Tax Advantages of Agricultural Exemption in Texas

by Malinda Winkle

Image by Ken Lund via FlickrJohn Benda owns and operates Fuel City No. 2, a truck stop at the intersection of Interstate 30 and Interstate 35E in Dallas, Texas. Due to the longhorn cattle grazing on the acreage  behind the truck stop, Benda estimates that he saves about $30,000 a year. The presence of the cattle gives the property an agricultural exemption, providing a hefty savings when figuring its annual property tax bill.

In the 1950s, land values began increasing in response to the post-war boom. As residents began buying and building in what was previously agricultural areas, the increased property values hurt the remaining farm and ranching operations. Agricultural use exemptions were born. Having an agricultural exemption in Texas lowered ad valorem taxes and shielded farmers and ranchers from the threat of rising property taxes. But, farmers and ranchers are not the only beneficiaries today.

Whether you are a cattle farmer of a Fortune 500 company, land you own may qualify for the lucrative agricultural exemption as long as you use it for either agricultural purposes or wildlife management.
In Texas, unlike other states, the agricultural exemption transfers from one owner to the next. No reference is made to a minimum amount of acreage. Instead, qualification is based on the use of the land.


References:

The Land Report; Cut Your Taxes With An Agricultural Exemption; Trey Garrison; April 2007