Bill,
Thanks for your question, and please be aware of the disclaimer at the
bottom of the page...Google Answers is no substitute for professional
legal or financial advice. However, I'm happy to provide you basic
information on the Texas Tax Code as it applies to property taxes for
farmers.
Farms in Texas are not actually exempt from property taxes. Instead,
they are eligible to be appraised based on the productivity of the
land, rather than on the market-value of the property. This generally
results in a lower appraisal and, hence, lower property taxes (which
means, as well, that one would pay less towards the school district,
since the schools are funded from property taxes).
For the sake of convenience, though, I'll refer to this specialized
treatement simply as an 'exemption'.
Your question asked about the size of the farm needed to be eligible
for such an exemption. In actuality, the law does not specify any
particular limits on how large or small a farm must be in order to be
eligible.
Instead, the law looks to distinguish those who farm as a profession
from others who merely dabble in it.
Specifically, the law says a property may be eligible for the farm
exemption if the following holds:
--the land has been devoted to farming for at least the past three years
--the land is being farmed as a business venture
--farming is the primary occupation and business source of income for
the property-holder (non-business income, such as Social Security,
generally doesn't count).
Bottom line...it's got to be a real, commercial farm. A home garden
type of operation ain't going to cut it.
The Texas Code itself offers a summary of the intent of the law:
"...There are two requirements before a person may have land appraised
as agricultural land: first, the land must be used principally for
agricultural purposes, and second, the property owner's primary
occupation must be agricultural business. It is sufficient if the
property owner shows that he devotes a greater amount of time to his
agricultural business than other business and that he receives more in
gross income from agricultural pursuits..."
You can read the actual law, if you're so inclined (including the
above excerpt), at this link:
http://www.window.state.tx.us/taxinfo/proptax/tc04/ch23c.htm
Title 1. Property Tax Code
..Subtitle D. Appraisal and Assessment
....Chapter 23. Appraisal Methods and Procedures
......Subchapter C. Land Designated for Agricultural Use
This is state law, by the way. There isn't any applicable city law,
as far as I know.
In the past few years, there have been proposals to make farms
ineligible for the farm exemption if they lie inside the limits of
large cities, such as Houston. But as far as I am aware, these
proposals have not been passed into law. A farm in Houston would be
eligible for the farm exemption if it meets the above requirements,
regardless of the size of the farm.
I trust this information fully answers your question.
But I'll be the first to admit that matters of taxes, exemptions,
farms and properties are very complex. If I misunderstood you
question at all, or if you need any additional information on this
topic, just let me know by posting a Request for Clarification. I'll
be more than happy to continue working on this, until you have all the
information you need.
Cheers,
pafalafa-ga
search strategy -- Google searches on:
tx property "tax exemption" farms
houston farm tax exemptions
tx property tax code 23.51
texas farm bureau |
