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.
How to File for Agricultural Appraisal
- Obtain an application form at your local appraisal district office.
- Fill it out completely and return it to the appraisal district office after January 1, but no later than April 30. Remember that falsifying statements on your application is a criminal offense.
- If your property is valued by more than one appraisal district, which occurs whenever a taxing unit crosses county lines, you must file an application with 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. Contact your 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 30th 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, which usually occurs on or about July 20. You will be charged a penalty for late filing equal to 10 percent of the tax savings you obtained through receiving agricultural appraisal for your land. After the ARB approves the records, you can no longer 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 request for 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 succeeding years unless your qualifications change. The chief appraiser may request a new application from time to time, to verify that you still meet the qualifications. If you receive 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 will result in a penalty charge.