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Farm and Ranch Tax Exemptions

Posted by Sharon Rosshirt on Friday, October 16th, 2015 at 12:42pm.

We have a lot of land under agricultural use in Central Texas.  People often ask us about how tax exemptions work, and the answer may be surprising.  Most of the “tax relief”  processes in place are not exemptions at all, but rather an adjustment to the way the land is valued for tax purposes.  The effect is the same, it lowers the property owners tax bill, but the way to get there is very specific. The Texas constitution permits certain kinds of agricultural land to be appraised for tax purposes at a productivity value, rather than a market value. This special appraisal value is based solely on the land’s capacity to produce agricultural products.

How is the Farm & Ranch exemption calculated?

Agricultural valuation on a property requires that the land is used for a qualifying agricultural use, and there are a number of things that fill that bill, but it is determined at the county level.  If you plan on running cattle on your property, for example, the number of cows per acre that would allow you to qualify for an adjusted valuation would be determined by going to your local tax assessor (we’ll share some links below) to see how many “animal units” are required in your area.  If your land is grassy, you’ll be able to qualify with fewer acres per animal unit, and if it’s rocky and arid, or full of cedar, you’ll need more land per animal.

What types of Animals can Qualify?

It’s surprising how many types of animals qualify; cattle, goats, sheep, horses; even bees!  The goal is to ease the tax burden for properties that are legitimately generating agricultural products for the marketplace, and not for personal use.  There are valuation processes in place for vineyards, orchards, hay pastures, and other genuine agricultural uses, and all have the pass an “intensity of use” standard, which is determined by field appraisals and other methods at the county level.

Why should I find out my lands status?

Property that qualifies for agricultural appraisal will have a substantial reduction in taxes, based on the difference in the special agricultural appraisal and the market value of the property.  Property taxes are deferred until a change in use of the property occurs or, sometimes, when the ownership changes. At the time of use or ownership change, taxes are recaptured for up to five previous years, based on the difference in what was paid based on the agricultural appraisal, and what would have been paid based on the market value of the property. This is something to be very alert to if you are buying land that has been held under an agricultural exemption and you do not intend to continue that use.

More information available at:

Travis County-  http://www.traviscad.org/forms.html

Hays County-  www.hayscad.com

Bastrop County-  www.bastropcad.org

Williamson County-  www.wcad.org

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