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Wildlife Exemption

Wildlife Exemption

What is a Wildlife Exemption?

Here, we detail wildlife exemptions and how they might fit with your property goals.  Put simply, a wildlife exemption is an alternative form of agriculture (“ag”) exemption with the same favorable tax implications as an ag exemption.  The wildlife tax valuation is not a true “exemption” but a special valuation approved through a constitutional amendment (Proposition 11, passed in 1995). Instead of paying taxes on the market value of the land, landowners in ag or wildlife pay the full tax rate on the land’s productive capacity.  To qualify for a wildlife tax exemption, landowners must be actively using the land to propagate a sustaining breeding, migrating, or wintering population of indigenous wildlife animals for human use.

Wildlife exemptions are ideal for landowners who have an active interest in wildlife, are no longer interested in livestock, hay, or timber production, would like to lower their cost of property ownership, or who have property goals not consistent with ag production.  Many inquiries into Texas’ wildlife management appraisal are based on a lack of grass production caused by drought or overgrazing.  In some cases, landowners depend on a neighbor or acquaintance to run livestock or cut hay on their property.  A switch to wildlife allows these landowners to put the property’s tax status in their own hands.

Properties with an existing ag or timber exemption are eligible to transfer into wildlife.  Of course, properties purchased that already have a wildlife exemption in place are also eligible. There are ways for a property to transfer directly from market value to a wildlife tax exemption. They are uncommon, but have been used successfully. Please call 512.906.9491 to find out if these are appropriate for you. Other eligibility requirements relate to minimum acreage, active use, primary use, and level of intensity.

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Is there a minimum acreage for wildlife properties?

Perhaps the most misunderstood rule with wildlife exemptions relates to minimum acreage. So what’s the law say? The law is very clear. The ONLY time tracts of land are subject to minimum acreage rules is when the tract was reduced in size the previous calendar year. This condition applies to exceedingly few properties.  The minimum acreage rule can be found in the Texas Administrative Code (TAC Title 34, Part 1, Ch. 9, Subch. G, Rule 9.2005). For the small percentage of tracts that are subject to this rule, minimum acreages are set according to region and the appraisal district’s board of directors. It should be noted that wildlife plans for small properties have unique considerations with respect to wildlife species the plan targets as well as wildlife practices that are chosen. If your tax appraisal district is telling you that they have a county-wide minimum acreage for wildlife practices, please call Landmark so that we can help you transition your property.  Each year, we convert properties to wildlife management on smaller tracts of land for which the minimum acreage rules do not apply.

Landowners with a wildlife tax exemption must be “actively using the land” for wildlife.  What does this mean?

For wildlife tax exemptions, this phrase means conducting at least three of seven wildlife management practices each year. These include habitat control, erosion control, predator control, supplemental water, supplemental food, providing shelter, and census counts.  To be safe, Landmark Wildlife recommends conducting at least four practices each year.  However, some activities such as erosion control and supplemental water can count for up to ten years as long as annual maintenance is performed. Wildlife activities selected should benefit target species of the plan. For example, food plots for white-tailed deer would not be appropriate for wildlife management plans targeting bats.

What is the primary use test?

Land qualified under a wildlife management exemption should be primarily used for wildlife. Residential, recreational, and commercial uses should not take a priority over management of wildlife. As an example, if land is used primarily for event parking the majority of the year, it would not be eligible for wildlife. The primary use test does not impact most landowners. Landmark Wildlife Management will advise you during the site visit if any concerns are apparent.  Please note that most tracts with a residence will already have one acre removed from ag or wildlife for the footprint of the structure.

How do I meet level of intensity requirements?

Texas Parks & Wildlife Department has created rules defining the level of intensity required for each of the wildlife practices.  For example, landowners with a wildlife exemption wishing to incorporate brush control in their wildlife exemption plan should annually treat at least 10% of the area in need of brush management or 10 acres, whichever is smaller.  Rules were created for each ecological region, and all of Texas’ 254 counties were assigned one of these regions.  For instance, landowners in Hays County are subject to rules set up for the Eastern Edwards Plateau.

What is the application deadline?

Wildlife exemption plans and applications must be submitted by April 30, 2012. If they are not, they can be submitted before appraisal rolls are certified, usually in late July. If an application is submitted after the April 30 deadline and before tax rolls are certified, a 10% penalty will be imposed. Wildlife exemption plans and applications cannot be submitted after tax rolls are certified.  To avoid the penalty and stay in the good graces of your appraisal district, we recommend that wildlife tax management plans be submitted timely.

I’ve heard that wildlife exemptions can be taken away.  Is this true?

When Texas voters approved wildlife tax valuations in 1995 by overwhelmingly passing  Proposition 11, they made it exceedingly difficult to remove wildlife tax appraisals as form of open-space valuation. The number of landowners who have property in wildlife appraisals increases each year, with some counties having over 500 tracts of land under this special approval. In 2011, an election was held to make another form of open space valuation available to landowners – water stewardship valuation. While this measure narrowly failed, the trend is evident. Our legislators are looking to increase tools for landowners to preserve Texas’ open space. Landmark Wildlife stays on top of all legislation with the potential to impact Texas’ agriculture and wildlife management community.

Is a Wildlife Exemption Right For You?

While any property with an ag or timber valuation is eligible for wildlife, some properties are ideally suited for wildlife. Landowners with a strong interest in wildlife often find the transition to wildlife allows them to devote their time and resources strictly for wildlife, improving wildlife populations and the health of their land. Non-resident landowner may not have the time to manage agriculture activities on the property. Ag expenses are felt particularly hard on smaller tracts (less than 300 acres) because economies of scale cannot be reached.

Can’t I just apply for a wildlife exemption myself? Why do I need Landmark Wildlife?

While you can certainly go through the process without professional representation, before you do so, be sure to read our case study to get a feel for the process. Read it here.

Fairness of ag and wildlife tax exemptions

One question that often arises during discussions about wildlife tax valuation – how fair are wildlife exemptions? Weren’t 1-d-1 valuations designed to help farmers and ranchers?  Some points to consider:

  • The purpose of ag and wildlife exemptions is to conserve open space in Texas, including conservation values of those open spaces. Special valuations were not put in place as tax breaks.
  • Ag and wildlife tax exemptions apply only to the land. Structures including homes and the footprint of homes continue to be valued at full market value.
  • Benefits of wildlife valuations includes increased wildlife habitat, healthier watersheds, increased plant and animal diversity, aquifer recharge, and water capture.
  • Texas is losing open space faster than any other state. Texas Wildlife Association reports that losses of agriculture land are 235 square miles per year.  Texas needs open space protection tools such as wildlife tax valuations to help preserve the open nature of our state.
  • Ag and wildlife properties pay for themselves. What do we mean? The American Farmland Trust reports that land with open space valuations (including ag and wildlife properties) generate tax revenues in excess of services provided to that open space land. Livestock don’t call 911 when accidents happen and wildlife do not utilize city sewage systems. In fact, the American Farmland Trust reports that Bexar County spends eighteen cents for every dollar collected through agriculture and wildlife properties. In contrast, Bexar County spends $1.15 in services for every dollar collected for residential development.

Tax Savings

Texas has one of the highest property tax rates in the country. Tax rates can range anywhere from 1.2% to well over 2% of market value. However, ag and wildlife properties are taxed at the full tax rate of the land’s productivity value – the income that can expected to be generated on the land. Typically, taxes on ag/wildlife acreage are $0.50-$2.00 per acre. Without the special valuation, property taxes based on the market value of the land can be as high as $50-$200 per acre.

 

While ag and wildlife taxes are equal (you won’t be paying any more or less by switching to wildlife), many landowners realize significant savings by converting to wildlife because they no longer have to pay for feed, fencing, livestock, veterinary bills, and the numerous miscellaneous expenses associated with ag enterprises. Landowners owning their own livestock understand the enormous time commitment involved.

After you’ve made the decision to transition to wildlife (and wildlife tax appraisal is not for everyone), the next step is seeking the help needed to ensure the application process goes smoothly. This involves creating an exceptional wildlife management plan and having the highest level of representation. Having a wildlife tax exemption means conducting practices in order to stay in compliance.  In addition, you will need to complete an annual report each year that thoroughly documents the practices that you’ve conducted.  The tax implications of losing your wildlife exemption are massive (see above table).  It makes sense to have the right company working on your behalf from the beginning.

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