General Information on Ag Value

If you are a farmer or rancher, productivity valuation could lower your taxes. Productivity valuation lowers the taxable value of agricultural land used for a qualified agricultural use or wildlife conservation purpose. It values such property on the land’s capacity to produce crops, forage or timber, or other agricultural use, instead of its value on the real estate market.  This lower taxable value reduces property taxes on the land. Productivity valuation is NOT an exemption.

Contents:

What Land Qualifies?

How to File for Agricultural Appraisal?

Degree of Intensity Standards for Ellis County

What Land Qualifies?

The Property Tax Code states, land must be devoted principally to an agricultural use to receive the agricultural appraisal.  The land must qualify on January 1 or the owner should provide evidence that they intend he intends to put the land into agricultural use for the bulk of the year.

The Property Tax code defines the term “Agricultural Use” as including, but not limited to the following activities:

·   Cultivation of the soil

·   Producing crops for human food, animal feed, or planting seed or for the production of fibers

·   Participation in a government program and normal rotation

·   Raising or keeping of livestock

·   Raising exotic game or livestock for commercial use

·   Beekeeping

·   Floriculture

·   Viticulture

Land that is currently receiving agricultural productivity valuation may qualify as wildlife management land provided it is used in at least three of seven specific ways to propagate or maintain a population of indigenous wild animals for human use. Rules related to wildlife use may be obtained from the appraisal district by calling (972) 937-3552.

Degree of Intensity

Agricultural land must be devoted to production at a level of intensity that is typical in the local area. The chief appraiser, with input from an agricultural appraisal advisory board composed of local agricultural producers, determines the level or degree of intensity  applicable to each type of agricultural use.

·     Are there physical improvements on the land such as fences and barns to accommodate livestock?

·     Do stocking levels justify the investment and match the lands carrying capacity?

·     Does the owner have the necessary equipment for the operation?

·     Are records and receipts maintained?

·     Is income generated by the operation?

·     The operator should be able to demonstrate what is being put into his agricultural enterprise – in time, labor, equipment, management and capital.

The degree of intensity test measures what the owner is putting into his agricultural enterprise in time, labor, equipment, management and capital then compares it with typical levels of “inputs” for the same enterprise generally found in the area. This test is intended to exclude land on which token agricultural use occurs in an effort to obtain tax relief.

The law does not state what degree of intensity qualifies a particular type of land.  It is the responsibility of each Appraisal District to establish standards according to the local agricultural practices. The Appraisal District will use the following guidelines to determine if an operation meets the degree of intensity. This list of guides is not exhaustive and each operator will be considered on an individual basis.

Cropland

Farming dryland crops requires:

·     Tilling the soil

·     Planting the crop

·     Applying herbicide

·     Applying insecticide

·     Applying fertilizer

·     Harvesting the crop

The Texas Agricultural Extension Service has developed operator budgets that identify the necessary practices associated with different crops. Each of these steps requires capital, time, labor and management. If typical farming practices are not followed it is likely the crop will not produce a yield necessary to sustain the operation.

Native Pasture

Native pastures are uncultivated lands occupied wholly or mainly by native or naturally introduced plants useful for grazing.

The carrying capacity of native pasture is measured in animal units (AU) per acre. In this area it is estimated that the typical carrying capacity of native pasture is 1 AU per 10-12 acres (with no supplemental feeding). An animal unit (AU) is defined as approximately 1,000 pounds of hooved animal (ie. 1 cow, 7 goats, or 5 sheep). It should be noted that this figure will vary due to soil type, rainfall, and temperature.

It is common practice in this area for a livestock producer to graze the pasture during the warm months then supplement the grazing with hay in the winter. Normally supplemental feeding will be required for several months. Therefore it is believed the producer will increase his carrying capacity by approximately thirty five percent when supplementing the grazing during the winter. Since this is a normal practice in this area then it must be assumed a stocking rate of 6-8 acres per AU is the minimum.

The stocking rate should not exceed the carrying capacity of the land. Other items that are common to livestock industry are fence repairs, veterinarian costs, salt, minerals, equipment, labor and marketing the animals.

Improved Pasture

Coastal Bermuda is used for both livestock grazing and hay production. It requires heavy fertilization to reach its maximum production. Coastal is the most widely adapted high potential pasture grass in Texas.

Grazing

Coastal Bermuda can carry 1 AU per 3-5 acres. Livestock management and supplemental feeding would be the same as on native pasture.

Hay Production

Coastal Bermuda hay is commonly fertilized with a mixed fertilizer and nitrogen before the first cutting.  After each cutting another application of nitrogen is needed. Coastal will normally yield two or three cuttings each year.

There are many other grasses suitable for use as improved pasture in this area and all would require higher levels of fertilization and management to achieve greater production than native pasture.

History Requirements

The land must have been devoted to agricultural use for at least five of the past seven years.   However, land within the city limits must have been devoted continuously for the preceding five years, unless the land did not receive substantially equal city services as other properties in the city.

Change Of Use (Rollback)

If your land qualified for agricultural appraisal and you change its use to a non-agricultural use, you will owe a rollback tax for each of the previous five years in which your land received the lower appraisal. The rollback tax is the difference between the taxes you paid on your land’s agricultural value and the taxes you would have paid if the land had been taxed on its higher market value.

Additionally, 7-percent interest is charged for each year from the date that the taxes would have been due.

The chief appraiser determines if a change to a non-agricultural use has been made and sends a notice of the change. If you disagree, you may file a protest with the ARB. You must file the protest within 30 days of the date the notice was mailed to you.  The ARB decides your case.  If you don’t protest or if the ARB decides against you, you owe the rollback tax.

How to File for Agricultural Appraisal

  1. Get an application form at the appraisal district office. Or you may use this form:  2017 Ag Application
  2. Fill out the form completely and return it to the appraisal district office no later that April 30th of the year in which you are applying for the agricultural valuation. If your property is valued by more than one appraisal district, you must file an application in each appraisal district office.
  3. If you need more time to complete your application form, submit a written request to the chief appraiser before the April 30 deadline. The chief appraiser can grant up to 60 extra days if you have a good reason for needing extra time.
  4. If you miss the April 30 deadline, you may file an application any time before the appraisal review board approves the appraisal records (usually mid-July).  However, in such a case, you will be charged a penalty for filing late.  The penalty is 10 percent of the tax saving you obtained by getting agricultural appraisal for your land. Once the appraisal review board approves the records, you can’t apply for agricultural appraisal for that year.
  5. If the chief appraiser asks you for more information, you will have at least 30 days to reply.  You may ask for more time but you must have a good reason. If you don’t reply the chief appraiser must deny your application.
  6. If the chief appraiser denies or modifies your agricultural appraisal, he or she must tell you in writing within five days. This notice must explain how you can protest.
  7. Once you receive agricultural appraisal, you don’t have to apply again in the following years unless your qualifications change.  However, the chief appraiser may request a new application to verify that you still meet the
    qualifications. If you get a notice to reapply, be sure to do so. If you don’t, you will lose your eligibility.
  8. If you become the owner of land that is already qualified, you must apply in your own name by April 30th. If you do not apply, your property will be appraised at it’s full market value.  
  9. You must notify the appraisal district in writing by April 30th if your land’s eligibility changes. Failure to do so results in a penalty charge.
  10. The agricultural appraisal is based on an estimate of the typical annual income during the five-year period preceding the year before the appraisal. The agricultural appraisal may change annually based on this income and the capitalization rate.

Degree of Intensity Standards for Ellis County

The chief appraiser is required by law to develop “degree of intensity” standards for each type of agricultural production in a given county.  These standards reflect the practices that are typical for producing various kinds of crops or livestock.

Classification

Specific Crop

Yield Per Acre

Typical

Acreage

Comments

Dry Crops

Corn, Grain
Sorghum, Cotton, Soybean

Varies with crop

10 acs

Minimum yields per acre: Corn 70 bu, Grain Sorghum 70 bu, Soybeans 20 bu, Oats 50 bu,
Wheat 30 bu, cotton 400 pounds

Horticulture

Greenhouses

Varies

Varies

Must be a wholesale operation.

Nursery

Varies

5 acs

Must be a wholesale operation.

Orchard

Varies

5 acs

Fruit and nut orchard. Must be a wholesale operation.

Truck Farm

Varies

5 acs

Must be a wholesale operation.

Tree Nursery

Minimum 200
trees/ac

5 acs

Must be a wholesale operation. State reported average is 300 trees/ac.

Turf Grass

Varies

5 acs

Must be a wholesale operation.

Pasture Land

Hay

Minimum of two
cuttings per year

10 acs

Must control weeds, vines, and brush. Except for native grass pastures or those also used to run cattle, must fertilze at least once each spring and cut and bale at least twice each year. One annual cutting required for native grasses and fields on which cattle are run outside the haying season.

Improved

10 acres

Coastal Bermuda can has a carrying capacity of 3-5 acres per animal unit

Native

10 acres

Typical carrying capacity 10-12 acres per animal unit (with no supplemental feeding).This figure will vary due to soil type, rainfall and temperature.

Other

Exotic Animal

10 acres Species not indigenous to state. Must be in commercial production.

 Beekeeping

5-20
acres
Minimum of 6 hives and registration with the Texas Apiary Registration Service. Must be more than a hobby use.

Wildlife Management

12.5 Acres  Must sustain a breeding, migrating, or wintering population of indigenous wild animals. Must have qualified for open-space AG USE the previous year to qualify land in current year, and meet state guidelines. (Wildlife management plan required.)

For more information, see the Frequently Asked Questions Page