I wish we could move....

[Alexz7272]

@Latestarter THANK YOU! We definitely want AG exemption.

 

[Mike CHS]

Farms here have to be over 10 acres for most programs. I'm not sure if there is a minimum for the sales tax exemption (if you guys have that in Texas) but it has saved us several hundred dollars just in fencing supplies.

 

[Baymule]

I would definitely use the profit from selling your current home to pay CASH for your new home. Then if the market takes a downturn, and we all know it's coming, your place is all paid for.

Do I hear ROAD TRIP?

 

[greybeard]

Texas ag exemptions are complicated and vary widely.
First off, it is not an exemption, even tho everyone calls it that. It's simply a different way of valuation by each county's appraisal district and there are generally 2 different kinds. Hobby farmers generally do not qualify for either, tho the bar is set pretty low by some counties.
1. Open space valuation. This is the most commonly applied for valuation. For small farmer/rancher.
2. Agricultural use valuation. This is for the serious farmer/rancher that derives all or most of their livlihood from the land.
Open Space Valuation=Qualified open-space land" means land that is currently devoted principally to agricultural use to the * degree of intensity generally accepted in the area * and that has been devoted principally to agricultural use or to production of timber or forest products for five of the preceding seven years
Ag Use valuation=Land designated for agricultural use is appraised at its value based on the land's capacity to produce agricultural products. The value of land based on its capacity to produce agricultural products is determined by capitalizing the average net income the land would have yielded under prudent management from production of agricultural products during the five years preceding the current year.
See the astericks? That 'degree of intensity generally accepted for the area' is what gets a lot of people in tax trouble.
It is specifically written to disqualify hobbyists who apply simply to get a devaluation and have no intent or plan to make their ag endeavor show income. The counties each have different ideas what defines degree of intensity.
Here are some examples:
Grayson County:

LIVESTOCK / STOCKING RATES (based on the Degree of Intensity) established January 1, 2005 BEEF :
Cattle operation on Improved Pasture: 1 animal unit (1,000 lbs) per 3 acres of productive land mass.

Cattle operation on Native Pasture: 1 animal unit (1,000 lbs) per 7-10 acres of productive land mass.

COW/CALF: Raising beef for sale to either processors or other operators as breeding stock. These include purebred operations, as well as, commercial breeders who sell calves to the local livestock markets. Typical requirements include at least 5 cows of breeding age that are bred annually.

STOCK/FEEDER: Raising beef for processors. This operation involves acquiring calves at a certain weight from cow/calf operators or the livestock auction and raising the calves until they reach slaughter weight. Both heifer and steer calves may be found in these types of operations.

SHEEP/GOAT: Sheep/Goat operation: 1 animal per acre of productive land mass, 10 animals minimum.
SHEEP: Can provide two by-products, wool and meat. A commercial operation would not require any particular breed and may be in the business of meat production only. Purebred operations are normally primarily in the business of producing either wool, meat or animals to sell to other producers as breeding stock. A typical flock consists of at least 15 head of ewes and 1 ram.

GOATS: Can provide three by-products, mohair, meat & dairy. Typical mohair production is limited to the Angora breed; all other breeds are involved in the production of meat (cabrito or young kid goat). Goats also may produce dairy by-products as a secondary use. A typical flock of goats consists of at least 25 head of does and one buck.

HORSES: Horses operation on pasture: 1 animal unit (1,000 lbs) per 4-5 acres of productive land mass plus supplemental feed. This includes horses, donkeys and mules. The by-products are colts and fillies. This operation involves having brood mares and either a stud (stallion) on location or using an artificial insemination service for breeding. At least 3 head of breeding age mares are required to be considered a typical horse breeding operation. Supplemental feeding is a given fact of a breeding horse operation. Breeding associations have suggested that a minimum amount of acres for a typical breeder is in the fifteen to twenty acre range in order to support a breeding operation. Horse breeding, raising and being sold to the public qualify for agricultural use. Horses stabled and/or used strictly for pets or recreational purposes do not qualify for agricultural use. When qualifying for agricultural land based on horse activity it will be necessary to provide evidence of use.

Caldwell County:

CALDWELL COUNTY APPRAISAL DISTRICT- DEGREE OF INTENSITY STANDARDS The “degree of intensity” test measures whether the land is being farmed or ranched to the extent typical for agricultural operations. This test is intended to exclude land on which token agricultural use occurs in an effort to obtain tax relief. The degree of intensity test measures what the property owner/operator is putting into the agricultural operation (in time, labor, equipment, management, and capital), and compares it with typical levels of inputs for the same type of operations in the area generally. In addition, a property owner/operator should be able to verify purchases and sales of livestock and/or farm products by bill of sale, sales receipt, or other documentation. The following standards will be applied by Caldwell County Appraisal District:
OPERATION TYPE.. MINIMUM NUMBERS.. NUMBER OFFSPRING / YEAR
Cow / Calf ............4 Cows........................ 3 Calves
Stocker Calves .......8 Calves
Breeding Horses .....4 Mares....................... 2 Foals
Goats.................. 20 Nannies................... 20 Kids
Sheep.................. 20 Ewes....................... 20 Lambs
Hay.................... 1.5 tons / year

Don't get caught several years down the road not meeting the qualifications--you can have to pay back the difference between residential valuation and ag valuation PLUS a substantial penalty/interest for late payment. They don't recognize pets as qualifiers.

 

[misfitmorgan]

You all are AMAZING and super helpful, thank you!

To answer you @misfitmorgan We ideally wouldn't want more then 20 acres, we'd be happy with 10.
I think we are planning to stick to sheep, a few goats, a few hogs and the birds of course. We are definitely doing more or a homesteading situation and selling excess on as a side business, not our main business. That being said, does anyone have experience owning a business in Texas? We currently have a contract engineering business that obviously we'd relocate with us. It's just the two of us and it is a registered LLC, I know NOTHING about moving something like that. We also are about to get one our patents issued come December and start production on that. I'll have to look that all up I guess.
As far as infrastructure, it would be nice if it was already set up, but we could do it ourselves too (yes I know lots of work). The main thing it has to have is a big (reasonable) machine shop, we have a lot of machinery we'd be moving down. Totally not looking forward to even the potential of that.
Soooo much to think about!

I dont know Texas pastures but i know in Michigan 15 acres would be plenty of room for what your wanting to do. For the LLC it is a pain in the butt!! This website can outline options for you http://www.bizfilings.com/learn/moving-business.aspx
By far moving a sole proprietorship is so much easier, i refuse to move any of our LLC's i would rather dissolve them and make new ones but thats just me.

Texas ag exemptions are complicated and vary widely.
First off, it is not an exemption, even tho everyone calls it that. It's simply a different way of valuation by each county's appraisal district and there are generally 2 different kinds. Hobby farmers generally do not qualify for either, tho the bar is set pretty low by some counties.
1. Open space valuation. This is the most commonly applied for valuation. For small farmer/rancher.
2. Agricultural use valuation. This is for the serious farmer/rancher that derives all or most of their livlihood from the land.
Open Space Valuation=Qualified open-space land" means land that is currently devoted principally to agricultural use to the * degree of intensity generally accepted in the area * and that has been devoted principally to agricultural use or to production of timber or forest products for five of the preceding seven years
Ag Use valuation=Land designated for agricultural use is appraised at its value based on the land's capacity to produce agricultural products. The value of land based on its capacity to produce agricultural products is determined by capitalizing the average net income the land would have yielded under prudent management from production of agricultural products during the five years preceding the current year.
See the astericks? That 'degree of intensity generally accepted for the area' is what gets a lot of people in tax trouble.
It is specifically written to disqualify hobbyists who apply simply to get a devaluation and have no intent or plan to make their ag endeavor show income. The counties each have different ideas what defines degree of intensity.
Here are some examples:
Grayson County:


Caldwell County:


Don't get caught several years down the road not meeting the qualifications--you can have to pay back the difference between residential valuation and ag valuation PLUS a substantial penalty/interest for late payment.

That's poopy..sooooo much easier here. Just need more then 50% devoted to ag which can be anything aside from horses and chickens, they dont count..but anything esle does hay, trees, berry bushes, orchards, garden, you can even rent out the land to someone else to farm it and still qualify.

 

[greybeard]

In Texas, we can also rent out the land for ag and still get the devalued appraisal. After all, it is all about the land value and it's productivity, not who the individuals are that's doing the work. That last part comes, with the cottonpickin agriculture census the USDoA/TxDoA sends out every few years. It's pretty extensive and local appraisal district gets a copy IIRC.
My sister owns 41 acres right beside me, and she's under ag, my twin brother has 24 ac beside me in the other direction, lives full time in Arkansas and his Tx property is on ag as well--neither owns a cow, got or any other kind of livestock but both leased their property to me and a neighbor, and therefore falls under ag valuation.

One of the reasons it is more difficult to get ag in Texas is we have no state income tax. State income tax is not just for state project use--a portion of that tax revenue, according to area populations is given back to each county to use in their local projects and maintenance. So, without that state income tax, Texas counties have to get as much local property and school tax revenue as it needs. Michigan has a state income tax, (4.25%) and about the same state sales tax rate (6%) as Texas (6.8%) . With Texas local/county sales taxes capped by state statute at 2% max, (Tx max total sales tax not to exceed 8.25%) that means both states sales taxes are nearly the same, but Texas counties have no state income tax to claw back. They rely on that property tax to keep up county roads, and we have a lot of roads the counties have to keep up.

If I read the Michagan regs correctly, horses do qualify for ag, but only if they are raised in production mode and not simply for recreational use, and Michigan does use a 'degree of intensity' qualifier as well, but they call it an "animal to acreage ratio" instead, even if the landowner is unaware exactly how the ratio is computed. (appraisal details and such from those type offices are generally a tightly kept secret akin to stuff usually relegated to Langly Va)

What is meant by “acre-to-animal ratio” in relation to the qualified agricultural property exemption?
For any animal, the “acre-to-animal ratio” is the number of acres it takes to support 1 of that animal. For instance, it may typically take 3 acres to support 1 dairy cow. The acre-toanimal ratio for dairy cows would then be 3 to 1. (This ratio was created without significant research and may or may not be an accurate acre-to-animal ratio for dairy cows.)

There's more explanation of that on pg 24-25 of Michigan's Dept of Treasury website:
http://msue.anr.msu.edu/uploads/234/71344/Qualified_Agricultural_Prop_BOOK_139854_7.pdf

 

[NH homesteader]

That's interesting. We also have no state income tax, or sales tax. So property taxes are really high. No agriculture specific tax rate but we have "current use" which is undeveloped land used either for agriculture or left as "wild" land. However we can not build anything on land in current use. No barn, nothing. Except fencing is OK. So from what understand we need to carve an acre off for the house and barn (we don't have a barn yet, but if we build one) and the rest can be fenced in for animals. Kind of a pain.

 

[norseofcourse]

We have income taxes, sales taxes, and property taxes in Ohio.

In my county (and it may the be the same or similar for other counties in Ohio), the agricultural exemption is called CAUV, and there's two ways to get it. First way is to have 10 acres or more in agricultural use (no animal ratio I'm aware of), and they deduct 1 acre for the house, so you'd have to own at least 11 acres. The second way, if you don't have enough acreage, is to make at least $2500 per year gross from agricultural income, which is what I'm going for. This would include income from my lamb and fleece, as well as any income that would be considered 'farm' - seedlings, plants, vegetables or fruits, etc. Income from boarding horses or other livestock would count, too, although I don't plan on doing that.

Stuff that I buy for the production of agricultural stuff is exempt from sales tax, but fencing and stuff for buildings are specifically excluded from the sales tax exemption. And the exemption is not for animals raised for my own consumption, so that can be difficult to separate out...

 

[misfitmorgan]

In Texas, we can also rent out the land for ag and still get the devalued appraisal. After all, it is all about the land value and it's productivity, not who the individuals are that's doing the work. That last part comes, with the cottonpickin agriculture census the USDoA/TxDoA sends out every few years. It's pretty extensive and local appraisal district gets a copy IIRC.
My sister owns 41 acres right beside me, and she's under ag, my twin brother has 24 ac beside me in the other direction, lives full time in Arkansas and his Tx property is on ag as well--neither owns a cow, got or any other kind of livestock but both leased their property to me and a neighbor, and therefore falls under ag valuation.

One of the reasons it is more difficult to get ag in Texas is we have no state income tax. State income tax is not just for state project use--a portion of that tax revenue, according to area populations is given back to each county to use in their local projects and maintenance. So, without that state income tax, Texas counties have to get as much local property and school tax revenue as it needs. Michigan has a state income tax, (4.25%) and about the same state sales tax rate (6%) as Texas (6.8%) . With Texas local/county sales taxes capped by state statute at 2% max, (Tx max total sales tax not to exceed 8.25%) that means both states sales taxes are nearly the same, but Texas counties have no state income tax to claw back. They rely on that property tax to keep up county roads, and we have a lot of roads the counties have to keep up.

If I read the Michagan regs correctly, horses do qualify for ag, but only if they are raised in production mode and not simply for recreational use, and Michigan does use a 'degree of intensity' qualifier as well, but they call it an "animal to acreage ratio" instead, even if the landowner is unaware exactly how the ratio is computed. (appraisal details and such from those type offices are generally a tightly kept secret akin to stuff usually relegated to Langly Va)



There's more explanation of that on pg 24-25 of Michigan's Dept of Treasury website:
http://msue.anr.msu.edu/uploads/234/71344/Qualified_Agricultural_Prop_BOOK_139854_7.pdf

Yeah they dont actually use that in my county. They dont even go look at properties 95% of the time..they just go by the permits issued or what you tell them. DH went down to the tax lady and told her we needed to be listed as ag and she changed it on the spot and printed a new tax paper. Keep in mind we dont own the property, we just lease it....the owners have another residence in the next town over. Of course you also have to make an appointment to see the tax lady because it is only her part-time side job. The tax accessor also only works part-time on the side. Michigan gets more revenue because they send less taxes to schools since the lottery supports the schools, which means they have more regular tax money to spend on roads and such.

Forgot to mention we qualified from the use of the hay field btw...nothing to do with our livestock. There is 12 acres of hay field and we cut it once this year so the entire 20 acre property falls under ag use.

 

[greybeard]

Sounds like a pretty good setup there in Ohio Norse. Still they basically say the same thing most states do.

What about you? Who qualifies for CAUV?
This list ranges from aquaculture to apiculture and field crops to flowers. Timber and animal husbandry, including horses, is there, too.

But the key word is “commercial.”

You must be doing this for a profit, not as a hobby, said Larry Gearhardt, Ohio Farm Bureau local affairs director.

http://www.farmanddairy.com/news/tax-time-thinking-about-cauv-do-you-qualify/1620.html

It's why I tell anyone moving here, to get their Ps & Qs in order and keep them in order if they want to qual for ag ....and stay that way.
There are other financial advantages to being in Texas agriculture.
1. Farm related sales tax exemptions--in Texas, you have to apply for farm tax exempt status tax # and 'the little guys' generally can't get it without being on land ag valuation, or a bona fide full time employee of a farm or ranch.
2. Farm tags for vehicles--trucks/trailers. Lots cheaper. Requires the tax stamp to get them. Far tag (license plates) can also increase the allowed GVWR (gross vehicle weight rating) on a truck and trailer. I can legally haul a lot more wt with my truck and trailer with farm tags than if they had regular lic plates. I have seen people get overweight tickets for hauling a few cows in a 14' bumper pull stock trailer with regular tags on the vehicle and trailer, but wouldn't have gotten the ticket if they had farm tags.

In Texas, tax records are private and the appraisal office is a stickler about that.When one applies for the ag valuation, don't expect the appraisal folks to tell you if it has met the '3 previous years on ag' requirement--they won't. It's up to the new land owner to find that info from the seller and be able to prove it to the appraisal officer--otherwise, that ag valuation won't kick in for the new owner for 3 years, no matter how many cattle he is running or how many acres he has under cultivation for those first 3 years..

They come out and check here periodically. Gave my sister a hard time when they looked her 41 wooded acres over good and couldn't find any indication of cattle being on it--no cow manure. Cows just don't like to go over there much---too many mosquitos and not much grass anyway. They check mine with aerial view--the cattle show up real good on their helo and satellite photos.

The county told me I could take as little or as much as I wanted for my home expemption (Homestead) but the guy said I would have to show I was in fact using the whole place as my homestead residence (yard). I set aside 1/2 acre for my homestead, as the ag valuation is lower than the homestead exemption, meaning the more I use for house and yard, the more in total taxes I would pay, as that extra 1/2 acre wouldn't be ag qualified.