What is AG Exemption really mean?

People purchase rural land for a variety of reasons. Many want the serenity of living on a few acres in a rural area. Others like the idea of purchasing and holding on to the land for two reasons. Hold on until they are ready to build or potentially sell it and cash in. Either way having an agricultural exemption on your land will give you tax benefits while promoting agricultural use of the land and green living.

In Texas, one of the most sought-after property tax benefits is the agriculture use valuation, commonly referred
to as an “ag exemption.” This option represents a tremendous cost/tax savings for land owners. However, it’s not an exemption, but rather a special method of valuing your real estate.

Property tax valuation is usually based on the best use of the land, but agriculture landowners are entitled to have their property taxes computed based on the productive agriculture value, or wild life management value.  Obtaining the agriculture exemption can yield significant tax savings, so anyone acquiring rural land should pay attention to the requirements for this exemption. For federal tax purposes, IRS has very specific guidelines to indicate what type of farming could be included. There are 5 specific categories you have to choose from in order to be eligible for an AG Exemption, specific minimum acreage  along with specific length of time before the landowner can apply for the special agriculture valuation with the local appraisal district. Lots of specificity, don’t go it alone.
If you would like to know the requirements for your local area, please email me:

Marta.Hutchinson@C21TheHillsRealty.com

Land.Life.Love