What you need to know about tax exemption from AG

If you are new (or even experienced) in raising livestock or producing hay, you may want to consider getting an Agricultural Exemption (AG) for your land, if you don’t already have one. This allows your property’s taxes to be calculated based on the value of the productive agriculture rather than the higher market value of the property. And the difference between the two values ​​can result in significant tax cuts worth hundreds or thousands of dollars.

Using the land for hay production, wildlife management, and raising livestock include some of the ways to qualify for an AG rating. But the rules on this differ depending on which province the property is located in. So what exactly does it take to get started?

1. Qualifications for AG Exemption.

Land primarily used for agricultural purposes for at least 5 of the past 7 years may qualify. And those applications include livestock, crop production, beekeeping or similar activities.

Most provinces require a minimum amount of acreage, depending on the type of agricultural use.

2. Minimum number of acres required.

The AG exemption requirements vary by province, but usually you need a minimum of 10 hectares of qualified agricultural land to qualify for this special appraisal.

3. Kind of animals.

In Texas, most people think of livestock when they imagine livestock has an AG exemption. But a wide variety of animals can qualify. Goats, sheep, bees or other species may also qualify.

However, each province has its own unique rules and requirements, so be sure to check with the province where you live. You can do this by contacting the appraisal district where the property is located. Or you can search for your county’s requirements by visiting the Texas Comptroller site here.

4. Factors related to property taxes.

Tax rates vary by county depending on a school tax, a county tax, a hospital tax (if the county has one), a college tax (if the county has one), etc. Then all these rates are summed up as the property tax. The amount is then used at the estimated market value of the property. Often, when people find they owe more than the previous year, it most likely comes from a higher estimated market value — not the actual rate. In other words, their home may have been rated as worth $150,000 for a few years, but then the fourth year, it may be rated as $190,000, even though their tax rate has remained the same. But on the other hand, exemptions from AG are not based on market value but on productive agricultural value. And that can lead to big savings.

5. Difference Between AG & Homestead Exemptions.

An AG exemption is primarily for land (not a house like a Homestead) and specializes in agricultural use only. An AG exemption would also be better labeled as a special valuation. It gives the land a different value based on agricultural production than a market value based on real estate value. And the production value is usually a lower amount (versus the value of real estate) which in turn lowers your taxes. Also, a Homestead exemption gives you a specific dollar amount that is deducted from the appraised value of the property. And anyone can get a Homestead exemption at their primary residence. In contrast to an AG exemption, there is no mandatory waiting period. And it requires no work to ensure it is current or to maintain it by meeting specific requirements such as an AG exemption.

Main takeaway:

In the end, even if it takes extra effort, getting an AG Exemptions is worth it. The difference in taxes can be a large amount. Most people who own land with an AG exemption know the savings and blessings of owning land and how it helps maintain a farm or ranch.

About the Contributor: Tonya Bradford has over 17 years of real estate brokerage experience helping buyers and sellers in the Northeast Texas area. Her tenacious attitude has also served her clients as an insurance agent for Farm Bureau in Cooper, Tx for 9 years. Tonya has lived on a farm for over 40 years and is familiar with all aspects of the beef industry, hay production, dairy industry, poultry production and row farming. Her ongoing dedication to helping her clients find their new home or farm and ranch is what excites her the most. Put her dedication and love of real estate to work for you!

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