Reduction in Taxes for Farms and Ranches that Qualify for a Productivity Appraisal
Fort Bend — Texas law allows certain kinds of farm and ranch land to pay property taxes based upon the productivity value rather than on market value. The land’s ability to produce agricultural or timber products determines the productivity value, which is usually lower than market value. Land used to manage wildlife may also qualify for special use appraisal. In most cases, this appraisal technique substantially reduces the tax liability on properties that qualify for agricultural appraisal.
The Texas Constitution authorizes two types of agricultural productivity appraisals, 1-d-1 and 1-d, named after the section in which they were authorized. For 1-d-1 appraisal, property owners must use the land for agriculture or timber and the land’s use must meet the degree of intensity generally accepted in the area. Owners must also show that the land was used for this purpose at least five of the preceding seven years. 1-d-1 appraisal does not restrict ownership to individuals and does not require agriculture to be the owner’s primary business. Most land owners apply for the 1-d-1 appraisal.
Under 1-d appraisal, property owners must designate the land for agricultural use and the land must have been used for this purpose at least three years and the owner must be an individual versus a corporation, partnership, agency or organization. The land must also be the owner’s primary source of income.
Texas law allows farmers and ranchers to use land for wildlife management and still receive the special appraisal, but the land must be qualified for agriculture use in the preceding year. Land under wildlife management must also meet special use qualifications.
If you apply for and receive productivity appraisal, you must continue to use the land
for the qualifying use from year to year. A rollback tax occurs when a land owner switches the land’s use to non-agricultural. These rollback taxes, or the difference between the taxes paid under productivity appraisal and the taxes that would have been paid if the land had been put on the tax roll at market value are based on the three tax years preceding the year of change.
The deadline to apply for productivity appraisal is April 30. If the last day for the performance of an act is a Saturday, Sunday or legal state or national holiday, the act is timely if performed on the next regular business day. For good cause shown the chief appraiser may extend the deadline for filing the application by written order for a single period not to exceed 60 days. If an application for agricultural designation is approved when the application is filed late, the owner is liable for a penalty of 10 percent of the difference between the amount of tax imposed on the property and the amount that would be imposed without the agricultural designation.
Owners of land qualified as 1-d must file a new application every year. Owners of land qualified as 1-d-1 need not file again in later years unless the chief appraiser requests a new application or if the owner changes use or category of use.
For more information about productivity appraisal and application forms, property owners may contact the Fort bend Central Appraisal District at 281.344.8623 or visit the FAQS section on the District’s website at www.fbcad.org.
Information is also available on the Comptroller’s Property Tax Assistance Division’s website at https://comptroller.texas.gov/taxes/property-tax/
The Fort Bend Central Appraisal District is a political subdivision of the State of Texas established in 1982 for the purpose of discovering and appraising property for ad valorem tax purposes for each taxing unit within the boundaries of the district.
The district has approximately 376,000 accounts to appraise each year with a total market value of approximately $107 billion. The Fort Bend Central Appraisal District serves approximately 215 taxing units. For further information, visit www.fbcad.org.