Agricultural Property Tax Exemptions

Market Value vs Ag Use Value

Ag-use assessment taxes land on productive capacity, not market value. A $2M parcel may be assessed at $200-400K for ag use, saving $15-40K/year in taxes.

State Programs

Three models: pure use-value (IA, KS, NE), deferred taxation with rollback (TX, TN, VA, NC), and restrictive agreements (CA Williamson Act). Rollback periods range 2-10 years with interest.

Qualification

Minimum acreage (5-15 acres), income tests ($1K-$10K gross), active use requirement, ownership duration, application deadlines.

Impact on Returns

Affects cash yield ($50-100/acre NOI difference), cap rate accuracy, and conversion economics (rollback penalties).