How To Take Advantage Of Texas Ag Exemption

Dated: 01/12/2018

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Image titleHow to become Ag Exempt in Texas.


How to become Ag Exempt in Texas

What is typically called an ag exemption is really an assessment valuation based on the income the land can be expected to produce, rather than its market value, Larry Hammonds, chief appraiser for the Parker County Appraisal District, said.

Pasture that has been improved will be assigned a greater value per acre than native pasture, he said, but the average productivity value assigned is around $100 per acre. Market values for the same land could be as high as $20,000 per acre.

“If you average all the market values from Peaster to Millsap to Aledo, you get an average of about $5,000 per acre,” he said. “The tax savings is just huge if you’ve got ag.”

For example, an individual with a one-acre tract with the average market value of $5,000 would pay about $115 in local taxes annually. The same tract valued according to productivity standards — at $100 per acre — requires an annual tax payment of only $2.30.

Exemptions apply only to vacant land, however, Hammonds said. Houses and barns are taxed according to their market value. 

To qualify, property owners must meet three basic criteria.

First, the land must be dedicated principally to agricultural use, with the production of crops, livestock, poultry, fish or exotic or wild animals to produce human food or other items of commercial value.

Secondly, the production must be at the same intensity as is common in the area. Property owners cannot claim an ag exemption if they have one cow on 100 acres, for example, if area stocking rates are higher.

Finally, property owners must show that their land has been dedicated to agricultural production for at least five of the past seven years.

Green said what strikes him most about the interest in ag exemptions is the misconception that it is easy to be a farmer.

“People ask me about ag exemptions, and I ask them what it is they want to do, have a peach orchard or raise goats,” he said. “Our job is to educate them on what they want to produce.

“A lot of people I talk to don’t realize the work it takes to be involved in an agricultural commodity.”  

How Much acreage qualifies? 

Many times properties with less than 10 acres generally will not qualify. I am told Parker county has not set a minimum acreage but will look at uses on smaller tracts and if they can justify the use it can qualify for ag exemption. 

Depending on the county, you may need one animal unit per 5-10 acres of improved land,. 

Below are the unit requirements for Wise County, and these requirements could be similar in the surrounding counties 

        1 Cow & Calf = 1 animal unit 

        1 Bull = 1 ½ animal unit 

        1 Horse = 1 animal unit

        6 Sheep or goats = 1 animal unit

        2 Miniature horses or donkeys = 1 animal unit

What Activities Qualify?

  • farming or ranching for the purpose of raising agricultural products for sale;

  • timber production (including contract logging);

  • feedlot operation;

  • commercial fish farm operation;

  • bee keeping;

  • custom harvesting;

  • crop dusting (as defined by 14 CFR Section 137.3);

  • growing plants for sale in a commercial nursery;

  • a veterinary business that makes farm or ranch calls;

  • Future Farmers of America or 4-H; or

  • teaching an agricultural vocational course.

What Activities Do Not Qualify?

  • home gardening;

  • horse (PDF) racing, boarding, training or trail rides;

  • rodeos, circuses or zoos;

  • florists or similar retailers who maintain plants before sale;

  • wildlife management and conservation;

  • hunting and fishing operations, including aerial hunting;

  • predator control;

  • wildlife or livestock surveys;

  • commercial fishing;

  • companion animal (pet) breeding; and

  • kennels or other animal boarding businesses.

Agricultural and timber producers are not exempt entities, and not all purchases they make are exempt from sales tax.

Please call your local tax assessors office for your county's specific requirements

If you want more information about purchasing Agricultural Properties in Texas Call 817-550-6911

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