Tax relief for property used in ag production
CAMERON—Milam County property owners whose land is used for agricultural production may be eligible for property tax relief on their land. Texas law allows farmers and ranchers to pay property taxes based upon the “productive value” of their land rather than on market value. This means qualified land is based on its ability to produce crops and livestock—not on its value on the real estate market. It can mean a substantial property tax savings.
“Agricultural productivity appraisal is more commonly referred to as ag value,” Chief Appraiser Patricia Moraw said.
The Texas Const itution authorizes two types of agricultural appraisals, 1-d-1 and 1-d, named after the section in which they were authorized. For 1- d-1 the owner must use the land for agricultural use but does not require agriculture to be the owner’s primary business. To qualify, agricultural use must meet the degree of intensity generally accepted in the area.
Owners must also show the land has been devoted principally to the qualifying use for at least five of the preceding seven years. Most land owners apply for 1-d-1. Under 1-d appraisal, the land must be used for at least three years and the owner must be an individual with the land being the owner’s primary source of income.
A fairly new provision in Property Tax Code Section 23.522 permits a landown- er to cease agricultural use of property during a declared drought without losing the land’s open-space appraisal designation. On Dec. 21, 2011, Gov. Perry renewed his declaration of drought disaster throughout the state.
“No ag valuation for qualified properties has been removed due to drought-related conditions,” Moraw said.
The law also allows a property owner to use land for wildlife management and still receive the special appraisal if the land qualifies for agricultural use in the preceding year. L and under wildlife must meet acreage size requirements and special use qualifications. A w ildlife m anagement plan is required as part of an annual report that must be filed.
“Agricultural land used for wildlife management is not an easy alternative to cattle or farm operations,” Moraw said.
The law provides penalties, in the form of a rollback tax, for taking qualified land out of agricultural production. Roll back taxes are based on five years preceding the year of the change.
“Property owners should consider the increase in the taxable value of the land and of additional taxes to be due if they are considering changing the land’s use from agricultural use,” Moraw cautioned.
Property still used for agricultural use at a lesser intensity may lose the ag valuation but would not be subject to rollback taxes. The roll back tax is the difference between the taxes paid under ag valuation and the taxes that would have been paid if the land had been put on the tax roll at market value and includes interest charges.
Moraw reminds new property owners that they are required to file an application. Ag valuation does not roll over from owner to owner. Property changing title into an Estate or Trust is considered to have a new owner who must file an application of their own.
The deadline to apply for the 2013 tax year for productivity appraisal is April 30. Property owners may file late until the 2013 records are approved in mid- July. A penalty for late filing is assessed for filing after the April 30 deadline. There is no provision in the Property Tax Code to allow for property owners to file for agricultural productivity valuation af ter records are approved.
For more information about productivity appraisal and application forms, contact the Milam County Appraisal District, P. O. Box 769, 120 N. Houston Avenue, Cameron, TX 76520; 254-697-6638 or 800-772-4457. Information is also available on the State Comptroller’s website at www.window.state.tx.us/ taxinfo/proptax/ or by calling the Comptroller’s Property Tax Assistance Division at 800- 252- 9121, press “2” to access the menu and then press “1” to contact the Information Services Team.
The Appraisal District is a free- standing governmental of f ice. Milam County Commissioners’ Court has no jurisdiction or responsibility over the functions of the Appraisal District.