Texas ag exemption rollback tax, explained

What the rollback tax is

When qualifying open-space land changes to a non-agricultural use, Texas Tax Code section 23.55 generally lets the appraisal district assess the tax difference for the three tax years before the change. That difference is the tax on full market value minus the tax you actually paid on the lower agricultural (productivity) value. The base additional tax generally does not include interest. Chapter 33 penalties and interest generally arise only if the later-issued bill becomes delinquent.

What triggers a rollback

A rollback is generally tied to an actual change in how the land is used, not to a sale or a paperwork slip. The following generally trigger a rollback:

• Change from agricultural to non-agricultural use
• Development, subdivision work, or another project when it actually changes the land to non-agricultural use
• A deed restriction or other owner action when it actually ends the qualifying agricultural use

What does not trigger a rollback

These situations generally do not trigger a rollback on their own, though you may still lose the special valuation going forward. Check your appraisal district for your specific facts:

• Lowering intensity below the qualified level while continuing ag use (you may lose the valuation going forward, but no rollback)
• Missing an application or re-application deadline while the agricultural use continues (the special valuation may be lost for that year)
• Sale of the property as right-of-way or to an exempt organization
• Filing a homestead on part of the property because you built a house
• Filing a 23.20 waiver of 1-d-1 special valuation

How the amount is figured

A reliable dollar figure needs the actual market-value tax and productivity-value tax for each of the three preceding years, which depend on your county's certified values and tax rates. Because those inputs vary by parcel and year, treat any quick estimate as a rough range and confirm the real numbers with your appraisal district.