A property that is eligible for exemption from the agricultural property tax must meet minimum requirements in terms of size, use and location. To be eligible for the exemption, the property must have been in agriculture production for at least 5 years. The receipts and proof of this information must be presented in order to apply. The status must be maintained annually and run as a profitable business in order to keep it.
Why is it so important to have an exemption from property taxes for ag? It will significantly lower your annual property taxes.
If you’re considering buying a property with an ag exemption in place, please ensure that you work with an agent or broker who is familiarized with the requirements for the county where the property is located.
As different types of agriculture and land requirements are required in each county, there will be different exemptions and minimum requirements. Depending on the type of operation, some counties may require more land than others. Others will need as little as 5 acres.
You might not be buying the minimum amount for your county if you purchase land from a larger area that is exempt from ag taxes. This is because you might not be able to keep the exemption in place in the future.
Rollback taxes will apply to properties that do not keep the agricultural exemption. This means that the property is now responsible for all property taxes, including those incurred in the 5 years prior to the exemption. This amount will run into the thousands. You should calculate the amount of rollback taxes you will owe and set aside money to pay it when it becomes due. The taxes won’t become due immediately, but it will be gradual.
If you’re a seller who knows your property may not be in an ag exempt area, ensure that the contract protects you from any liability to pay those rollback taxes.
However, you can choose to rollover into a wildlife valuation rather than an agricultural valuation. This requires annual reports and plans.
If your looking to buy property contact Preferred Properties of Texas today.