Savings on Agricultural Land Taxes
Agricultural appraisal lowers the value of land. It values land based on the land’s capacity to produce crops, livestock, qualified wildlife, or timber, instead of its value on the real estate market. This lower value reduces property taxes on the land.
What land qualifies?
Taxpayers may qualify for agricultural appraisal under two different laws. The newer law is called “open-space valuation” or “1-d-1 appraisal” (after Article 8, Section 1-d-1 of the Texas Constitution). Nearly all land that receives agricultural appraisal is under this law. Details on the older law — known as “1-d” or “agricultural use” — are available from your appraisal district.
For “1-d-1 appraisal,” the land must meet the following:
The chief appraiser determines if a change to a non-agricultural use has been made and sends a notice of the change. If you disagree, you may file a protest with the ARB. You must file the protest within 30 days of the date the notice was mailed to you. The ARB decides your case.
- The land must be devoted principally to agricultural use. Agricultural use includes production of 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 and cutting wood for use in fences or structures on adjacent agricultural land also qualifies. Wildlife management is also an agricultural use. 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. See the Guidelines for Qualification of Agricultural Land in Wildlife Management Use.
- Timberland must be used with the intent to produce income and be devoted principally to the production of timber.
- Both agricultural land and timberland 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 and/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.
- If your land qualified for agricultural appraisal and you change its use to a non-agricultural use, you will owe a rollback tax for each of the previous five years in which your land got the lower appraisal. The rollback tax is the difference between the taxes you paid on your land’s agricultural value and the taxes you would have paid if the land had been taxed on its higher market value. In addition, 7-percent interest is charged for each year from the date that taxes would have been due.
If you don’t protest or if the ARB decides against you, you owe the rollback tax. The owner who changes the land’s use gets the rollback tax bill.
How to File for Agricultural Appraisal
- Get an application form at your local appraisal district office.
- Fill out the form completely and return it to the appraisal district office after January 1, but no later than April 30. Remember, making false statements on your application is a criminal offense.
- If your property is valued by more than one appraisal district, you must file an application in each appraisal district office. If you don’t, you could end up paying taxes on your property’s full market value to one or more taxing units. This occurs when your property is located in a taxing unit that is also in a neighboring county. Contact the appraisal district if you aren’t sure.
- If you need more time to complete your application form, submit a written request to the chief appraiser before the April 30 deadline. The chief appraiser can grant up to 60 extra days if you have a good reason for needing extra time.
- If you miss the April 30 deadline, you may file an application any time before the ARB approves the appraisal records (usually about July 20). However, in such a case, you will be charged a penalty for filing late. The penalty is 10 percent of the tax saving you obtained by getting agricultural appraisal for your land. Once the ARB approves the records, you can’t apply for agricultural appraisal for that year.
- If the chief appraiser asks you for more information, you will have at least 30 days to reply. You may ask for more time but you must have a good reason. If you don’t reply, the chief appraiser must deny your application.
- If the chief appraiser denies or modifies your agricultural appraisal, he or she must tell you in writing within five days. This notice must explain how you can protest to the ARB.
- Once you receive agricultural appraisal, you don’t have to apply again in the following years unless your qualifications change. However, the chief appraiser may request a new application to verify that you still meet the qualifications. If you get a notice to reapply, be sure to do so. If you don’t, you will lose your eligibility. If you become the owner of land that is already qualified, you must reapply in your own name by April 30. If you don’t, you will lose your eligibility. You must notify the appraisal district in writing by April 30 if your land’s eligibility changes. Failure to do so results in a penalty charge.
- The agricultural appraisal is based on an estimate of the typical annual income during the five-year period preceding the year before the appraisal. The agricultural appraisal may change annually based on this income and the capitalization rate.