Agricultural Valuation

What Land Qualifies?

Taxpayers may qualify for agricultural productivity valuation 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). Both individual and corporate owners are eligible under this provision if the land is used for a qualified purpose. Nearly all land that receives productivity valuation is under this law.

An older law — known as “1-d” or “agricultural use” appraisal — is available only to individual owners who derive the majority of their income from farming or ranching.

For “1-d-1 appraisal,” the land must meet the following:

• 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. Land which has been receiving agricultural productivity valuation may qualify as wildlife management land provided it is used in at least three of seven specific ways to propagate or maintain a population of indiginous wild animals for human use. Rules related to wildlife use may be obtained from Galveston CAD by calling (409) 935-1980.
• 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 chief appraiser, with input from an agricultural appraisal advisory board composed of local agricultural and timber producers, determines the level or degree of intensity applicable to each type of agricultural or timber use.
• 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.

It’s important to know that if you just stop using the land for an agriculture purpose you may not be issued a rollback on your property. The only two reasons for a rollback to be issued on a piece of land is if the land is platted into a subdivision or something commercial is built on the land. REMEMBER, STOPPAGE OF USE IS NOT NECESSARILY A CHANGE OF USE.

If your land qualified for agricultural appraisal and you change its use to a non-agricultural use (subdivision or commercial), you will owe a rollback tax for each of the previous three 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 its higher market value. Plus, 5-percent interest is charged for each year from the date that the taxes would have been due.

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.

If you don’t protest or if the ARB decides against you, you owe the rollback tax.

The owner who changes the use of the land gets the bill for the rollback tax.

How to File for Agricultural Appraisal

1. Get an application form at the appraisal district office.
2. 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.
3. 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.
4. 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.
5. If you miss the April 30 deadline, you may file an application any time before the appraisal review board 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 appraisal review board approves the records, you can’t apply for agricultural appraisal for that year.
6. 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.
7. 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.
8. 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.
9. 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.

• Agriculture Guidelines-Typical Levels
• Guidelines for Beekeeping
• Agriculture Valuation FAQ
• 1-d-1 Ag & Bee Application

Tax Savings on Timber Valuation

What Land Qualifies?

Land devoted to the growing and harvesting of timber products may qualify for special valuation. Timberland must be used with the intent to produce income and be devoted principally to the production of timber to a degree of intensity that is common to the local level. The chief appraiser, with input from a local advisory board composed of agricultural and timber producers, determines the level or degree of intensity applicable to each type of timber use.

The land must have been devoted to 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.

It’s important to know that if you just stop using the land for an agriculture purpose you may not be issued a rollback on your property. The only two reasons for a rollback to be issued on a piece of land is if the land is platted into a subdivision or something commercial is built on the land. REMEMBER, STOPPAGE OF USE IS NOT NECESSARILY A CHANGE OF USE.

If your land qualified for timber valuation and you change its use to a non-qualifying use (subdivision or commercial), you will owe a rollback tax for each of the previous three years in which your land received timber valuation. The rollback tax is the difference between the taxes you paid on your land’s timber valuation and the taxes you would have paid if your property had been taxed at its market value. Plus, 5-percent interest is charged for each year from the date that the taxes would have been due.

The chief appraiser determines if a change to a non-qualifying use has been made and sends a notice of the change. If you disagree, you may file the 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 owner who changes the use of the land gets the bill for the rollback tax.

For more information see Chapter 23 of the Texas Property Tax Code.

Timber Guidelines

1-d-1 Timber Valuation Application

Wildlife Management

In November, 1995, Texas voters approved Proposition 11, which amended Article VIII, Section 1-d-1 of the The Texas Constitution to permit productivity appraisal for land used to manage wildlife.

House Bill (H.B.) 1358 implemented the constitutional amendment by adding wildlife management as an agricultural use that qualifies the land for agricultural (productivity) appraisal in the Texas Property Tax Code — Section 23.51.

H.B. 1358 required the State Comptroller of Public Accounts – with the help of the Texas Parks and Wildlife and the Texas Cooperative Extension – to issue guidelines to county appraisal districts (CADS) on how to qualify and appraise land used to manage wildlife for agricultural appraisal. The Comptroller’s Property Tax Division has distributed interim guidelines to county appraisal districts. You can obtain a copy by writing the Property Tax Division at the following address:

Property Tax Assistance Division
P.O. Box 13528
Austin, TX 78711-3528

You can also call the toll-free number, 1-800-252-9121, or 512-305-9999 in Austin.

These guidelines will be revised in the future to accommodate changes in law, circumstances or in light of new information.

This article reviews the requirements for qualifying land for wildlife management, for initially appraising the land, and for defining elements of the seven wildlife management activities. Chapter 23, Subchapter D, of the Texas Property Tax Code addresses the qualifications for agricultural appraisal and the appraisal of qualified agricultural land. Land used for wildlife management must meet all the legal requirements of land qualified for agricultural appraisal. Land on which the owner engages in wildlife management and meets other requirements for agricultural appraisal is qualified for agricultural appraisal and is technically in agricultural use. To simplify terms, however, this article refers to agricultural land used for wildlife management as land in wildlife management use.

• Wildlife Management Information
• Wildlife Management Plan Degree of Intensity
• Wildlife Management FAQ’s
• 1-d-1 Wildlife Management Application (Both forms must be completed)
• Wildlife Management Annual Report Form