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Agricultural and Timberland Appraisal

Property taxes for agricultural land and timberland can be cut by well over 90% by obtaining an “ag exemptions”. While it is not technically an exemption, the property taxes are reduced sharply. (It is an assessment valuation based on agricultural use or timber use.) There is some controversy over who should qualify for ag exemptions. The initial concept of ag valuation was based on a minimal value for land used for agriculture or growing timber. A limited number of exemptions today are by real estate investors who do meet the technical requirements. Further, anyone who converts agricultural land to normal valuation pays an amount similar to 5 years taxes (based on the market value for the previous 5 years). This document was prepared by the Texas Comptroller and is presented for your convenience.

Agricultural and Timberland Appraisal

Q: How may landowners qualify for agricultural and/or timberland appraisal?

A: Landowners may apply for special appraisal based on their land’s productivity value rather than what the land would sell for on the open market. Typically, a productivity value is lower than market value, which lowers property taxes. Landowners must use their land in agriculture, for timber products, as public access airport property or for recreational-park-or scenic land to receive a special appraisal. Requirements for each type of use vary. There is a rollback tax for taking such land out of its productivity use.

Q: What land qualifies for agricultural appraisal?

A: Property owners may qualify for agricultural appraisal if land meets the following criteria:

  • The land must be devoted principally to agricultural use. Agricultural use includes producing crops, livestock, poultry, fish, or cover crops. It also can include leaving the land idle for a government program or for normal crop or livestock rotation. Land used for raising certain exotic animals (including exotic birds) to produce human food or other items of commercial value qualifies. Cutting wood for use in fences or structures on adjacent agricultural land also qualifies.
  • Using land for wildlife management is an agricultural use, if such land was previously qualified open-space land and is actively used for wildlife management. Wildlife management land must be used in at least three of seven specific ways to propagate a breeding population of wild animals for human use.
  • Agricultural land must be devoted to production at a level of intensity that is common in the local area.
  • The land must have been devoted to agricultural or timber production for at least five of the past seven years. However, land within the city limits must have been devoted continuously for the preceding five years, unless the land did not receive substantially equal city services as other properties in the city.

Q: What happens if land receiving an agricultural appraisal changes to a non-agricultural use?

A: If land receiving an agricultural appraisal changes to a non-agricultural use, the property owner who changes the use will owe a rollback tax.

The rollback tax is due for each of the previous five years in which the land got the lower appraisal. The rollback tax is the difference between the taxes paid on the land’s agricultural value and the taxes paid if the land had been taxed on its higher market value. Plus, the owner pays 7 percent interest for each year from the date that the taxes would have been due. For example, the fifth year of rollback tax bill may include as much as 35 percent interest, depending on the date the use changed.