By Troy Corman, www.t2ranches.com
Effective September 1, 2019, the rollback tax bite has been reduced for those who own land in Texas designated with an agricultural use. If you sell land in Texas designated as agriculture, and the buyer uses the land for a different use, then, a Rollback tax plus interest would need to be paid by either the seller or buyer of the land.
Historically, the rollback tax in Texas added up the taxes that would have been due, had the land not been designated as agricultural use, for the five years preceding the property sale. Those tax savings that the land owner enjoyed would be basically clawed back. To boot, an interest rate of 7% was added on to the cumulative five years of tax savings.
The new law, HB 1743 was passed and amends sections 23.55 and 23.76 of the Property Tax Code regarding the appraisal methods and procedures in Texas. The rollback tax now in effect only goes back three years to capture the tax reduction afforded the owner. In addition to the reduction from five years to three years, the interest rate charged to the taxpayer has been reduced from 7% to 5%.
Keep in mind that land in Texas zoned as open-space will still have to abide by the original rollback taxes that go back for five years. Open space land in Texas is usually owned by Texas entities or corporations with principals that don’t actively farm or ranch the land themselves.
Texans pay some of the highest property taxes in the nation, and with the recent price appreciation following The Great Recession, it’s becoming difficult for home owners and landlords to afford the property tax increases. Luckily, the Texas governor and legislators have listened to their constituents and are providing some relief.