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What Every Broker Should Know About Open Space Valuations.

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Presentation on theme: "What Every Broker Should Know About Open Space Valuations."— Presentation transcript:

1 What Every Broker Should Know About Open Space Valuations

2 Top Tips for Open Space Valuations How to qualify for ag, wildlife, timber and Ecolab No minimum size requirement New owners must re-apply Buyers need to know ag-history Owners should protest market value Developers should use phase in approach Rollback taxes only apply if change in use 2

3 What is 1-d-1 Open- space Valuation? Found in the Texas Constitution Article 8, Section 1-d-1 Four ways to qualify: –Agricultural use –Wildlife Management Use –Ecological Laboratory (Ecolab) –Timber Production “Special Valuation” not an “Exemption” –Property appraised at its “Productive Value” rather than its “Market Value” 3

4 Agricultural Use Property Tax Code Sec 23.51 Land is “devoted principally” to agriculture Agricultural use must be to the “degree of intensity generally accepted in the area” Must be used for agriculture for 5 of 7 previous years Application to Central Appraisal District before May 1. 4

5 Examples of Agricultural Use Producing crops for human food, animal feed, including crop rotation Planting seed for the production of fiber Floriculture, viticulture, horticulture Raising or keeping livestock Raising or keeping exotic animals for food / fiber production Timber production Beekeeping 5

6 What does not qualify? Harvesting native plants Harvesting native animals Processing plants or animals Exotic game hunting Recreational fishing Boarding / training horses Land located within a city 6

7 Ag Categories Irrigated cropland Dry cropland Improved pasture Native pasture Orchard Waste 7

8 The New Landowner’s Concerns Today’s buyer of rural land is a new kind of buyer. –They want recreational land, not Ag land. –They have no experience with Ag operations. –They’d rather not share their land– i.e. they don’t want to deal with lessees. –They are worried about affording large parcels of land without an “Ag exemption. 8

9 Wildlife Management Value as a Solution Wildlife Management Valuation meets these concerns: –Most urbanites would rather own a “wildlife preserve” than a farm or ranch. –Wildlife Management requirements often fit within the goals of the recreational landowner and conservation organizations. –Many of the recommended practices can be done by the landowner, without special equipment or much training and/or with the assistance of a Land Trust. –Landowners can afford larger tracks of land if the tax exposure is maintained at an affordable level. 9

10 Section 23.51(7)(A), Tax Code Wildlife management (WM) is an alternative to a traditional “agriculture” appraisal. Land must be used to propagate a breeding, migrating, wintering population of indigenous wild animals for human use. At least 3 eligible management practices performed to required level of intensity. 10

11 THE BIG SEVEN Habitat control Erosion control Predator control Providing supplemental supplies of water Providing supplemental supplies of food Providing shelters Making census counts to determine population 11

12 Wildlife Management Requirements Existing 1-d-1 open space appraisal Primary use is wildlife management –WM plan being followed –WM takes priority over other uses –Secondary uses do not interfere Degree of intensity Minimum acreage 12

13 Texas Property Tax Code Amendments§23.51(7)(B),(C) and (8) (7)(B) land used to protect endangered species under a federal permit if : –(i) in a habitat preserve and subject to a conservation easement; or –(ii) part of a conservation development under an HCP; or (C) land used for a conservation or restoration project to compensate for natural resource damages. (8) “Endangered species,” “federal permit,” and “habitat preserve” have the meanings assigned by Section 83.011, Parks and Wildlife Code 13

14 What exactly is an EcoLab? The Texas Tax Code Section 23.51 Similar to an agricultural or wildlife management valuation Landowners partner with universities to host confidential research Alternative for landowners interested in wildlife management Research must be in furtherance of farming, ranching or wildlife management.. 14

15 15 Saving Money While Supporting Research Perfect for properties that are paying market value taxes Usually takes 6 years of grazing or farming to reduce taxes Reduce property taxes within one year to $2.00/acre Landowner provides grant money to fund research Grants are tax deductible

16 Advantages No requirement to do five years of grazing or farming Move into wildlife management after two years Advances important scientific research Enhances relationships with universities and professors 16

17 Qualifications Properties larger than 50 acres work best Land must be contiguous if more than one owner Property must be principally used for research by a college and/or university Landowner commits to funding and accommodating research projects for 2 year period Property needs at least three researchers 17

18 How is the Land Used? Landowners choose which research to host and fund Researchers will conduct research on property Study of grasses, insects, birds, soil sampling, small mammals, fish Landowners can use property recreationally 18

19 No Size Limit for 1-d-1 Valuations BUT… still have to meet legal tests of principal use and intensity. No minimum size requirement for wildlife UNLESS…. property has been subdivided in previous year, then appraisal district’s minimum acreage applies. Form Wildlife Management Property Association Beekeeping is limited to 5-20 acres 19

20 Tips for Buyers New owners must re-apply by May 1 st. Buyers need to know ag-history of property Owners should protest market value every year Review Notice of Appraised Value 20

21 Tips for Developers Know the minimum acreage requirements Developer should use phase in approach Rollback taxes only apply if change in use The difference between “Market Value” taxes and “productive Value” taxes for the previous 5 years, plus 7% interest accrued. 21

22 22 Stay informed and connected… B&G on Social Media Like us on Facebook Follow us on Twitter Find us on LinkedIn

23 Stay informed and connected… Join the: 23 Stay informed on issues affecting landowners and their land. This free e-mail service comes out once every two weeks and gives subscribers exclusive access to alerts on transmission lines, announcements about important changes in the law, and upcoming educational seminars. Anyone interested in land will benefit from a subscription.

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