Tax Savings on Land Used for Agriculture & Wildlife Conservation

If you are a farmer or rancher, productivity valuation could lower your taxes. Productivity valuation lowers the taxable value of agricultural land used for a qualified agricultural use or wildlife conservation purpose. It values such property on the land's capacity to produce crops, forage or timber, instead of its value on the real estate market. This lower taxable value reduces property taxes on the land.

Contents:

What Land Qualifies?
How to File for Agricultural Appraisal
Application & Qualification Schedule for Harris County
Degree of Intensity Standards for Harris County
The Appraisal Process

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 HCAD by calling (713) 957-7402.

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.

If your land qualified for agricultural appraisal and you change its use to a non-agricultural use, you will owe a rollback tax for each of the previous five 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, 7-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 that 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.

Application & Qualification Schedule for Harris County

Since land in the urban area frequently changes use, the Harris County Appraisal District requires that owners of agriculture or timber land who receive special valuation to requalify once every three years. Requalification is conducted in accordance with the following 3-year rotating schedule.

The X on the table below indicates the year to file an agriculture application if located in the school district shown. The plan indicates a 3-year rotating application schedule by school district. For the two years that property owners do not file an application, they will be mailed pre-approval letters.

School District Total 2007 2008 2009 2010 2011 2012
   001  HOUSTON ISD 453 x     x    
   002  DEER PARK ISD 20 x     x    
   003  WALLER ISD 1020 x     x    
   004  CYPRESS-FAIRBANKS ISD 656 x     x    
   005  CROSBY ISD 721   x     x  
   006  CHANNELVIEW ISD 23   x     x  
   007  NEW CANEY ISD 2   x     x  
   008  ALIEF ISD 7   x     x  
   009  ALDINE ISD 530   x     x  
   012  NORTH FOREST ISD 98   x     x  
   015  GALENA PARK ISD 21   x     x  
   016  GOOSE CREEK ISD 289 x     x    
   017  KLEIN ISD 551   x     x  
   018  HUMBLE ISD 540   x     x  
   019  KATY ISD 396     x     x
   020  LA PORTE ISD 110     x     x
   021  PASADENA ISD 111     x     x
   023  SHELDON ISD 85     x     x
   024  SPRING ISD 413     x     x
   025  SPRING BRANCH ISD 10     x     x
   026  TOMBALL ISD 1085     x     x
   027  CLEAR CREEK ISD 131     x     x
   028  DAYTON ISD 17     x     x
   030  HUFFMAN ISD 205     x     x
   031  STAFFORD ISD 0     x     x
   032  FORT BEND ISD 11     x     x
Total 7,505 2,566 2,749 2,511 2,438 2,493 2,574
x- Application
For the two years that property owners do not file an applications, they will be mailed renewal letters.

Degree of Intensity Standards for Harris County

The chief appraiser is required by law to develop "degree of intensity" standards for each type of agricultural production in a given county. These standards reflect the practices that are typical for producing various kinds of crops or livestock.

Standards for various dry and irrigated crops commonly grown in Harris County may be obtained by contacting the appraisal district's Productivity Valuation Section at (713) 957-7402.

Classification Specific Crop Yield Per Acre Minimum
Acreage 		Comments
Dry Crops Corn, Grain Sorghum, Peanuts, Soybean Varies with crop 10 acs Minimum yields per acre: Corn 87 bu, Grain Sorghum 33 cwt, Peanuts 1600 lbs, Soybeans 24 bu.
Irrigated Crop Rice 54 cwt 10 acs
Horticulture Greenhouses Varies Varies Must be a wholesale operation.
Nursery Varies 5 acs Must be a wholesale operation.
Orchard Varies 5 acs Fruit and nut orchard. Must be a wholesale operation.
Truck Farm Varies 5 acs Must be a wholesale operation.
Tree Nursery Minimum 200 trees/ac 5 acs Must be a wholesale operation. State reported average is 300 trees/ac.
Turf Grass Varies 5 acs Must be a wholesale operation.
Pasture Land Hay Minimum of 2400 lbs/acre per cutting 7 acs Must control weeds, vines, and brush. Except for native grass pastures or those also used to run cattle, must fertilze at least once each spring and cut and bale at least twice each year. One annual cutting required for native grasses and fields on which cattle are run outside the haying season.
Improved Produce sufficient forage to sustain a minimum of 4 animal units. 7 acs Minimum of four (4) animal units. Must have one (1) animal unit per 4 acs on larger tracts.
Native Produce sufficient forage to sustain a minimum of 4 animal units. 8 acs Minimum of four (4) animal units. Must have one (1) animal unit per 7 acs on larger tracts.
Timber Land Class I - Pine 1440-1980 BF 10 acs 120-165 cu ft. (Timber management plan required.)
Class II - Mixed 1020-1440 BF 10 acs 80-120 cu ft. (Timber management plan required.)
Class III - Hardwood 600-1000 BF 10 acs 50-84 cu ft. (Timber management plan required.)
Other Exotic Animal
7 acs
Species not indigenous to state. Must be in commercial production.
Wildlife Management
12 acs
Must sustain a breeding, migrating, or wintering population of indigenous wild animals. Must have qualified for open-space AG USE the previous year to qualify land in current year, and meet state guildlines. (Wildlife management plan required.)
2 Yr. Rotation Per each year crop as shown above 10 acs Rice 54 cwt, Soybean 24 bu.
3 Yr. Rotation Per each year crop as shown above 10 acs Rice 54 cwt, Soybean 24 bu.

** ANIMAL UNIT -- Any domestic animal or combination of animals with a forage dry matter (DM) requirement of 27 lb/day. (e.g., Animal Unit = 1 cow, 1 horse, 6 sheep, or 7 goats.)

These Degree of Intensity Standards are subject to change from year to year.