Texas Land ( Ag Exemption ) Facts, Concerns & Potential Huge Benefits

HOW TO KNOW BEFORE YOU BUY ACREAGE OR HOME WITH ACREAGE WHAT THE PRO'S AND CON'S ARE OF AGRICULTURAL USE STATUS

• ( AG Exemption ) is NOT a exemption. The land will still occur property taxes but IS a special use appraisal of such land based upon the productivity value of the land ( not the market value of the land ). Example: Tax liability of 40 acres without Agricultural Use status: Market Value $1,663,590, Property Tax Liability $38,889.74. Example: Tax Liability of 40 acres WITH Agriculture Use status for at least 5 of the last 7 years outside city limits, 5 of 5 past years if inside city limits: Assessed Tax Value $3870, Property Tax Liability $90.47

• Land Does NOT automatically qualify for agricultural use because you install a put a few cows, chickens, goats, hogs etc on your property. There are specific requirements based upon each county in Texas. Why is that ? you say. Because Texas is so big and the weather and soil types vary so much around the state the requirements have to be customized to each individual county NOT a single state-wide list of acceptable agricultural practices and acreage requirements. County appraisers are not push overs and are typically very aware if land is being owned and operated under the guidelines to quality for the special use AG appraisal status.

• If you are BUYING OR SELLING a property that has already been designated as AG Use status, been taking advantage of the tax advantages of such be AWARE !!! Rollback Taxes of the 3 prior years property taxes may apply to the sale and purchase of said property if the buyer fails to maintain or removes the AG Use status after the purchase. That is why it is incredibly important that the possibility of that situation is negotiated and stated in the offer to purchase contract from inception who would be responsible for those roll back taxes if they should occur. See example below of what roll back taxes would be owed on the same property listed above if removed from AG Use status and taken back to Market Value Non-AG Use: ROLLBACK TAXES OWED WOULD BE $104,844.02

• See and click link to form 50-129 used for submittal of information and history of your property to be considered for AG Use Status: Link To Form 50-129 AG Use Form

• Some County Appraisal Districts will require put more emphasis on minimum acreage while others will value the intensity of the agriculture practice involved. See attached picture in this article of examples of 4 different CAD requirements of AG use: Montgomery, Walker, San Jacinto, and Liberty

• The only intensity that is set in stone statewide is " Beekeeping " requirements:

  1. Minimum of 5 Acres

  2. 6 hives for the first 5 Acres

  3. 1 additional hive for each additional 2.5 Acres

  4. 20 Acres maximum

• If interested in qualifying existing property through wildlife qualification requirements start looking here at this link: Link To Wildlife AG Use Requirements

• CAD use the term AU ( Animal Unit ) as a universal description in which 1 AU = 1000 LB. So 1 Adult beef or dairy animal would typically be considered 1 AU where a horse is 1.1 AU, Sheep is .16 AU, Goats are .19 AU etc. so its basic math but can still get somewhat tasking if your planning on adding up different animal stock to the required amounts of AU needed to qualify for the amount of acreage your wanting to be placed under AG Use Tax Appraisal Status

• Options can get more complicated when buying a property that has existing homestead on smaller Non AG use status; verses buying 15 Acres with AG Use status existing and building a new equivalent value homestead on the property. If you seek the options before you buy, you can find a property where you get much more land for the same or less property tax due each year.

• You must have at least 6 Acres ( 1 Acre for homestead and 5 Acres of land for the AG Use appraisal status ) If the land has no prior AG Use status history you will receive no AG Use status appraisal value of the 5 Acres until the 5 years minimum of AG Use compliance has been applied for and completed with your local county CAD

• Final Take Aways:

  • Some lenders do not have experience with AG land purchases try to find one that does

  • Reach out and stop by the county CAD and find out what their AG Use requirements are for the type of AG Use you hope to comply with and implement

  • Locate and work with a Real Estate Agent that has knowledge about AG land purchasing and is willing to do the extra work and research to help you find the perfect property.

  • Your local AG Extension offices are a great place to stop at and talk to them about AG Use options, questions, and process along with their vast knowledge of domestic livestock farming and wildlife management in their perspective areas and zones.

  • There is a lot of variables and situations with AG Use land and we have only touched on some of them. So continue to research via some of the links provided, email-text-call myself, or stop into your local Central Appraisal District and get more questions answered by them directly. They are there to help and make sure you know all the benefits, requirements and options.

  • James Andrew ( 361-249-2876)

  • Ultima Real Estate Property Search Website

  • gemhomebuys@gmail.com