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 MCAD by calling (936) 756-3354.
- 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 (subdivsion 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.