Ag Exemptions and Why They Are Important

The type of properties we lend on are as diverse as our group of borrowers. We offer products for individuals that thrive in the hustle and bustle of the city as well as those that need a little more wide-open space.

To serve our clients that live on acreage, we here at Texas Farm Credit have some unique products and guidelines. One of the principals we feel really separates us from traditional mortgage lenders is that we allow agricultural exemptions to remain on the property.

So, what is an ag exemption?

Well, an ag exemption is not really an exemption, but instead is a special valuation.

In simple terms this means agricultural landowners will have their property's taxes calculated based on productive agricultural value, as opposed to market value of the land.

The idea of agricultural land valuation is literally rooted in the Texas Constitution, and can equate to significant tax savings, because let's face it any type of agricultural land is not cheap to maintain or operate.

Properties are eligible for ag valuations for the production of everything from honey to hay and can even be eligible for wildlife management depending on the location and rules of the county.

Ag valuations are not easy to get, so it's very important to keep and maintain them.

The next question we often get is: Why do other lenders ask for the exemptions to be removed?

All we know is that if an ag exemption or valuation is lost on a property, the current or new owners could be responsible for three to five years of rollback taxes including interest. This can be a tremendous financial burden for brand new landowners - which is why we work so hard to help our borrowers keep their exemption.

Long story short, Texas Farm Credit understands the significance of ag valuations for our customers and the future of the Texas agricultural industry. We ensure that all our mortgage products allow ag exemptions to stay in-tact, and the only thing our customers have to worry about is how to make a little slice of Texas feel like their perfect home.

If you are interested in learning more about Texas Farm Credit and the products, we offer – give us a shout. We'd love the opportunity to work with you!

Frequently Asked Questions

How many acres do you need to be ag exempt in Texas?

Ag exemption requirements vary by county, but generally speaking, you need at least 10 acres of qualified agricultural land to be eligible for the special valuation.

What qualifies as ag exemption in Texas?

Only land that is primarily being used – and has been used for at least five of the past seven years – for agricultural purposes may qualify for an ag exemption in Texas. Agricultural purposes include crop production, livestock, beekeeping, and similar activities. Many counties have minimum acreage requirements, and some also consider the agricultural degree of intensity.

How much does an ag exemption save in Texas?

How much money a Texas landowner could save with An Ag exemption depends on many factors, including the specific type of Ag valuation and the market value of the property. Eligibility requirements and tax rates differ by county, so there is no one-size-fits-all calculation, but in most cases the savings are well worth the effort required to meet those requirements.

What animals qualify for ag exemption in Texas?

Cattle, sheep, goats, and bees typically qualify for Special Ag Valuation however, every county in Texas has unique rules and requirements. The best way to understand your specific opportunities is to contact the appraisal district in which your property is located. Begin by selecting your county here: https://comptroller.texas.gov/taxes/property-tax/county-directory/

How many cows do you need to be tax exempt in Texas?

The number of cattle or other livestock needed to qualify for a Special Ag Valuation is based on the intensity standards for each individual appraisal district. The intensity standards for an appraisal district are typically defined as the number of acres of land needed to sustain a grazing animal unit. (One cow is considered an animal unit, as is 5 sheep or goats in most cases.) The amount of acreage deemed adequate for an animal unit varies drastically by geographic location in Texas due to average rainfall amount, among other factors. Contact your local appraisal district to learn more and submit an application for Agricultural Appraisal.

Do chickens qualify for ag exemption in Texas?

Traditionally appraisal districts will allow poultry to qualify a property for Special Ag Valuation, but many qualifications must be met and those qualifications vary depending on the county and are subject to changes due to weather patterns. To locate the agricultural appraisal guidelines regarding chickens in your county, begin by visiting the Texas comptroller's website.

What is the difference between an Ag exemption and a homestead exemption?

The difference between an Ag exemption and a homestead exemption is an Ag exemption is not really an exemption, but instead is a special valuation. This means agricultural landowners will have their property taxes calculated based on productive agricultural values, as opposed to market value of the land. Ag exemptions are only for land that is primarily being used for agricultural purposes. They are not easy to get and can be difficult to maintain.

Homestead exemptions in Texas on the other hand are easy to receive. They are a property tax break for homeowners living in their primary residence. Also different from Ag exemptions, homestead exemptions are easy to maintain because they do not need to be reapplied for once they are issued.