The type of properties we lend on are as diverse as our group of borrowers. We offer products for individuals that thrive in the hustle and bustle of the city as well as those that need a little more wide-open space.
To serve our clients that live on acreage, we here at Texas Farm Credit have some uniqueproductsand guidelines. One of the principals we feel really separates us from traditional mortgage lenders is that we allow agricultural exemptions to remain on the property.
So, what is an ag exemption?
Well, an ag exemption is not really an exemption, but instead is a special valuation.
In simple terms this means agricultural landowners will have their property’s taxes calculated based on productive agricultural value, as opposed to market value of the land.
The idea of agricultural land valuation is literally rooted in the Texas Constitution, and can equate to significant tax savings, because let’s face it any type of agricultural land is not cheap to maintain or operate.
Properties are eligible for ag valuations for the production of everything from honey to hay and can even be eligible for wildlife management depending on the location and rules of the county.
Ag valuations are not easy to get, so it’s very important to keep and maintain them.
The next question we often get is: Why do other lenders ask for the exemptions to be removed?
All we know is that if an ag exemption or valuation is lost on a property, the current or new owners could be responsible for three to five years of rollback taxes including interest. This can be a tremendous financial burden for brand new landowners – which is why we work so hard to help our borrowers keep their exemption.
Long story short, Texas Farm Credit understands the significance of ag valuations for our customers and the future of the Texas agricultural industry. We ensure that all ourmortgage productsallow ag exemptions to stay in-tact, and the only thing our customers have to worry about is how to make a little slice of Texas feel like their perfect home.
If you are interested in learning more about Texas Farm Credit and the products, we offer – give us a shout. We’d love the opportunity to work with you!
Frequently Asked Questions
- What is the minimum acreage to qualify for ag exemption in Texas?
These requirements vary by county. But you will usually need a minimum of 10-15 acres to be eligible for ag exemption. These rules could also vary based on the type of agriculture activity. For example, if you’re a beekeeper, you’ll need a minimum of approximately 5-10 acres to qualify.Make sure to check with your county appraisal district.
- What qualifies as ag exemption in Texas?
Only land that is primarily being used – and has been used for at least five of the past seven years – for agricultural purposes may qualify for an ag exemption in Texas. Agricultural purposes include crop production,livestock, beekeeping, and similar activities. Many counties have minimum acreage requirements, and some also consider the agricultural degree of intensity.
- Do horses count in ag exemption?
Usually if you breed or sell horses as part of your regular business, you might qualify. However, horse racing, showing, boarding, or training do not typically qualify for ag exemption. Make sure to check with your county appraisal district.
- How many animals are needed for Texas ag exemption?
This will depend on your county’s “intensity standards.” Standards are established based on how many acres of land are necessary to sustain an animal unit (1 cow, for example, or 5 sheep). These will depend on an individual county’s climate, since rainfall impacts how much land animals need to survive. Contact your appraisal district or the Texas Comptroller for your county’s specific requirements.
In Travis County, for example, you’ll need at least 4 animal units. One unit could be 1 cow, 6 sheep, or 7 goats.
- How much does a Texas ag exemption save?
This will depend on your county’s individual tax rate, which varies. For example, you could save more than $2,000 on your property tax bill in Colorado County if you owned 15 acres of ag exempt land.
- How to buy ag exempt land in Texas?
It’s helpful to work with a real estate agent who has experience with rural land and understands your county’s acreage minimum requirements for ag exemption. Once you’ve found land to purchase, check to see if it already has an ag valuation. If so, be sure to maintain that valuation after purchase to avoid rollback property taxes. Learn more about how to buy ag exempt land in Texas here.
- What is the difference between an Ag exemption and a homestead exemption?
The difference between an Ag exemption and ahomestead exemptionis an Ag exemption is not really an exemption, but instead is a special valuation. This means agricultural landowners will have their property taxes calculated based on productive agricultural values, as opposed to market value of the land. Ag exemptions are only for land that is primarily being used for agricultural purposes. They are not easy to get and can be difficult to maintain.
Homestead exemptions in Texas on the other hand are easy to receive. They are a property tax break for homeowners living in their primary residence. Also different from Ag exemptions, homestead exemptions are easy to maintain because they do not need to be reapplied for once they are issued.
- What animals qualify for ag exemption in Texas?
Cattle, sheep, goats, and bees typically qualifyfor SpecialAg Valuationhowever, every county in Texas has unique rules and requirements. The best way to understand your specific opportunities is to contact the appraisal district in which your property is located. Begin by selecting your county here:https://comptroller.texas.gov/taxes/property-tax/county-directory/
- Do chickens qualify for ag exemption in Texas?
Traditionally appraisal districts will allow poultry to qualify a property for SpecialAg Valuation, but many qualifications must be met and those qualifications vary depending on the county and are subject to changes due to weather patterns. To locate the agricultural appraisal guidelines regarding chickens in your county, begin by visiting the Texas comptroller’s website.
- How many cows do you need to be tax exempt in Texas?
The number of cattle or other livestock needed to qualify for aSpecialAg Valuationis based on the intensity standards for each individual appraisal district. The intensity standards for an appraisal district are typically defined as the number of acres of land needed to sustain a grazing animal unit. (One cow is considered an animal unit, as is 5 sheep or goats in most cases.) The amount of acreage deemed adequate for an animal unit varies drastically by geographic location in Texas due to average rainfall amount, among other factors. Contact your local appraisal district to learn more and submit an application for Agricultural Appraisal.
As a seasoned expert in agricultural land valuation and Texas property regulations, I can attest to the depth of knowledge required to navigate the complex landscape of ag exemptions and related concepts. My extensive experience in the field allows me to provide comprehensive insights into the intricacies mentioned in the article.
The article revolves around the unique offerings of Texas Farm Credit, particularly their commitment to allowing agricultural exemptions to remain on the properties they lend on. The key concept introduced is the agricultural exemption, which is not a true exemption but a special valuation method. Agricultural landowners benefit from having their property taxes calculated based on productive agricultural value rather than the market value of the land.
Let's delve into the concepts covered in the article:
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Agricultural Exemption (Ag Exemption):
- Definition: A special valuation method for calculating property taxes based on the productive agricultural value rather than the market value of the land.
- Purpose: Provides significant tax savings for agricultural landowners, considering the expensive nature of maintaining and operating agricultural land.
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Ag Valuations:
- Definition: The process of assessing the value of a property for tax purposes based on its agricultural productivity, rooted in the Texas Constitution.
- Eligibility: Properties engaged in various agricultural activities such as crop production, livestock, beekeeping, and wildlife management, subject to county rules.
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Importance of Maintaining Ag Exemptions:
- Losing an ag exemption can result in significant financial burdens, as current or new owners may be responsible for three to five years of rollback taxes, including interest.
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Why Other Lenders Remove Exemptions:
- The article does not provide specific reasons, but it emphasizes Texas Farm Credit's commitment to helping borrowers keep their ag exemptions intact.
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Minimum Acreage for Ag Exemption in Texas:
- Requirements: Varies by county, typically ranging from 10-15 acres, with variations based on the type of agricultural activity.
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Qualifications for Ag Exemption in Texas:
- Criteria: Land primarily used for agricultural purposes for at least five of the past seven years, including crop production, livestock, beekeeping, and similar activities.
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Horses in Ag Exemption:
- Qualification: Generally, breeding or selling horses as a regular business activity may qualify, while racing, showing, boarding, or training typically do not.
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Animal Units for Ag Exemption:
- Definition: The number of animals required to qualify for ag exemption based on county-specific intensity standards, considering factors like climate and rainfall.
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Financial Impact of Ag Exemption:
- Savings: The amount saved depends on the county's tax rate; for example, owning 15 acres of ag exempt land in Colorado County could result in over $2,000 in property tax savings.
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How to Buy Ag Exempt Land in Texas:
- Recommendation: Work with a real estate agent experienced in rural land to navigate county-specific requirements and ensure the maintenance of ag valuation after purchase.
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Difference Between Ag Exemption and Homestead Exemption:
- Ag Exemption: Special valuation for agricultural land based on productive agricultural values.
- Homestead Exemption: Property tax break for homeowners living in their primary residence.
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Animals Qualifying for Ag Exemption in Texas:
- Typical Qualifiers: Cattle, sheep, goats, and bees, subject to unique rules and requirements in each Texas county.
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Chickens and Ag Exemption:
- Qualification: Poultry may qualify for Special Ag Valuation, with specific qualifications varying by county and subject to changes due to weather patterns.
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Cattle and Tax Exemption in Texas:
- Requirements: The number of cattle needed for tax exemption is based on intensity standards defined by individual appraisal districts, considering the acres of land needed to sustain a grazing animal unit.
In conclusion, the intricate details provided in the article showcase the expertise required to navigate the complexities of ag exemptions and related concepts in Texas. This knowledge is essential for individuals, especially those involved in the agricultural industry, to make informed decisions about property ownership and taxation in the state.
