Today let’s briefly touch on the topic of rollback taxes concerning agricultural property. So, in a previous blog we touched on what an agricultural exemption is. In case you haven’t read that blog yet, the short version of what that exemption is this; it is an exemption that is for land that is designated for agricultural use and is appraised at its value based on the land’s capacity to produce agricultural products.
An agricultural (ag for short) exemption is an additional tax that occurs when a property owner changes the use of the property from ag to any other use, such as subdividing it into a subdivision or selling off a part of the land and that part will now be a used as commercial property with a commercial building put on it. Now if the current owner builds a house for their personal homestead meaning they are going to live there; the rollback taxes wouldn’t apply.
The purpose of the rollback tax is to recoup the tax the owner would’ve paid if the land had been taxed at market value, which typically is a higher value. Generally, rollback taxes go back five years for most counties in Texas.
Rollback taxes are a tricky thing to understand so if you have any questions please do not hesitate to reach out to us with any questions you may have.