Selling Texas land with an ag exemption? We pay cash.

What to know

How it usually works

What most people call an "ag exemption" is really a special agricultural (open-space or 1-d-1) appraisal: the land is taxed on what it produces, not its market value. Under Texas Tax Code 23.55, a rollback tax is due when the land's use changes from agriculture to something else. It equals the difference between the taxes paid and the taxes that would have been paid at market value for the three years before the change. According to the Texas Comptroller, selling the land does not by itself trigger a rollback on 1-d-1 land; changing its use does. Since 2021, no interest is added to the rollback itself unless the bill goes unpaid past its due date.

1. Find out how your land is appraised. Your county appraisal district's website shows whether the land has agricultural appraisal and how much it saves you each year.
2. Tell us how the land is used today. Grazing, hay, crops, timber or wildlife management. The type of use matters for whether a buyer can keep the valuation.
3. Get a written cash offer that covers the rollback. We'll tell you in writing whether we plan to keep the land in ag use and who pays any rollback tax if the use changes.
4. Close at a licensed title company. This year's taxes are normally split at closing based on the date. The contract spells out the rest.

Is the government or a utility taking part of your ag land? Under Texas Tax Code 23.55(f), the rollback tax does not apply when the change of use comes from a condemnation or a sale for right-of-way. Our affiliated company, National ROW, explains rollback taxes in a Texas condemnation.