{"id":4049,"date":"2016-11-07T01:06:42","date_gmt":"2016-11-07T07:06:42","guid":{"rendered":"http:\/\/agrilife.org\/texasaglaw\/?p=4049"},"modified":"2026-04-17T15:26:46","modified_gmt":"2026-04-17T20:26:46","slug":"special-use-valuation-texas-part-basics","status":"publish","type":"post","link":"https:\/\/agrilife.org\/texasaglaw\/2016\/11\/07\/special-use-valuation-texas-part-basics\/","title":{"rendered":"Special Use Valuation in Texas (Part I): The Basics"},"content":{"rendered":"

Most Texas landowners are aware of the special use valuation methods available to agricultural landowners that allow property taxes to be calculated based on productive agricultural value, as opposed to market value of the land. \u00a0Importantly, this is not a “tax exemption,” for agricultural landowners, but instead is an alternative way to calculate property taxes owed.<\/p>\n

This blog series will address the basic concept of special use valuation, and will then walk through the three valuation methods available to agricultural landowners: agricultural use valuation; open space valuation; and wildlife valuation.<\/p>\n

\"Texas<\/a>

Texas A&M Agrilife Extension photo by Blair Fannin<\/p><\/div>\n

Purpose<\/strong><\/p>\n

In the 1960\u2019s, urban sprawl began to threaten agricultural land across the United States.\u00a0 This created a problem for agricultural landowners.\u00a0 Not only were developers offering attractive prices to purchase their farmland in order to build homes and businesses, but their property tax rates were skyrocketing.\u00a0 Generally, property taxes are based upon the market value of the property.\u00a0 Thus, where developers drove up the market value for land near agricultural areas, property taxes for farms and ranches rose to amounts higher than their annual agricultural incomes.\u00a0 Recognizing this issue threatened agriculture, state governments got involved.\u00a0 Specifically, legislation was drafted in order to allow agricultural land (meeting certain specific requirements) to be taxed not at the market value for the highest market value of the property, but instead based upon lands actual capacity for producing agricultural products.\u00a0 The first agricultural tax assessment statute was passed in Maryland in 1960.\u00a0 Since then numerous states, including Texas, have passed similar laws.<\/p>\n

The purpose of the Texas open space and agricultural appraisal scheme is to protect the family farm.\u00a0 See McCormick v. Attorney General of Texas<\/em>, 822 S.W.2d 814 (Tex. App. Ft. Worth 1992).\u00a0 Rooted in the State Constitution, Texas recognizes two distinct types of agricultural-related property use valuation. \u00a0\u00a0The original method is known as \u201cagricultural use valuation\u201d or \u201c1-D appraisal\u201d after the Constitutional section from which it originates.\u00a0 The second, intended to promote the preservation of open spaces, is known as the \u201copen space valuation\u201d or \u201c1-D-1 appraisal.\u201d \u00a0A sub-part of the open space valuation is the wildlife management use category. \u00a0Although each valuation method serves a similar purpose, distinct rules exist. \u00a0Even further complicating the matter, there are numerous rules that vary by County Appraisal District.<\/p>\n

Agricultural use valuation is critically important to Texas agricultural producers. \u00a0Without being able to avail themselves of these special valuation methods, many times farmers would owe more in taxes than they can generate by agricultural production. \u00a0For example,\u00a0let’s consider an actual 1,200 acre family ranch\u00a0in Jack County. \u00a0This ranch, whose income consists of raising cattle and selling hunting leases,\u00a0has been in the same family for over 135 years. \u00a0In 2015, the gross ranch revenue was $30,000. \u00a0If the ranch’s taxes were based upon fair market value, their tax bill would have been $45,880. \u00a0But thanks to the alternative valuation method afforded by the Open Space Valuation law, their actual tax bill received was $1,687. \u00a0This is a classic situation where the rancher would be driven out of business without the special use valuation.<\/p>\n

Rollback Penalty<\/strong><\/p>\n

It is important to note, however, that once a landowner obtains a special use valuation, there are serious penalties for ceasing to comply with the requirements. \u00a0In that instance, the landowner is required to pay back the difference between the taxes that would have been owed using traditional market value tax valuation and those taxes that were paid using the special use valuation. \u00a0For land in Agricultural Use valuation, the rollback period where repayment is owed is 3 years with a 1%\/month interest rate. \u00a0For Open Space Valuation, it is a 5 year rollback period with a 7%\/year interest rate.<\/p>\n

This blog series will continue with a look at each of the agricultural special use valuation methods available under Texas law.<\/p>\n","protected":false},"excerpt":{"rendered":"

Most Texas landowners are aware of the special use valuation methods available to agricultural landowners that allow property taxes to be calculated based on productive agricultural value, as opposed to market value of the land. \u00a0Importantly, this is not a “tax exemption,” for agricultural landowners, but instead is an alternative way to calculate property taxes owed. This blog series will address the basic concept of special use valuation, and will then walk through the three valuation methods available to agricultural landowners: agricultural use valuation; open space valuation; and… Read More →<\/a><\/span><\/p>\n","protected":false},"author":2444,"featured_media":4050,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[56],"tags":[],"class_list":["post-4049","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-special-use-valuation"],"acf":[],"yoast_head":"\nSpecial Use Valuation in Texas (Part I): The Basics - Texas Agriculture Law<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/agrilife.org\/texasaglaw\/2016\/11\/07\/special-use-valuation-texas-part-basics\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Special Use Valuation in Texas (Part I): The Basics - Texas Agriculture Law\" \/>\n<meta property=\"og:description\" content=\"Most Texas landowners are aware of the special use valuation methods available to agricultural landowners that allow property taxes to be calculated based on productive agricultural value, as opposed to market value of the land. \u00a0Importantly, this is not a “tax exemption,” for agricultural landowners, but instead is an alternative way to calculate property taxes owed. 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