species should be re-established.
  25. How much crown canopy must be retained in the buffer and how large an opening must be left out?
    At least 50% of the overstory crown in the buffer must be retained. An opening of more than 60 feet without tree species vegetation covering 50% of the area must be mapped out of the buffer.
  26. If I have a large tract and harvest a block each year, am I eligible for a tax credit each year?
    Yes. Each tax credit must be based on a different buffer adjacent to a different harvest.
  27. Tax map parcels are often combined to make a large contiguous tract. Are each tax map parcel treated separately?
    No, however all parcel ID's must be given.
  28. If a portion of a timber sale is completed and the timber owner releases that portion of the sale back to the landowner, can the landowner take the tax credit on that portion released from the timber sale in the year it is released?
    Yes. There must be a written release and a final harvest inspection for that portion.
  29. Some landowners may not want to indicate to the tax department in documented proof how much income was really received for the timber. Does the VDOF require documentation of the value?
    Yes. VDOF must have some documentation of the value, either the value paid for the adjoining timber or a cruise of the buffer.

Value Determination

  1. How is the value determined?
    The landowner must provide the information to VDOF, i.e. total acres harvested and total value so the value can be prorated to the value of the buffer. Alternatively, the landowner can opt to have a professional timber cruise determine the value of the timber in the buffer.
  2. How is the value determined if there is a partial cut in the buffer?
    If the harvest is a clear-cut and the buffer had a partial cut then the value would be half of the value per acre.
  3. How is the value determined if there is a partial harvest?
    Use the value of the timber harvested and number of acres to determine an average value. Then apply the value to each acre in the buffer. If the buffer was also partially harvested use half the per acre value.
  4. How is the value determined if I believe the trees in the buffer are more valuable than the remainder of the tract, i.e. walnut?
    The landowner will have to provide data from a professional cruise, and the Area Forester determines if it is reasonable based on timber sales in the area.
  5. Can I deduct the cost of mapping and a Stewardship Plan from taxes? This could be compared to deducting consultant costs when doing a timber sale.
    If these cost are incurred in preparation for and before the timber sale the cost could be considered cost for doing the sale and be deductible.
  6. I own timber on both sides of a stream and harvest on one side only; can I take the tax credit on both sides?
    No. A landowner can only take the credit on the side where the harvest is. If he harvests on the other side later, then he would be eligible for the credit for that side at the time of that harvest.

Water Quality and the Tax Credit

  1. Do BMPs have to be installed to receive the tax credit?
    No.
  2. Can a tax credit be received where there is a water quality problem?
    No. Problems must be corrected before the landowner qualifies for the tax credit.

Last modified: Thursday, 06-Nov-2014 10:37:22 EST