Another "land locked" property question - Texas Ghost Town

[Ken73]

My wife and I moved out "to the country" to get away from the craziness of the metropolitan area (neither one of us likes the city) and love it. That being said, the wife had big plans for our little 6 acres - milking goats, chickens for eggs, and a large garden. Already has a nice little 1/4 acre pond that we stocked with fish, too. Everyone (from the city, of course) told us "oh yea! you can get an ag exemption and pay less on taxes!" This sounded great but as we quickly learned, there's a 5 year gap between when you can claim your ag exemption and when you START doing agricultural activities on the property - and then, not all 6 acres would count since the house sits on the "homestead." We spoke to the folks at the county appraisal district and they said that they generally frown upon ag exemptions of less than 10 acres. However, they did say if you owned acreage elsewhere within the county, you could claim that as well and add what you have at your house in total. (Minus the homestead area of course.) I'm outside the city limits so I'm just in the "county" for tax purposes.

Thus began a slow process of formulating what/where we could obtain enough property within the county (lots of land out here at least) to total up to 10+ acres. This isn't something that'll happen overnight as we're still trying to get everything running here; garden is in the process of being converted over to raised beds, chicken coop is designed and the area is cleared out, and I've cleared the fenceline to start putting fence in.

That being said, I sat down and looked up the appraisal district the other day and was looking at the GIS map that shows all the property lines; found lots of nice properties but most were priced pretty high ($10k+ per acre) and understandably so - they were close to town. Otherwise they were too large of parcels and way too far out of my price range anyway. Then I scrolled in a different direction on the map and - oddly enough - found what appears by property lines to be a small town - but modern satellite photos show nothing but farmland. Even Google maps shows these same property lines, but satellite shows one large farmland area. We drive by the area often so I know for a fact it's just farmland. I zoom in and start clicking on some of the properties and many don't have any information at all; I suspect these are also owned by the surrounding property's owner. However, some of these properties had a different owner - parcels as big as 10-12 acres and as small as a lot barely big enough for an RV campsite. Mind you, these are all "land locked" with either no, or vague access to the property. Apparently I stumbled on a ghost town - I looked it up and it only existed between 1910-1917. Most (but not all) of the properties already had their 5-year ag exemption in place. I started looking at the property owners and many are out of state (Illinois, Missouri, etc.) or at least weren't anywhere near the area (Dallas, etc.) After going through many of the properties, the values were really low - like $8k for 10 acres - that's more my price range. One property was only appraised at $464 for 4.64 acres! The interesting part is that these properties all have deed dates of 1/1/1900. None of these properties appears to be for sale as - I mentioned before - they're all part of a large ricefield that someone is farming.

My interest is in purchasing just enough property so that I have at least 10+ acres between the 6 acres I have now (minus the acre or so for homestead) and whatever I purchase so that my taxes drop substantially on the property. This also enables me to start "the farm" and get a tax exemption for farm supplies, etc. I have already purchased quite a bit of equipment and supplies and paid taxes on it (tractor, fencing, etc.) Since the additional property would already have the ag exemption, I wouldn't pay much at all for taxes on it - just the purchase price. Since it's landlocked, and already being farmed (rice by the looks of it) I'd simply find who it is that's farming it, and let them know to continue on farming it but I'd look at getting a lawyer to help me write up a contract that basically says as long as you are farming it or using it for agricultural use, the lease is "free" - but as soon as the agricultural activity stops (i.e. development gets out that way, which I seriously doubt it would in my lifetime) then I'd need some sort of access to it. I don't care to deal with it, it simply adds to my total of ag-use land so I can get over that 10-acre hump (and ideally, very cheaply.)

Of course, as I mentioned above, these properties aren't apparently "for sale," the deed dates are 1/1/1900 and most of the owners are out of state or not anywhere near the local area. (The larger parcels are owned by someone local.) I'm only really able to look at the county appraisal values too, so I have no idea what their real value is to the people that supposedly own them. For grins, I looked up the addresses on Google maps and many of these people live in fairly nice areas so I suspect these are parcels of land that have been passed down through the generations. The area is nothing but farmland as far as you can see so it's not likely to be developed in my lifetime and probably not even my children's lifetime (and I don't even have children yet!) I would think any current owner would jump on the chance to get rid of that financial liability especially if they're out of state. It's not like it's a piece of land you can put an RV on and live off of - there is no access to it.

So... what do y'all think? Where should I start? Mail the current owners (according to the appraisal district) and ask if they'd be interested in selling, explain my situation so they don't get the idea that it's going to be developed and worth something and want a ton of money for it? Talk to the county appraisal district? Is it even worth pursuing? I'd ask if you think I'm nuts but I already know the answer to that. :laughing:

 

[dave1949]

I guess talk to the county appraisal district first. Just ask what's the deal with these ghost town lots?

I bet there is some interesting history there, rice wars maybe. :laughing:

 

[two_bit_score]

Well, Ken, that sure is interesting. I thought at first that someone had plated a subdivision out there tht just never was developed but when you said the owners were out of state I got lost.

Did you check to see if there were actually tax numbers on those "lots" and if anyone was actually paying taxes on them?

It will be interesting to see what you find out.

 

[Ken73]

Well, Ken, that sure is interesting. I thought at first that someone had plated a subdivision out there tht just never was developed but when you said the owners were out of state I got lost.

Did you check to see if there were actually tax numbers on those "lots" and if anyone was actually paying taxes on them?

It will be interesting to see what you find out.

There's account numbers on some of the plots, but only a handful out of the many. Hence why I suspect that the owner(s) of the larger surrounding plots also own many of the smaller lots. Unfortunately the tax website for the county is down so I haven't been able to look and see if they've been paying taxes or not. This is definitely not a subdivision - it has the layout of an old late 19th/early 20th century farming town. Lots of larger plots surrounding a smaller "downtown" looking area with smaller lots for businesses. It's actually quite eerie looking at it on a map because you know the town was there at one time, but only a small paragraph exists about it in the Texas State Historical Association's website. We drive by this area often and it's nothing but farmland.

I have a couple of Texas Ghost Town books and apparently during the mid 1830's when Texas won it's independence from Mexico there were a lot of schemes/scams where people were lured down here with the promise of lush fertile farmland where they bought the land cheap then came down here to find out it wasn't so fertile or lush without a lot of hard work. In this particular case, there was a water pumping station that became unreliable, and that killed the town. Others declined because of lack of roads or railroad access. At one time there was actually a railroad line through the area - in fact, there still remains an old bridge on someone's property that I've seen on the aerial map. (We drove by and have seen the bridge, it's still there!)

 

[MNBobcat]

generally frown upon ag exemptions of less than 10 acres

That phrasing tells me that the County is not prohibited from giving you an ag exemption. I think you're taking the wrong approach. The County has nothing to do with that exemption other than they record it when you come in and fill out the paperwork. Those "exemptions" are State or Federal programs.

I would recommend you fill out the application and apply for the exemption and then see what the County tries to do.

It doesn't look like Texas specifies a minimum acreage to be in the program.

You always have to remember when dealing with the County that they are all money grabbers. You need to do your own research and not trust everything they tell you.

 

[Paddy]

Ken73,

All interesting from the history point of view. if your objective is to to reduce property tax I'm not sure the plan will work. For example; If a farmer has 200 ac farm, he separates his house to be on one ac and the farm is 199 ac. He does this so the 199 ac valued at real value 1 M pays based on ag tax, far less. His modest home valued at $100k he pays his $1000 standard property tax. If instead he had 10 ac with the house, his appraised home value might be $110k and his tax might be $1100.

So in your case, home and 1 ac and 9 ac "farm" would have a very low tax difference. I would be asking the county tax auditor "what would my tax be if...? in both cases.

 

[Ken45101]

Interesting history

I agree, I would really be looking much deeper into the realities of what the county (and state) would do. You might be going off on a wild goose chase. Perhaps it would be useful to talk with a knowledgeable lawyer but I would also talk with the county people.

It varies with the individuals involved. Here, our farm has had no problem with the exemption. We bought another 20 ac in another county that we rent out as pasture. That county has a different (more stringent) interpretation of the state law and said "no".:confused3:

 

[Ken73]

That phrasing tells me that the County is not prohibited from giving you an ag exemption. I think you're taking the wrong approach. The County has nothing to do with that exemption other than they record it when you come in and fill out the paperwork. Those "exemptions" are State or Federal programs.

I would recommend you fill out the application and apply for the exemption and then see what the County tries to do.

It doesn't look like Texas specifies a minimum acreage to be in the program.

You always have to remember when dealing with the County that they are all money grabbers. You need to do your own research and not trust everything they tell you.

This is the kind of info I need! Thanks!! The thing I understand it as, is that you have to have already been engaged in agricultural activities on the land for the last 5 years before they even give you the exemption. The other thing is - how does the property the house sits on get excluded if it's all one property? Worst case I'll just continue to pay taxes, but it would be nice to have additional land even if it is part of a larger parcel that's being farmed for now.

 

[dave1949]

It would make more sense for the state/county/whoever to base the exemption on farm income, not acres.

For example, what if someone raised rare orchids in a greenhouse on one acre, but are able to sell them for many thousands of dollars? Or, someone with five acres of root stock growing grafted tree fruit varieties that sell for $20-$30 each?

As far as I understand the federal IRS rules for farms, it is based on farm income, not farm size. It would probably make too much sense to standardize that definition across all political units. :laughing: It would raise the efficiency of government, put lawyers and politicians on unemployment.

 

[Ken45101]

It would make more sense for the state/county/whoever to base the exemption on farm income, not acres.

For example, what if someone raised rare orchids in a greenhouse on one acre, but are able to sell them for many thousands of dollars? Or, someone with five acres of root stock growing grafted tree fruit varieties that sell for $20-$30 each?

As far as I understand the federal IRS rules for farms, it is based on farm income, not farm size. It would probably make too much sense to standardize that definition across all political units. :laughing: It would raise the efficiency of government, put lawyers and politicians on unemployment.

Here, they also exempt forest land. Of course, there might not be any "income" to show for forest land for 50 or more years.

 

[dodge man]

I agree with some of the others, are you trying to save a dollar by spending ten? I'd try and work with what you have.

As far as the ghost town. I doubt thats the case. There are several towns in my area that were platted to be fairly large towns, but never developed. Some are still they with several houses, while others may just have a house or two. If you really want to buy property in that area, I'd talk to the local guy, he probably farms it all and leases what he doesn't own.

 

[dave1949]

Here, they also exempt forest land. Of course, there might not be any "income" to show for forest land for 50 or more years.

That's true.

We have a state "Tree Growth" property tax reduction program here. It does have a minimum of ten acres required, and a management plan by a licensed forester that is updated every ten years. Not that they check much, but you could loose your reduction if the management plan isn't being followed. The program is based on the concept that eventually, wood will be commercially harvested.

As you noted, forestry is a bit different than farming since you accumulate operating and development expenses, but only receive income very sporadically. IRS Form F is used to compute your past accumulated basis in the forestry operation, filed in the year the forestry income is generated.

That is different from regular farming where an annual income, or anticipated income within 3-5 years (IIRC), is the norm, and no long term management plan requirement by the state.

The Feds don't care if you have a forestry management plan, but the state requires it. We have high government expenses because we have a multitude of overlapping programs and tax policies that only a specialized accountant and/or lawyer can deal with. That's my theory and I'm sticking to it. :laughing:

 

[Ken45101]

In Ohio, forest land and farm land are administered under the same tax reduction (CAUV -current agricultural use valuation) program.

 

[Lou66]

I have an Ag account,, also have 70 plus acres,, I have people that will buy a few acres 5-100 and ask me to put it under my Ag,, I can use it as I see fit.. I do sometime if the property is worth it to me.. the difference in taxes can be several thousands dollars,, I have one acre on the bayou that I pay three times more in taxes than I do on the 70 plus acres,, I don't live on either,, We live in town, Lake Jackson, all of the property is with in 20 miles radius of me.. I know in Brazoria county you have to have 10 A or more for an Ag Ex.. or someone else, with one uses it.. haying, cows or goats.. horses only count if a pre cent are brood mares,, it is 200 lbs pre acre, or one cow or one horse for 5 acre, one goat for 1 acre,, and so on.. but money wise if you can Ag it then give it a try.. Lou

 

[hawkeye08]

You asked about how they figure the homestead part, for us here, they use aerial maps and computers to figure the acreage that is home vs farm. For us, you can clearly see the lawn around the house and outside that is the farmland. It is a pain to provide the paperwork every few years, but worth it in tax savings. Good luck..

 

[dmccarty]

Visit you local extension office and have a chat with them and/or get their documentation. The NC Extension office has a very helpful website so check if your state does as well. In NC one can lower property taxes on timber and farm land. For the timber valuation there was a size requirement, I think 20 acres, but one could combine parcels. The Extension office had quite a bit of information about the process and requirements AND had classes from time to time. They just had a class on this very subject in the last few weeks.

In NC, you there was no a time requirement to get the valuation but if you sold the land for N number of years after getting the valuation you had to go back and pay taxes as if there was no timber or agriculture valuation.

When we were looking to buy land we were not finding any to buy. I was visiting the county GIS and Deeds offices looking at maps and reading deeds. I was creating a list of parcels that met our requirements and that were owned by people living out of state. The plan was to look at the parcels and then send out mail to see if the owners were willing to sell. In the end, we did not do this because a parcel came on the market and we were able to buy it. Spending a bit of time in the court house was interesting though. I had some informative talks with county employees, one of who was a neighbor of a parcel we were looking at buying. She was very helpful in that case because she gave me some missing information.

The vast majority of the county employees we talked too were very helpful and friendly. Now, there were a couple of raging holes but eventually they were fired. The employees are dealing with these issues every day and SHOULD know what they are talking about and they certainly hear things.

Just reading some of the deeds was just danged interesting. Property lines marked by trees on a creek or a rock in a road that now longer exists made some interesting reading. :laughing::laughing::laughing:

Later,
Dan

 

[ustmd]

For those of you in the other 49 states, the great state of TX allows a significant amount of discretion to the various appraisal districts for granting ag exemption on property taxes.

I am with the others, that this may be more trouble than it is worth.

I am in Travis county. In this appraisal district, if you homestead, then automatically the value of the house and 1 acre of land is excluded from the ag exemption. The district here also will consider plots smaller than 10 acres for the ag exemptions, but you have to show evidence of supplemental feeding, etc to demonstrate that you are engaged in a sustainable commercial business (raising animals/growing food for you own consumption is not considered). Also they have a formula for numbers of animals per acre/per type of land (wood, grass land etc) you need to be raising (x number goats, or y number of cows).

Also, the county, here, is cracking down on the sale of land locked parcels--there maybe a reason all of those parcels have not changed ownership in so long. The county is requiring for a tittle change that the parcel have access to a public road either by easement or by continuity with a parcel with a same owner that has access to a public road.

Finally, for some good news. Ag exemption and the sales tax exemption are two separate and unrelated processes. Generally, if you have the ag exemption than the sales tax exemption will be given automatically when you apply, but you can get the sales tax exemption fairly easily even without the ag exemption. My in-laws, who live next door, on 8 acres just got the sales tax exemption because of horses.

 

[two_bit_score]

This is the kind of info I need! Thanks!! The thing I understand it as, is that you have to have already been engaged in agricultural activities on the land for the last 5 years before they even give you the exemption. The other thing is - how does the property the house sits on get excluded if it's all one property? Worst case I'll just continue to pay taxes, but it would be nice to have additional land even if it is part of a larger parcel that's being farmed for now.

Thanks for the info on the ghost town. It's pretty unlikely that you have stumbled across any property that is available to be bought. Stranger things have happened though so I'd like to see how this turns out.

As to your original objective to get your property in Ag, you should just go to the appraisal district and file the request then sit down with them and discuss your options. The best bet may be 'wildlife management' rather than trying to put one cow and claim its a farm. An owner generally has to be able to sustain the animals on the land and be producing Ag products for sale not just personal consumption to qualify.

 

[jinman]

My general opinion is you are likely to get into more hassle with the ag exemption than it is worth on such a small acreage. As Dodge Man said, you may spend more than the exemption is worth. I used to have 33 acres and now have 22 after selling one tract. None of my property is fenced and there are no structures for animals. The land is not good for crops of any kind except maybe orchards.

With around $1000 per year in taxes (county and school), I cannot justify going out and spending huge sums to fence my land and build structures for animals, not even chickens. I can leave my land clear and open. Also, when I want to go somewhere, I shut off water to my house and go. I don't have to make arrangements for anyone to take care of my animals. We put our four kitties at a kennel if needed, and that can even be more than the taxes if we are gone for 10 days or more. I just can't bring myself to seek exemptions when my tax burden is reasonable. If for some reason, my land value jumps through the roof, perhaps I'd be wise to sell it and move on. Since I own my land outright, I consider the taxes as rent. It's very cheap rent to not have the hassle of city life.

 

[dave1949]

In Ohio, forest land and farm land are administered under the same tax reduction (CAUV -current agricultural use valuation) program.

Oh, we have that too, and several other categories of property tax reductions aimed at preservation of land use, other than for development, by lowering tax burdens on "current use."

Not to sound like a sour puss, but all these programs are well-intentioned bureaucracy breeders that drive up the cost of government and our cost of complying with government. Plus, the state legislatures and congress feel the need to tweak them on a regular basis, thereby fomenting new rules, more rules, and obsolete rules that keep lawyers and accountants employed and taxpayers confused.

Taking Maine as an example, we have an ageing almost static population, and 90% of the state is forested. Do we really need a program to encourage growing trees? If the actual goal is to support the paper industry, which current programs are not really doing well, then I could see strong tax incentives for very large single or cooperative properties only, thereby encouraging the preservation and formation of the large tracts of managed forest that actually help economical wood products production. Forests cannot be economically managed and harvested 10 acres or two truck loads at a time.

I think it is all related to a need to simplify our tax codes which would contribute greatly to reducing government overhead. We need "structural" or "transformative" changes, or pick your current buzzword.