What Are Rollback Taxes?

Northern Texas Real Estate Podcast with Anastasia Riley

Today I’m discussing what you need to know about rollback taxes.

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Today’s topic is what you should know about rollback taxes when purchasing an Ag exempt (agricultural exempt) property. Recently I’ve had an uncommonly high number of calls from buyers wanting to purchase land. I myself live on an acreage and absolutely love the lifestyle and highly recommend the experience. Having an Ag exempt status allows you substantial tax savings. The agricultural exemption is actually not an exemption per se; it is property eligibility for a special appraisal method where you are being taxed not on the market value of the land but instead on this land’s agricultural productivity. Generally, a productivity value is much less than the fair market value, which significantly lowers your property taxes. However, what many buyers and real estate agents know is that if you change what you use your land for, you could be subject to rollback taxes. You could be accountable for three years of rollback taxes plus 5% interest. It used to be five years of rollback taxes and 7% interest up until September 1 of this year, so we got a small break. Rollback taxes are essentially the difference between the property being taxed and the normal market value rate. As you can imagine, it can add up to a massive amount of money. You’ll also have to pay rollback taxes if you subdivide your land.

Having an Ag exempt status allows you substantial tax savings.

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Please make sure you work with a competent real estate agent to guide you through your land purchasing process. As always, if you or someone you know are looking to buy a piece of real estate in the Dallas-Fort Worth area, please allow me the opportunity to represent you. I promise I will take excellent care of you. Call or email me with any questions or for more information.

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