Landowners in Texas may be eligible for either an agricultural and timber exemption or a wildlife exemption, saving them thousands of dollars in property taxes each year. (Note: Though these savings are frequently referred to as exemptions, they are extraordinary to use valuations that result in discounts rather than full exemptions. You can look for general suggestions, but the most excellent resource is the county appraisal district in which the property is located once you have decided on which Texas land for sale you want to buy. You can look for the best land in east Texas for sale.
To be eligible for a property tax exemption, you must meet the following criteria:
Land used for agricultural purposes, such as pasture or grazing land, timberland, and the area used to protect and preserve wildlife may qualify. However, each exemption has specific requirements for using the land. Sections 23:51 through 23:59 of the Texas Property Tax Code clarify which properties are qualified for the assessment procedure that leads to the exemption.
- The Texas Comptroller of Public Accounts has a useful webpage where you may get PDFs of important legislation and forms.
- If reading law is too much for you, consider the Caldwell County Appraisal District’s more reader-friendly explanation of required criteria.
- The Texas Parks and Wildlife Department has granted a wildlife exception.
A rural land use exception can save Texans a lot of money.
According to Stout, with an agricultural exemption, property taxes are cut to just $3 to $5 per acre per year. With a wood exemption, property taxes are reduced to $5 to $6 per acre each year. In a state with one of the country’s highest average property tax rates, that’s a huge thing. The average Texan spent $3,327 in property taxes, according to this Houston Chronicle report. Using these figures, a 20-acre property owner would pay $100 instead of $16,635.
Unlike many home mortgage loans, property taxes are not generally escrowed into the loan regardless of the cost. Stout claims that property taxes are reduced to just $3 to $5 per acre each year with an agricultural exemption. Property taxes are reduced by $5 to $6 per acre when a timber exemption is applied. In a state where the average property tax rate is among the highest in the country, that’s huge.
Final thoughts
The average Texan spent $3,327 in property taxes in 2015, according to this Houston Chronicle report. A 20-acre property owner would pay $100 instead of $16,635 if these figures were used. Property taxes are not often escrowed into the loan like in many home mortgage loans, regardless of the cost. That means the land buyer must be willing to pay a flat sum at the end of the year.
You will be entitled to file a Schedule F in your federal income taxes if you use the property for farming purposes, including holding timberland and intending to sell the timber. Schedule F, Profit or Loss from Farming, allows you to deduct expenses connected to farming activities, such as the interest on your property purchase loan.
