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Savings On Agricultural Land Taxes

Agricultural appraisal lowers the taxable value of land. As noted previously, it values land based on its capacity to produce crops, livestock, qualified wildlife or timber, rather than its value on the real estate market. This method typically reduces your property tax bill.

What land qualifies?

Taxpayers may qualify for agricultural appraisal under two different state laws. The newer one 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 falls under this law. Details on the older law—known as “1-d” or “agricultural use”—are available from your appraisal district. Very few landowners apply for “1-d” since you have to show at least 50 percent of your income comes from farming or ranching.

To receive “1-d-1 appraisal,” your land must meet the following criteria.

• The land must be devoted principally to agricultural use.

  Agricultural use includes the 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 or birds to produce human food or other items of commercial value and wood for use in fences or structures on adjacent agricultural land also qualifies, as does land used for wildlife management. Wildlife management land must previously have qualified as open-space land for other purposes. 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 Comptroller’s Guidelines for Qualification of Agricultural Land in Wildlife Management Use, available at your appraisal district or from the Texas Comptroller’s office.

  • 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. Land within the city limits, however, must have been devoted to such use 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 has qualified for agricultural appraisal and you change its use to a non-agricultural purpose, you will owe a “rollback” tax for each of the previous five years in which your land received 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 a higher market value. In addition, 7 percent interest is charged for each year from the date on which taxes would have been due.

  The chief appraiser determines whether a change to a nonagricultural use has been made and sends the taxpayer a notice of the change. If you disagree, you may file a protest with the appraisal review board. You must file this protest within 30 days of the date on which the notice was mailed to you.

  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 receives the rollback tax bill, even though you may have not owned the land when it received the tax break.

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