
An "AG Exemption" is not a tax exemption but a special appraisal based on productivity rather than market value. For example, 40 acres without this status may incur a property tax liability of $38,889.74, while the same land with agricultural status could be taxed at $90.47. To qualify, land must meet specific criteria set by Texas counties due to varying soil and weather conditions. Simply adding livestock like cows or chickens isn't enough.
When buying or selling properties with AG Use status, be aware of potential rollback taxes, which apply if the status is not maintained post-purchase. Rollback taxes can be substantial, reaching over $104,000 in some cases. Negotiating who is responsible for these taxes should be part of the purchase contract.
Each county in Texas may have different requirements for agricultural appraisal status. For example, Montgomery County requires about 20 acres with specific ratios of grazing land and livestock. Wildlife-based qualification for AG Use status has its guidelines, such as beekeeping needing a specific number of hives.
County Appraisal Districts (CADs) assess AG Use land through "Animal Units" (AU), where 1 AU typically equals 1,000 pounds of livestock. This can get complex if various types of livestock are involved.
When buying land, consider if it has homestead status or not. A scenario might involve purchasing 15 acres with AG Use status and building a house, potentially resulting in lower property taxes compared to all-homestead property.
Key Points to Consider:
1. Seek lenders experienced in agricultural land purchases.
2. Consult with county CAD for specific AG Use requirements.
3. Work with knowledgeable real estate agents about AG properties.
4. Visit local AG Extension offices for guidance on agricultural practices.
There's much to consider with AG Use land, so continue researching, and consult local experts and CADs to explore all your options and requirements fully.
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