Is the yearly FS fee tax deductible?

Fri, 14 Jan 2022 18:46:19 GMT

My tax advisor says that it is NOT tax deductible. I argue that it amounts to a property tax on the land. Anyone out there know anything different or have an opinion?

Reply

Fri, 14 Jan 2022 19:02:41 GMT

Rick,

Your tax advisor is correct, the annual USFS special uses permit fee is a fee for the right to use the land, not a tax. In other words, consider it a "rent" of the land. As a general rule, the cost of renting homes or land for personal use is not a tax-deductible expense. Most states also impose a property tax on the value of the cabin, which is tax deductible.

Doug Gann, NFH President

Fri, 14 Jan 2022 22:52:58 GMT

Thanks for the response.

Sat, 24 Sep 2022 14:55:59 GMT

How many cabin owners are getting taxed by your state on the appraised value of the land that your cabin is on, but don't own the land? Here in TN we were in a law suit with the State of TN for 8 years about this subject, but are now taxed on land value and cabin value.

Two Other States

Sun, 25 Sep 2022 18:25:53 GMT

In response to the question above, there are two other states that impose taxes to cabin owners for the use of forest service lands. California has a possessory interest tax component of their property tax laws. The concept is a permit holder has certain rights to use the cabin lot which provides the holder with a private benefit (possessory interest) for use of public lands. These benefits are considered to be somewhat similar to certain benefits enjoyed by private land owners, so a value for the cabin lot (land) is included in the property tax valuation for the cabin.

Washington State has a less direct method. WA imposes a leasehold excise tax on the value of the annual special use permit fee paid to the Federal Government. The concept is the state is imposing a tax for the use of public land, although not through a property tax valuation. The excise tax is 12.84% of the Forest Service annual special uses fee amount. As an example, my 2022 annual special uses fee was $4,565 which resulted in a state leasehold excise tax of $587 for the use of the land for 2022. In addition, we pay a property tax on the value of the cabin which does not include a value for the land.

It appears Tennessee is the third state that we are aware of that imposes (directly or indirectly) a tax on the land under our cabins. While we might believe taxing us on the land we don't own is unfair, we understand that States tend to have broad authority to pass laws to impose various forms of taxation, whether we like it or not.

Doug Gann
NFH Immediate Past President
Lake Wenatchee, WA cabin owner

Tue, 20 Dec 2022 01:21:49 GMT

Here in Florida we could be taxed on the cabin, shed and dock, in other words tangible assets. Fortunately all of the cabins in my area fall under the threshold in vale, so we don't pay the tangible taxes.
I've decided not to inform the county that my cabin is probably worth a lot more!
Shhhhh!