Texas Timberland Taxed at Deminimus Level – Big Discount
Texas Property Tax Code 2021 Chapter 23 Subchapter E
Texas timberland property is based on its productivity and not on its market value. Timberland is not exempt but it is valued at a tiny fraction of market value.
Texas Property Tax Code
2021 Edition
Texas Comptroller of Public Accounts
The Texas Property Tax Code available on this website are current through the Regular Session of the 87th 2nd Called Legislative Session, 2021. The Texas Constitution is current through the amendments approved by voters in November 2019.
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TITLE 1. PROPERTY TAX CODE
SUBTITLE D. APPRAISAL AND ASSESSMENT
CHAPTER 23. APPRAISAL METHODS AND PROCEDURES
SUBCHAPTER E. APPRAISAL OF TIMBER LAND
Sec. 23.71. DEFINITIONS. In this subchapter:
(1) “Category of the land” means the value classification of land for timber production, based on soil type, soil capability, general topography, weather, location, and other pertinent factors, as determined by competent governmental sources.
(2) “Net to land” means the average net income that would have been earned by a category of land over the preceding five years by a person using ordinary prudence in the management of the land and the timber produced on the land. The net income for each year is determined by multiplying the land’s potential average annual growth, expressed in tons, by the stumpage value, expressed in price per ton, of large pine sawtimber, small pine sawtimber, pine pulpwood, hardwood sawtimber, hardwood pulpwood, and any other significant timber product, taking into consideration the three forest types and the four different soil types, as determined by using information for the East Texas timber-growing region as a whole from the U.S. Forest Service, the Natural Resources Conservation Service of the United States Department of Agriculture, the Texas Forest Service, and colleges and universities within this state, and by subtracting from the product reasonable management costs and other reasonable expenses directly attributable to the production of the timber that a prudent manager of the land and timber, seeking to maximize return, would incur in the management of the land and timber. Stumpage prices shall be determined by using information collected for all types of timber sales, including cutting contract and gatewood sales.
Acts 1979, 66th Leg., p. 2261, ch. 841, Sec. 1, eff. Jan. 1, 1982. Amended by Acts 2003, 78th Leg., ch. 968, Sec. 1, eff. Jan. 1, 2004.
Sec. 23.72. QUALIFICATION FOR PRODUCTIVITY APPRAISAL. (a) Land qualifies for appraisal as provided by this subchapter if it is currently and actively devoted principally to production of timber or forest products to the degree of intensity generally accepted in the area with intent to produce income and has been devoted principally to production of timber or forest products or to agricultural use that would qualify the land for appraisal under Subchapter C or D for five of the preceding seven years.
(b) In determining whether land is currently and actively devoted principally to the production of timber or forest products to the degree of intensity generally accepted in an area, a chief appraiser may not consider the purpose for which a portion of a parcel of land is used if the portion is:
(1) used for the production of timber or forest products, including a road, right-of-way, buffer area, or firebreak; or
(2) subject to a right-of-way that was taken through the exercise of the power of eminent domain.
(c) For the purpose of the appraisal of land under this subchapter, a portion of a parcel of land described by Subsection (b) is considered land that qualifies for appraisal under this subchapter if the remainder of the parcel of land qualifies for appraisal under this subchapter.
Acts 1979, 66th Leg., p. 2261, ch. 841, Sec. 1, eff. Jan. 1, 1982. Amended by Acts 1987, 70th Leg., ch. 780, Sec. 3, eff. Jan. 1, 1988.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 43 (H.B. 1409), Sec. 1, eff. September 1, 2019.
Sec. 23.73. APPRAISAL OF QUALIFIED TIMBER LAND. (a) The appraised value of qualified timber land is determined on the basis of the category of the land, using accepted income capitalization methods applied to average net to land. The appraised value so determined may not exceed the market value of the land as determined by other appraisal methods.
(b) The comptroller by rule shall develop and distribute to each appraisal office appraisal manuals setting forth this method of appraising qualified timber land, and each appraisal office shall use the appraisal manuals in appraising qualified timber land. The comptroller by rule shall develop and the appraisal office shall enforce procedures to verify that land meets the conditions contained in Section 23.72. The rules, before taking effect, must be approved by the comptroller with the review and counsel of the Texas A&M Forest Service.
(c) For the purposes of Section 23.76 of this code, the chief appraiser also shall determine the market value of qualified timber land and shall record both the market value and the appraised value in the appraisal records.
(d) The appraisal of minerals or subsurface rights to minerals is not within the provisions of this subchapter.
Acts 1979, 66th Leg., p. 2261, ch. 841, Sec. 1, eff. Jan. 1, 1982. Amended by Acts 1981, 67th Leg. 1st C.S., p. 145, ch. 13, Sec. 73, eff. Jan. 1, 1982; Acts 1991, 72nd Leg., 2nd C.S., ch. 6, Sec. 26, eff. Sept. 1, 1991.
Amended by:
Acts 2017, 85th Leg., R.S., Ch. 23 (S.B. 594), Sec. 2, eff. January 1, 2018.
Acts 2017, 85th Leg., R.S., Ch. 553 (S.B. 526), Sec. 10(c), eff. September 1, 2017.
Sec. 23.74. CAPITALIZATION RATE. (a) The capitalization rate to be used in determining the appraised value of qualified timber land as provided by this subchapter is the greater of:
(1) the interest rate specified by the Farm Credit Bank of Texas or its successor on December 31 of the preceding year plus 2-1/2 percentage points; or
(2) the capitalization rate used in determining the appraised value of qualified timber land as provided by this subchapter for the preceding tax year.
(b) Notwithstanding Subsection (a):
(1) in the first tax year in which the capitalization rate determined under that subsection equals or exceeds 10 percent, the capitalization rate for that tax year is the rate determined under Subsection (a)(1); and
(2) for each tax year following the tax year described by Subdivision (1), the capitalization rate is the average of the rate determined under Subsection (a)(1) for the current tax year and the capitalization rate used for each of the four tax years preceding the current tax year other than a tax year preceding the tax year described by Subdivision (1).
Acts 1979, 66th Leg., p. 2262, ch. 841, Sec. 1, eff. Jan. 1, 1982. Amended by Acts 1995, 74th Leg., ch. 579, Sec. 5, eff. Jan. 1, 1996; Acts 2003, 78th Leg., ch. 968, Sec. 2, eff. Jan. 1, 2004.
Sec. 23.75. APPLICATION. (a) A person claiming that his land is eligible for appraisal as provided by this subchapter must file a valid application with the chief appraiser.
(b) To be valid, the application must:
(1) be on a form provided by the appraisal office and prescribed by the comptroller; and
(2) contain the information necessary to determine the validity of the claim.
(c) The comptroller shall include on the form a notice of the penalties prescribed by Section 37.10, Penal Code, for making or filing an application containing a false statement. The comptroller, in prescribing the contents of the application form, shall require that the form permit a claimant who has previously been allowed appraisal under this subchapter to indicate that previously reported information has not changed and to supply only the eligibility information not previously reported.
(d) The form must be filed before May 1. However, for good cause the chief appraiser may extend the filing deadline for not more than 60 days.
(e) If a person fails to file a valid application on time, the land is ineligible for appraisal as provided by this subchapter for that year. Once an application is filed and appraisal under this subchapter is allowed, the land is eligible for appraisal under this subchapter in subsequent years without a new application unless the ownership of the land changes or its eligibility under this subchapter ends. However, the chief appraiser if he has good cause to believe the land’s eligibility under this subchapter has ended, may require a person allowed appraisal under this subchapter in a prior year to file a new application to confirm that the land is currently eligible under this subchapter by delivering a written notice that a new application is required, accompanied by the application form, to the person who filed the application that was previously allowed.
(f) The appraisal office shall make a sufficient number of printed application forms readily available at no charge.
(g) Each year the chief appraiser for each appraisal district shall publicize, in a manner reasonably designed to notify all residents of the district, the requirements of this section and the availability of application forms.
(h) A person whose land is allowed appraisal under this subchapter shall notify the appraisal office in writing before May 1 after eligibility of the land under this subchapter ends. If a person fails to notify the appraisal office as required by this subsection a penalty is imposed on the property equal to 10 percent of the difference between the taxes imposed on the property in each year it is erroneously allowed appraisal under this subchapter and the taxes that would otherwise have been imposed.
(i) The chief appraiser shall make an entry in the appraisal records for the property against which the penalty is imposed indicating liability for the penalty and shall deliver a written notice of imposition of the penalty to the person who owns the property. The notice shall include a brief explanation of the procedures for protesting the imposition of the penalty. The assessor for each taxing unit that imposed taxes on the property on the basis of appraisal under this subchapter shall add the amount of the penalty to the unit’s tax bill for taxes on the property against which the penalty is imposed. The penalty shall be collected at the same time and in the same manner as the taxes on the property against which the penalty is imposed. The amount of the penalty constitutes a lien on the property against which the penalty is imposed and accrues penalty and interest in the same manner as a delinquent tax.
(j) If the chief appraiser discovers that appraisal under this subchapter has been erroneously allowed in any one of the five preceding years because of failure of the person whose land was allowed appraisal under this subchapter to give notice that its eligibility had ended, the chief appraiser shall add the difference between the appraised value of the land under this subchapter and the market value of the land to the appraisal roll as provided by Section 25.21 of this code for other property that escapes taxation.
Acts 1979, 66th Leg., p. 2262, ch. 841, Sec. 1, eff. Jan. 1, 1982. Amended by Acts 1981, 67th Leg., 1st C.S., p. 146, ch. 13, Sec. 74, eff. Jan. 1, 1982; Acts 1991, 72nd Leg., 2nd C.S., ch. 6, Sec. 27, eff. Sept. 1, 1991; Acts 1995, 74th Leg., ch. 579, Sec. 6, eff. Jan. 1, 1996.
Sec. 23.751. LATE APPLICATION FOR APPRAISAL AS TIMBER LAND. (a) The chief appraiser shall accept and approve or deny an application for appraisal under this subchapter after the deadline for filing it has passed if it is filed before approval of the appraisal records by the appraisal review board.
(b) If appraisal under this subchapter is approved when the application is filed late, the owner is liable for a penalty of 10 percent of the difference between the amount of tax imposed on the property and the amount that would be imposed if the property were taxed at market value.
(c) The chief appraiser shall make an entry on the appraisal records indicating the person’s liability for the penalty and shall deliver written notice of imposition of the penalty, explaining the reason for its imposition, to the person.
(d) The tax assessor for a taxing unit that taxes land based on an appraisal under this subchapter after a late application shall add the amount of the penalty to the owner’s tax bill, and the tax collector for the unit shall collect the penalty at the time and in the manner he collects the tax. The amount of the penalty constitutes a lien against the property against which the penalty is imposed, as if it were a tax, and accrues penalty and interest in the same manner as a delinquent tax.
Added by Acts 1981, 67th Leg., 1st C.S., p. 147, ch. 13, Sec. 75, eff. Jan. 1, 1982.
Sec. 23.76. CHANGE OF USE OF LAND. (a) If the use of land that has been appraised as provided by this subchapter changes, an additional tax is imposed on the land equal to the difference between the taxes imposed on the land for each of the three years preceding the year in which the change of use occurs that the land was appraised as provided by this subchapter and the tax that would have been imposed had the land been taxed on the basis of market value in each of those years.
(b) A tax lien attaches to the land on the date the change of use occurs to secure payment of the additional tax imposed by this section and any penalties and interest incurred if the tax becomes delinquent. The lien exists in favor of all taxing units for which the additional tax is imposed.
(c) The additional tax imposed by this section does not apply to a year for which the tax has already been imposed.
(d) If the change of use applies to only part of a parcel that has been appraised as provided by this subchapter, the additional tax applies only to that part of the parcel and equals the difference between the taxes imposed on that part of the parcel and the taxes that would have been imposed had that part been taxed on the basis of market value.
(e) A determination that a change in use of the land has occurred is made by the chief appraiser. The chief appraiser shall deliver a notice of the determination to the owner of the land as soon as possible after making the determination and shall include in the notice an explanation of the owner’s right to protest the determination. If the owner does not file a timely protest or if the final determination of the protest is that the additional taxes are due, the assessor for each taxing unit shall prepare and deliver a bill for the additional taxes as soon as practicable after the change of use occurs. The taxes are due and become delinquent and incur penalties and interest as provided by law for ad valorem taxes imposed by the taxing unit if not paid before the next February 1 that is at least 20 days after the date the bill is delivered to the owner of the land.
(f) The sanctions provided by Subsection (a) do not apply if the change of use occurs as a result of:
(1) a sale for right-of-way;
(2) a condemnation; or
(3) a transfer of the land to this state or a political subdivision of this state to be used for a public purpose.
(g) If the use of the land changes to a use that qualifies under Subchapter C, D, or H of this chapter, the sanctions provided by Subsection (a) of this section do not apply.
(h) The use of land does not change for purposes of Subsection (a) solely because the owner of the land claims it as part of the owner’s residence homestead for purposes of Section 11.13.
(i) The sanctions provided by Subsection (a) do not apply to land owned by an organization that qualifies as a religious organization under Section 11.20(c) if the organization converts the land to a use for which the land is eligible for an exemption under Section 11.20 within five years.
(j) The sanctions provided by Subsection (a) do not apply to a change in the use of land if:
(1) the land is located in an unincorporated area of a county with a population of less than 100,000;
(2) the land does not exceed five acres;
(3) the land is owned by a not-for-profit cemetery organization;
(4) the cemetery organization dedicates the land for a cemetery purpose;
(5) the cemetery organization has not dedicated more than five acres of land in the county for a cemetery purpose in the five years preceding the date the cemetery organization dedicates the land for a cemetery purpose; and
(6) the land is adjacent to a cemetery that has been in existence for more than 100 years.
(k) In Subsection (j), “cemetery,” “cemetery organization,” and “cemetery purpose” have the meanings assigned those terms by Section 711.001, Health and Safety Code.
Acts 1979, 66th Leg., p. 2262, ch. 841, Sec. 1, eff. Jan. 1, 1982. Amended by Acts 1981, 67th Leg., 1st C.S., p. 148, ch. 13, Sec. 76, eff. Jan. 1, 1982; Acts 1983, 68th Leg., p. 4824, ch. 851, Sec. 13, eff. Aug. 29, 1983; Acts 1989, 71st Leg., ch. 796, Sec. 21, eff. Sept. 1, 1989; Acts 1999, 76th Leg., ch. 723, Sec. 1, eff. June 18, 1999; Acts 1999, 76th Leg., ch. 631, Sec. 4, eff. Sept. 1, 1999.
Amended by:
Acts 2005, 79th Leg., Ch. 921 (H.B. 312), Sec. 1, eff. September 1, 2005.
Acts 2019, 86th Leg., R.S., Ch. 1361 (H.B. 1743), Sec. 2, eff. September 1, 2019.
Acts 2021, 87th Leg., R.S., Ch. 726 (H.B. 3833), Sec. 4, eff. June 15, 2021.
Sec. 23.765. OIL AND GAS OPERATIONS ON LAND. The eligibility of land for appraisal under this subchapter does not end because a lessee under an oil and gas lease begins conducting oil and gas operations over which the Railroad Commission of Texas has jurisdiction on the land if the portion of the land on which oil and gas operations are not being conducted otherwise continues to qualify for appraisal under this subchapter.
Added by Acts 2019, 86th Leg., R.S., Ch. 43 (H.B. 1409), Sec. 2, eff. September 1, 2019.
Sec. 23.77. LAND INELIGIBLE FOR APPRAISAL AS TIMBER LAND. Land is not eligible for appraisal as provided by this subchapter if:
(1) the land is located inside the corporate limits of an incorporated city or town, unless:
(A) the city or town is not providing the land with governmental and proprietary services substantially equivalent in standard and scope to those services it provides in other parts of the city or town with similar topography, land utilization, and population density; or
(B) the land has been devoted principally to production of timber or forest products continuously for the preceding five years;
(2) the land is owned by an individual who is a nonresident alien or by a foreign government if that individual or government is required by federal law or by rule adopted pursuant to federal law to register his ownership or acquisition of that property; or
(3) the land is owned by a corporation, partnership, trust, or other legal entity if the entity is required by federal law or by rule adopted pursuant to federal law to register its ownership or acquisition of that land and a nonresident alien or a foreign government or any combination of nonresident aliens and foreign governments own a majority interest in the entity.
Acts 1979, 66th Leg., p. 2263, ch. 841, Sec. 1, eff. Jan. 1, 1982.
Sec. 23.78. MINIMUM TAXABLE VALUE OF TIMBER LAND. The taxable value of qualified timber land appraised as provided by this subchapter may not be less than the appraised value of that land for the taxing unit in the 1978 tax year, except that the taxable value used for any tax year may not exceed the market value of the land as determined by other generally accepted appraisal methods. If the appraised value of timber land determined as provided by this subchapter is less than a taxing unit’s appraised value of that land in 1978, the assessor for the unit shall substitute the 1978 appraised value for that land on the unit’s appraisal roll.
Acts 1979, 66th Leg., p. 2263, ch. 841, Sec. 1, eff. Jan. 1, 1982. Amended by Acts 1981, 67th Leg., 1st C.S., p. 148, ch. 13, Sec. 77, eff. Jan. 1, 1982.
Sec. 23.79. ACTION ON APPLICATIONS. (a) The chief appraiser shall determine separately each applicant’s right to have the applicant’s land appraised under this subchapter. After considering the application and all relevant information, the chief appraiser shall, as soon as practicable but not later than the 90th day after the later of the date the applicant’s land is first eligible for appraisal under this subchapter or the date the applicant provides to the chief appraiser the information necessary for the chief appraiser to determine the applicant’s right to have the applicant’s land appraised under this subchapter, as the law and facts warrant:
(1) approve the application and allow appraisal under this subchapter;
(2) disapprove the application and request additional information from the applicant in support of the claim; or
(3) deny the application.
(b) If the chief appraiser requires additional information from an applicant, the chief appraiser shall, as soon as practicable but not later than the 30th day after the date the application is filed with the chief appraiser, deliver a written notice to the applicant specifying the additional information the applicant must provide to the chief appraiser before the chief appraiser can determine the applicant’s right to have the applicant’s land appraised under this subchapter. The applicant must furnish the information not later than the 30th day after the date of the request or the application is denied. However, for good cause shown the chief appraiser may extend the deadline for furnishing the information by written order for a single period not to exceed 15 days.
(c) The chief appraiser shall determine the validity of each application for appraisal under this subchapter filed with him before he submits the appraisal records for review and determination of protests as provided by Chapter 41 of this code.
(d) If the chief appraiser denies an application, the chief appraiser shall deliver a written notice of the denial to the applicant not later than the fifth day after the date the chief appraiser makes the determination. The notice must state and fully explain each reason the chief appraiser denied the application. The notice must include a brief explanation of the procedures for protesting the denial.
Added by Acts 1981, 67th Leg., 1st C.S., p. 148, ch. 13, Sec. 78, eff. Jan. 1, 1982.
Amended by:
Acts 2021, 87th Leg., R.S., Ch. 533 (S.B. 63), Sec. 10, eff. September 1, 2021.
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