Texas property tax law changes every few years. See the latest posts for the most up-to-date information.
High property taxes aren’t just a problem for hot urban and suburban markets in trendy metroplexes; property owners across the state are feeling the sting of property taxes that have risen more than 20% in the past five years. This season, urban condo owners, suburban single-family house owners, and rural land owners face higher tax bills. Texas property tax law changes every few years. See the latest posts for the most up-to-date information. High property taxes aren’t just a problem for hot urban and suburban markets in trendy metroplexes; property owners across the state are feeling the sting of property taxes that have risen more than 20% in the past five years. This season, urban condo owners, suburban single-family house owners, and rural land owners face higher tax bills.
You can use several strategies to lower your property taxes (or at least ensure you have the lowest possible tax bill), including applying for all the exemptions you’re eligible for and protesting your property taxes with the county. One often overlooked but powerful exemption in Texas is the Texas agricultural property tax exemption. In this guide, we’ll explore:
- How property tax exemptions work
- What the Texas agricultural property tax exemption is, and why it matters
- Other property tax exemptions you may be able to apply for
- The basics of protesting your property tax bill
What Are Property Tax Exemptions?
Texas property taxes are calculated by assessing your property’s value and then multiplying that value by your county (or other tax jurisdiction) tax rate. However, it’s often more complicated than simply multiplying those two values. For example, the county tax rate is composed of many different numbers. Your total county tax rate of 3%, for example, might be composed of a 1.5% school district tax rate, a 0.75% city tax rate, a 0.5% county tax rate, and a 0.25% community college tax rate.
Let’s consider a $300,000 house in this district. The total tax bill is $9,000 (because $300,000 * 0.03 = $9,000), but its breakdown would look like:
- School district tax bill: ($300,000 * 0.015) = $4,500
- City tax bill: ($300,000 * 0.00750) = $2,750
- County tax bill: ($300,000 * 0.0050) = $1,500
- Community college tax bill: ($300,000 * 0.00250) = $750
This breakdown matters because many Texas property tax exemptions are partial exemptions that exempt part of your property from one or all of these levies. For example, a general residence homestead exemption exempts part of your property’s value from the school district tax bill only. Other exemptions may remove or cap other tax levies. Some exemptions even allow homeowners to defer property tax payments (with an over-65 property tax exemption) or eliminate property taxes entirely (with a 100 percent disabled veteran exemption).
Some tax ‘exemptions’ don’t partially or fully exempt your property from an individual or all tax levies. Instead, they deal with the second half of the general property tax equation: the property’s assessed value. The Texas agricultural property tax exemption is one of those exemptions.
Related: What is a Homestead Exemption in Texas?
What Is the Texas Agricultural Property Tax Exemption?
Unlike other exemptions, the Texas agricultural property tax exemption doesn’t exempt part of the eligible property’s value from tax bill calculations. Instead, suitable properties are assessed according to specific metrics. Because farm and ranch land serves a different purpose than traditional land, the Texas Tax Code set up a different process for measuring its value. Rather than be assessed based on market value (which can vary wildly based on demand for the development and the flexibility of the zoning), some farm and ranch land is assessed by its productivity value. The productivity value measures how much agricultural production, such as crops or timber, the land generates.
What Does the Texas Agricultural Property Tax Exemption Do?
If you have land primarily used for agricultural purposes (or, in some cases, if you have wildland), you may be eligible for an ag exemption. This changes how your county or other tax jurisdiction evaluates your property. Instead of measuring its market value, the assessor determines its productivity value. This amount tends to be much lower, resulting in significant savings for the property owner.
The amount of money you can save by successfully applying for a Texas agricultural property tax exemption depends on your unique property. Some of the variables that affect your potential tax savings include:
- Your county’s tax rate: Every county establishes an independent tax rate that isn’t mandated by the state, so two parcels of land, even if they were the same type of land with an identical valuation, would still have different property tax bills.
- The property’s market value: While this amount won’t necessarily affect your tax bill with the ag exemption in place, this starting point will determine how much money you save by qualifying for the exemption.
- The type of ag valuation your land qualifies for: Under the broad umbrella of ‘agricultural,’ Texas establishes different valuation types based on the land, the agricultural purpose, and other factors.
Who Is Eligible for the Texas Agricultural Property Tax Exemption?
However, it’s not as simple as having a garden or a couple of chickens around your primary residence. The exemption requirements can be complex, and they vary across different counties. Some of the general conditions you can expect include:
- Having at least ten acres of qualified agricultural land
- Proof that the land has been primarily used for agricultural purposes in at least five of the last seven years
- ‘Agricultural purposes’ can be defined broadly or narrowly depending on the county, but some of the most common agricultural purposes include beekeeping, crop production, and keeping livestock. Qualifying livestock types include bees, cattle, goats, and sheep. Chickens or fish may also be a qualifying type of livestock, but special requirements apply. Cutting timber, raising exotic animals, and participating in qualifying crop rotation programs can make your land eligible for the exemption.
How Do You Apply for the Texas Agricultural Property Tax Exemption?
If you want your land to have a Texas agricultural property tax exemption and you believe your land fits the requirements, you can apply for the exemption with your county appraisal district. This process must be completed yearly, unlike general homestead and other standard exemptions. There are three different applications you can use during the process, depending on the unique needs and purpose of your property:
- Form 50-129, Application for 1-d-1 (Open-Space) Agricultural Use
- Form 50-165, Application for 1-d Agricultural Appraisal, which is for property owners who want to have their property assessed based on productive agricultural value
- Form 50-166, Application for Open Space Land Appraisal for Ecological Laboratories, which is less common for most individual agricultural landowners.
Because of the complexity of adequately applying for and assessing agricultural land, the Texas Comptroller created a Manual for the Appraisal of Agricultural Land with more details and specific rules under the Texas Tax Code.
Related: Should You Protest Your Property Taxes Yourself? Or Hire a Pro?
Why You Should Prioritize Property Tax Exemptions to Lower Your Property Taxes
Property tax exemptions are helpful tools for ensuring you’re only paying your fair share of property taxes rather than overpaying. Applying for any exemptions your property may be eligible for keeps your property correctly categorized by the county and ensures that even steep rises in your county’s tax rate are tempered.
Some other property tax exemptions you and your property may be eligible for include:
- General homestead exemption: If your land is your primary residence and you have 100% ownership, you can apply for this exemption. You automatically maintain this exemption, so you don’t have to reapply year after year. This exempts $40,000 of your property’s value from your local school district tax and caps potential increases in your property’s assessed value at 10% per year.
- Over-65 exemptions: If you or your spouse are 65 years old or older, you can apply for an additional $10,000 school district tax exemption. This exemption also caps certain levy payments and allows you to start deferring your property taxes.
- Disability exemptions: Homeowners with qualifying disabilities can also exempt a further $10,000 from their school district taxes (but cannot apply both an over-65 exemption and disability exemption in the same tax year).
- Disabled veterans exemptions: Veterans, depending on their disability rating from the VA, receive an exemption amount on one property in Texas (though this does not have to be their primary residence).
These exemptions quickly add up to significant savings for property owners.
Want to Lower Your Property Taxes Even Further? Protesting Your Property Taxes Can Help
There is another avenue for lowering your total property tax bill. Just like the Taxes agricultural property tax exemption changes the valuation of your property rather than operating as a valid exemption, property owners can protest the total assessed value of their property.
If you think the county assessor’s value is incorrect — for example, if they valued your property at $350,000 when you believe it should be $275,000 — you can file a Formal Protest Form with the county. In this process, you’ll submit your counter-valuation and any supporting documentation you have. This can include the property values of comparable homes in your neighborhood, estimates from contractors regarding upgrades or repairs your home needs, and more.
The county will then respond to your protest with an adjusted property value (which you can continue to reject) or schedule a series of informal and formal hearings where you can present your case in more depth.
Fight to Lower Your Property Taxes With Help From Home Tax Shield
Applying for property tax exemptions and protesting your property taxes takes time. If you’re too busy to manage the process or you’re worried about missing a savings opportunity, Home Tax Shield is here to help. We work with property owners across the state to help them get a fair property assessment and property tax bill. Sign up today to get started and see if you can lower your property taxes for 2022.