State Tax Laws > Property Taxes > Summary > Texas

For the complete text of Texas statutes please refer to the Texas Property Tax Code, other property tax information can be found at the Texas Comptroller of Public Accounts.

Property Classification:

Generally, Texas does not assign different types of property to different classes for property tax purposes. Texas law does provide preferential property tax treatment for forest and open-space lands that fall within the following categories:

(1) open-space land devoted to agriculture;

(2) land restricted to recreational, park, or scenic use; and

(3) open-space land devoted to timber production.

Landowners may apply for special appraisal based on their land's productivity value rather than what the land would sell for on the open market. Typically, a productivity value is lower than market value, which lowers property taxes. Open-space land devoted to timber production is entitled to taxation on the basis of its productive capacity.

There is no minimum acreage requirement for property to qualify for present-use valuation as timberland.

Land qualifies for appraisal as timberland if it: (Sec. 23.72, Tax Code)

(1) 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

(2) has been devoted principally for five of the preceding seven years to the production of timber or forest products or to agricultural use that would qualify it for appraisal as open-space or agricultural use land.

Land is not eligible for appraisal as timberland if: (Sec. 23.77, Tax Code)

(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.

Application: (Sec. 23.75, Tax Code)

A person claiming that his land is eligible for appraisal as timberland must file an application with the chief appraiser on a form provided by the appraisal office and prescribed by the comptroller, and contain the information necessary to determine the validity of the claim. The form must be filed before May 1st.

If a person fails to file a valid application on time, the land is ineligible for appraisal for that year. Once an application is filed and appraisal as timberland is allowed, the land is eligible for appraisal in subsequent years without a new application unless the ownership of the land changes or its eligibility ends.

Change in use of land: (Sec. 23.76, Tax Code)

If the use of land that has been appraised as timberland changes, an additional tax is imposed on the land equal to the difference between the taxes imposed on the land for each of the five years preceding the year in which the change of use occurs and the tax that would have been imposed had the land been taxed on the basis of market value in each of those years, plus interest at an annual rate of 7% calculated from the dates on which the differences would have become due.

If the change of use applies to only part of a parcel that has been appraised as timberland 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.

Special Circumstances:

Appraisal as restricted use timber land - Timber land on which harvesting is restricted for aesthetic, conservation, water protection, or plant or animal protection may qualify for appraisal for Texas property tax purposes as restricted-use timber land (Sec. 23.9801, Tax Code).

The land must be in an aesthetic management zone, critical wildlife habitat zone, or streamside management zone. The appraised value is one-half of what it would have been appraised at under normal circumstances. The appraised value may not exceed the lesser of the market value of the land or the appraised value of the land in the year preceding the first year it is appraised as restricted use timber land. An application must be filed with the chief appraiser by May 1. If use of the timber land changes so that it no longer qualifies as restricted-use timber land, an additional tax equal to what the land would have been assessed at will be imposed including interest.

Open-space land converted to timber production - If land that has been appraised as open-space land for at least five years is converted after September 1, 1997, to the production of timber, the owner may elect to continue having the land appraised as open-space land under Subchapter D for 15 years after the conversion, so long as the land qualifies during that period for appraisal as timberland. (Sec. 23.59, Tax Code)

Valuation and Assessment:

The appraisal process for timberland: (Sec 23.72, Tax Code; Manual for the Appraisal of Timberland, Comptroller of Public Accounts, Property Tax Division)

The productivity value of an acre of timberland equals the average annual net income a prudent manager could earn from growing timber over the five-year period preceding the appraisal's effective year, divided by a statutory capitalization rate. Net income has two parts: gross income and production cost.

Gross income is calculated by computing potential average annual timber growth per acre and multiplying this amount by timber's average annual market price for that year. This computation is performed for each year of the five-year period.

Average annual cost of producing timber in each of the five years is subtracted from gross income to find net income for the year.

Average annual net income is computed by averaging net income for each year of the five-year period. This five-year average annual net income is then divided by the statutory capitalization rate to produce the productivity value of timberland.

Timberland's productivity value is determined in ten basic steps: (NOTE: The following steps are completed by the assessor to determine taxable value)

1. classify timberland into three forest types;

Pine (and other softwood) timberland includes all forested areas in which the trees are predominately green throughout the year and do not lose their leaves. These trees are called evergreens. Forested areas where pine and other softwoods make up more than two-thirds of the trees free to grow are in this category.

Hardwood timberland includes all forested areas with a predominance of deciduous trees. These trees lose their leaves at the end of the frost-free season. Stands where hardwoods are more than two-thirds of the trees free to grow are in this category. Trees free to grow are those that are not covered by brush or other trees that prevent them from getting the sunlight necessary to grow.

Mixed timberland includes all forested areas where both evergreen and deciduous trees are growing and neither predominates. An area is classified as mixed when evergreen and deciduous trees each make up more than one-third of the trees

2. classify timberland into four soil types;

land capable of producing 120-165 cubic feet per acre per year;

land capable of producing 85-120 cubic feet per acre per year;

land capable of producing 50-85 cubic feet per acre per year; and

land capable of producing less than 50 cubic feet per acre year

3. estimate average annual timber growth;

4. convert timber growth into units for estimating gross income;

5. estimate average annual timber prices;

6. estimate average annual potential gross income of timber growth;

7. estimate average annual costs of producing timber;

8. estimate net income of timber growth;

9. capitalize net income by statutory rate to develop per acre timber values;

The capitalization rate to be used in determining the appraised value of qualified timber land is the interest rate specified by the Farm Credit Bank of Texas or its successor on December 31 of the preceding year plus 21/2 percentage points. (Sec. 23.74, Tax Code)

10. apply timber values to timber acreage within the district.

The resulting appraised value may not exceed the market value of the land as determined by other appraisal methods.

Productivity values are then multiplied by the county rates and school districts in your area to determine tax liability.

Severance or Yield Tax:

The state of Texas does not have a severance or yield tax on timber or timber products.