Deed Tax Standing Timber
“Standing timber” refers to the situation where one party has legal ownership of land that has timber growing (standing) on it. For an agreed-upon sale price, the owner (grantor) conveys legal ownership of the standing timber to the buyer (grantee) with a deed. The owner retains legal ownership of all the land except for the standing timber.
Deed Tax is due on the execution of a deed conveying legal ownership of standing timber.
Several provisions of the Minnesota Statutes have declared that standing timber is to be defined as real property for Property Tax purposes. For example, Minnesota Statutes 272.03, subdivision 1(a) defines real property to include timber. In addition, M.S. 272.05 provides that timber rights can be assessed and taxed separately from the surface land. Under M.S. 507.36, an interest in standing timber is treated as an interest in real property that may be conveyed for a valuable consideration. The document conveying an interest in standing timber may be recorded in the county recorder’s office like any other conveyance of real property.
A deed that conveys legal ownership of standing timber is subject to Deed Tax. The basis of the tax is the sale price for the standing timber that was agreed upon when the purchase agreement and the deed were signed.
