Understanding the Texas ag Exemption When You Sell A House

Understanding the Texas ag Exemption

At Cities Real Estate, the types of properties we help buyers and sellers with are incredibly diverse. We cater to individuals and families who thrive in the hustle and bustle of the city, as well as those who need a little more wide-open space.

For those who prefer to live on acreage, Cities Broker David Pannell answers some questions concerning the ag exemption, which is often misunderstood by current and future agricultural landowners.

What is an ag exemption?

An ag exemption is not really an exemption but a special valuation.

In simple terms, this means agricultural landowners will have their property taxes calculated based on productive agricultural value, as opposed to the market value of the land.

The idea of agricultural land valuation is rooted in the Texas Constitution. It can equate to significant tax savings because any type of agricultural land is costly to maintain or operate.

Properties are eligible for ag valuations for the production of everything from honey to hay. They can even be eligible for wildlife management depending on the location and rules of the county.

Ag valuations are not easy to get, so keeping and maintaining them is very important. What qualifies as an ag exemption in Texas?

Only land that is primarily being used – and has been used for at least five of the past seven years – for agricultural purposes may qualify for an ag exemption in Texas. Agricultural purposes include crop production, livestock, beekeeping, and similar activities. Many counties have minimum acreage requirements, and some consider the agricultural degree of intensity. What is the minimum acreage to qualify for an ag exemption in Texas?

These requirements vary by county, but you will usually need a minimum of 10-15 acres to be eligible for an ag exemption. These rules could also vary based on the type of agricultural activity. For example, if you’re a beekeeper, you’ll need a minimum of approximately 5-10 acres to qualify. Make sure to check with your county appraisal district for specifics. How many animals are needed for a Texas ag exemption?

This will depend on your county’s “intensity standards.” Standards are established based on how many acres of land are necessary to sustain an animal unit (one cow, for example, or five sheep). These will depend on an individual county’s climate since rainfall impacts how much land animals need to survive. Contact your appraisal district or the Texas Comptroller for your county’s specific requirements.

How much does a Texas ag exemption save?

This will depend on your county’s individual tax rate, which varies. For example, you could save $2,000 or more on your property tax bill in Tarrant County if you owned 15 acres of ag-exempt land.

What happens if an ag exemption on a property is lost?

If an ag exemption or valuation is lost on a property, the current or new owners could be responsible for three to five years of rollback taxes, including interest.

This can be a tremendous financial burden for brand-new landowners. Established, reputable lenders will ensure that all their mortgage products allow ag exemptions to stay intact. Trust David Pannell and Cities Real Estate

David Pannell and Cities Real Estate understand rural real estate and how ag exemptions work in Texas. If you’d like to learn more about how David can help you sell your property, call David today at (817) 797-9047. He’s helped hundreds of buyers and sellers since 2005; let him help you make your real estate dreams come true.

*This article is for informational purposes only and is not intended to serve as tax advice. For advice specific to your situation, please consult a qualified tax professional.

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Information is deemed reliable, but is not guaranteed accurate by the MLS or NTREIS. The information being provided is for the consumer's personal, non-commercial use, and may not be reproduced, redistributed or used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Real estate listings held by brokerage firms other than Cities Real Estate (Fort Worth) are marked with the NTREIS IDX logo and information about them includes the name of the listing brokerage.

NTREIS data last updated June 25, 2024.

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