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Title 1. Property Tax Code
Subtitle D. Appraisal and Assessment

Chapter 23. Appraisal Methods and Procedures

Subchapter E. Appraisal of Timber Land

Sec. 23.71. Definitions.
Sec. 23.72. Qualification for Productivity Appraisal.
Sec. 23.73. Appraisal of Qualified Timber Land.
Sec. 23.74. Capitalization Rate.
Sec. 23.75. Application.
Sec. 23.751. Late Application for Appraisal as Timber Land.
Sec. 23.76. Change of Use of Land.
Sec. 23.77. Land Ineligible for Appraisal as Timber Land.
Sec. 23.78. Minimum Taxable Value of Timber Land.
Sec. 23.79. Action on Applications.

Sec. 23.71. Definitions.

In this subchapter:

(1) "Category of the land" means the value classification of land for timber production, based on soil type, soil capability, general topography, weather, location, and other pertinent factors, as determined by competent governmental sources.

(2) "Net to land" means the average net income that would have been earned by a category of land over the preceding five years by a person using ordinary prudence in the management of the land and the timber produced on the land. The net income for each year is determined by multiplying the land's potential average annual growth, expressed in tons, by the stumpage value, expressed in price per ton, of large pine sawtimber, small pine sawtimber, pine pulpwood, hardwood sawtimber, hardwood pulpwood, and any other significant timber product, taking into consideration the three forest types and the four different soil types, as determined by using information for the East Texas timber-growing region as a whole from the U.S. Forest Service, the Natural Resources Conservation Service of the United States Department of Agriculture, the Texas Forest Service, and colleges and universities within this state, and by subtracting from the product reasonable management costs and other reasonable expenses directly attributable to the production of the timber that a prudent manager of the land and timber, seeking to maximize return, would incur in the management of the land and timber. Stumpage prices shall be determined by using information collected for all types of timber sales, including cutting contract and gatewood sales.

Amended by SB 1646, 78th Tex. Leg., 2003, effective January 1, 2004.

Cross References:

Constitutional authorization, see art. VIII, Sec. 1-d-1, Tex. Const.
Listing in appraisal records, see Sec. 25.02(a)(5).
Special appraisal records, see Sec. 25.011.

Sec. 23.72. Qualification for Productivity Appraisal.

Land qualifies for appraisal as provided by this subchapter if it 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 has been devoted principally to production of timber or forest products or to agricultural use that would qualify the land for appraisal under Subchapter C or D of this chapter for five of the preceding seven years.

Amended by 1987 Tex. Laws, ch. 780, Sec. 3.

Notes:

Evidence that trees can be and will be cut and sold, even for a profit, does not satisfy all the statutory qualifications for the timber-use valuation under Property Tax Code Section 23.72. A property owner has to show more than intent to harvest trees in the future and more than the land had trees for cutting. The acceptable degree of intensity for timberland management does not vary from landowner to landowner and does not depend on whether the landowner can realize a profit. An entire acreage used for a golf course, although some excess acreage not leased still contained timber, was subject to the rollback taxes when the acreage that qualified for timber appraisal was leased for a golf course. Harris County Appraisal District v. Wilkerson, 911 S.W.2d 84 (Tex. App.-Houston [1st District] 1995, writ denied).

Land used solely for cutting wood to build fences for ranch operations does not qualify for timber appraisal. Tex. Att'y Gen. Letter Opinion LO-88-89 (1988).

Sec. 23.73. Appraisal of Qualified Timber Land.

(a) The appraised value of qualified timber land is determined on the basis of the category of the land, using accepted income capitalization methods applied to average net to land. The appraised value so determined may not exceed the market value of the land as determined by other appraisal methods.

(b) The comptroller by rule shall develop and distribute to each appraisal office appraisal manuals setting forth this method of appraising qualified timber land, and each appraisal office shall use the appraisal manuals in appraising qualified timber land. The comptroller by rule shall develop and the appraisal office shall enforce procedures to verify that land meets the conditions contained in Section 23.72 of this code. The rules, before taking effect, must be approved by majority vote of a committee comprised of the following officials or their designees: the governor, the comptroller, the attorney general, the agriculture commissioner, and the Commissioner of the General Land Office.

(c) For the purposes of Section 23.76 of this code, the chief appraiser also shall determine the market value of qualified timber land and shall record both the market value and the appraised value in the appraisal records.

(d) The appraisal of minerals or subsurface rights to minerals is not within the provisions of this subchapter.

Amended by 1981 Tex. Laws (1st C.S.), p. 145, ch. 13, Sec. 73; amended by 1991 Tex. Laws (2nd C.S.), p. 31, ch. 6, Sec. 26.

Cross References:

Appraisal of timber lands, see Rule Sec. 9.4011.

Sec. 23.74. Capitalization Rate.

(a) The capitalization rate to be used in determining the appraised value of qualified timber land as provided by this subchapter is the greater of:

(1) the interest rate specified by the Farm Credit Bank of Texas or its successor on December 31 of the preceding year plus 2 1/2 percentage points; or

(2) the capitalization rate used in determining the appraised value of qualified timber land as provided by this subchapter for the preceding tax year.

(b) Notwithstanding Subsection (a):

(1) in the first tax year in which the capitalization rate determined under that subsection equals or exceeds 10 percent, the capitalization rate for that tax year is the rate determined under Subsection (a)(1); and

(2) for each tax year following the tax year described by Subdivision (1), the capitalization rate is the average of the rate determined under Subsection (a)(1) for the current tax year and the capitalization rate used for each of the four tax years preceding the current tax year other than a tax year preceding the tax year described by Subdivision (1).

Amended by 1995 Tex. Laws, p. 3375, ch. 579, Sec. 5; amended by SB 1646, 78th Tex. Leg., 2003, effective January 1, 2004.

Sec. 23.75. Application.

(a) A person claiming that his land is eligible for appraisal as provided by this subchapter must file a valid application with the chief appraiser.

(b) To be valid, the application must:

(1) be on a form provided by the appraisal office and prescribed by the comptroller; and

(2) contain the information necessary to determine the validity of the claim.

(c) The comptroller shall include on the form a notice of the penalties prescribed by Section 37.10, Penal Code, for making or filing an application containing a false statement. The comptroller, in prescribing the contents of the application form, shall require that the form permit a claimant who has previously been allowed appraisal under this subchapter to indicate that previously reported information has not changed and to supply only the eligibility information not previously reported.

(d) The form must be filed before May 1. However, for good cause the chief appraiser may extend the filing deadline for not more than 60 days.

(e) If a person fails to file a valid application on time, the land is ineligible for appraisal as provided by this subchapter for that year. Once an application is filed and appraisal under this subchapter is allowed, the land is eligible for appraisal under this subchapter in subsequent years without a new application unless the ownership of the land changes or its eligibility under this subchapter ends. However, the chief appraiser if he has good cause to believe the land's eligibility under this subchapter has ended, may require a person allowed appraisal under this subchapter in a prior year to file a new application to confirm that the land is currently eligible under this subchapter by delivering a written notice that a new application is required, accompanied by the application form, to the person who filed the application that was previously allowed.

(f) The appraisal office shall make a sufficient number of printed application forms readily available at no charge.

(g) Each year the chief appraiser for each appraisal district shall publicize, in a manner reasonably designed to notify all residents of the district, the requirements of this section and the availability of application forms.

(h) A person whose land is allowed appraisal under this subchapter shall notify the appraisal office in writing before May 1 after eligibility of the land under this subchapter ends. If a person fails to notify the appraisal office as required by this subsection a penalty is imposed on the property equal to 10 percent of the difference between the taxes imposed on the property in each year it is erroneously allowed appraisal under this subchapter and the taxes that would otherwise have been imposed.

(i) The chief appraiser shall make an entry in the appraisal records for the property against which the penalty is imposed indicating liability for the penalty and shall deliver a written notice of imposition of the penalty to the person who owns the property. The notice shall include a brief explanation of the procedures for protesting the imposition of the penalty. The assessor for each taxing unit that imposed taxes on the property on the basis of appraisal under this subchapter shall add the amount of the penalty to the unit's tax bill for taxes on the property against which the penalty is imposed. The penalty shall be collected at the same time and in the same manner as the taxes on the property against which the penalty is imposed. The amount of the penalty constitutes a lien on the property against which the penalty is imposed and accrues penalty and interest in the same manner as a delinquent tax.

(j) If the chief appraiser discovers that appraisal under this subchapter has been erroneously allowed in any one of the five preceding years because of failure of the person whose land was allowed appraisal under this subchapter to give notice that its eligibility had ended, the chief appraiser shall add the difference between the appraised value of the land under this subchapter and the market value of the land to the appraisal roll as provided by Section 25.21 of this code for other property that escapes taxation.

Amended by 1981 Tex. Laws (1st C.S.), p. 146, ch. 13, Sec. 74; amended by 1991 Tex. Laws (2nd C.S.), p. 32, ch. 6, Sec. 27; amended by 1995 Tex. Laws, p. 3375, ch. 579, Sec. 6.

Cross References:

Special use application forms, see Rule Sec. 9.402.
Contents of tax bills, see Sec. 31.01(d).

Sec. 23.751. Late Application for Appraisal as Timber Land.

(a) The chief appraiser shall accept and approve or deny an application for appraisal under this subchapter after the deadline for filing it has passed if it is filed before approval of the appraisal records by the appraisal review board.

(b) If appraisal under this subchapter is approved when the application is filed late, the owner is liable for a penalty of 10 percent of the difference between the amount of tax imposed on the property and the amount that would be imposed if the property were taxed at market value.

(c) The chief appraiser shall make an entry on the appraisal records indicating the person's liability for the penalty and shall deliver written notice of imposition of the penalty, explaining the reason for its imposition, to the person.

(d) The tax assessor for a taxing unit that taxes land based on an appraisal under this subchapter after a late application shall add the amount of the penalty to the owner's tax bill, and the tax collector for the unit shall collect the penalty at the time and in the manner he collects the tax. The amount of the penalty constitutes a lien against the property against which the penalty is imposed, as if it were a tax, and accrues penalty and interest in the same manner as a delinquent tax.

Added by 1981 Tex. Laws (1st C.S.), p. 147, ch. 13, Sec. 75.

Cross References:

Approval of appraisal records by appraisal review board, see Sec. 25.24.
Contents of tax bills, see Sec. 31.01(c)(3).
Penalties and interest on delinquent tax, see Sec. 33.01.

Sec. 23.76. Change of Use of Land.

(a) If the use of land that has been appraised as provided by this subchapter 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 that the land was appraised as provided by this subchapter 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 seven percent calculated from the dates on which the differences would have become due.

(b) A tax lien attaches to the land on the date the change of use occurs to secure payment of the additional tax and interest imposed by this section and any penalties incurred. The lien exists in favor of all taxing units for which the additional tax is imposed.

(c) The additional tax imposed by this section does not apply to a year for which the tax has already been imposed.

(d) If the change of use applies to only part of a parcel that has been appraised as provided by this subchapter, 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.

(e) A determination that a change in use of the land has occurred is made by the chief appraiser. The chief appraiser shall deliver a notice of the determination to the owner of the land as soon as possible after making the determination and shall include in the notice an explanation of the owner's right to protest the determination. If the owner does not file a timely protest or if the final determination of the protest is that the additional taxes are due, the assessor for each taxing unit shall prepare and deliver a bill for the additional taxes and interest as soon as practicable after the change of use occurs. The taxes and interest are due and become delinquent and incur penalties and interest as provided by law for ad valorem taxes imposed by the taxing unit if not paid before the next February 1 that is at least 20 days after the date the bill is delivered to the owner of the land.

(f) The sanctions provided by Subsection (a) do not apply if the change of use occurs as a result of:

(1) a sale for right-of-way;

(2) a condemnation; or

(3) a transfer of the land to this state or a political subdivision of this state to be used for a public purpose.

(g) If the use of the land changes to a use that qualifies under Subchapter C, D, or H of this chapter, the sanctions provided by Subsection (a) of this section do not apply.

Amended by 1981 Tex. Laws (1st C.S.), p. 148, ch. 13, Sec. 76; amended by 1983 Tex. Laws, p. 4824, ch. 851, Sec. 13; amended by 1989 Tex. Laws, p. 3598, ch. 796, Sec. 21; amended by 1999 Tex. Laws, p. 3332, ch. 732, Sec. 1; amended by 1999 Tex. Laws, p. 3191, ch. 631, Sec. 4.

Cross References:

Contents of tax bills, see Sec. 31.01(c)(3).
Notice of additional tax liability, see Sec. 5.010, Property Code.

Notes:

Evidence that trees can be and will be cut and sold, even for a profit, does not satisfy all the statutory qualifications for the timber-use valuation under Property Tax Code Section 23.72. A property owner has to show more than intent to harvest trees in the future and more than the land had trees for cutting. The acceptable degree of intensity for timberland management does not vary from landowner to landowner and does not depend on whether the landowner can realize a profit. An entire acreage used for a golf course, although some excess acreage not leased still contained timber, was subject to the rollback taxes when the acreage that qualified for timber appraisal was leased for a golf course. Harris County Appraisal District v. Wilkerson, 911 S.W.2d 84 (Tex. App.-Houston [1st District] 1995, writ denied).

Sec. 23.77. Land Ineligible for Appraisal as Timber Land.

Land is not eligible for appraisal as provided by this subchapter if:

(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.

Sec. 23.78. Minimum Taxable Value of Timber Land.

The taxable value of qualified timber land appraised as provided by this subchapter may not be less than the appraised value of that land for the taxing unit in the 1978 tax year, except that the taxable value used for any tax year may not exceed the market value of the land as determined by other generally accepted appraisal methods. If the appraised value of timber land determined as provided by this subchapter is less than a taxing unit's appraised value of that land in 1978, the assessor for the unit shall substitute the 1978 appraised value for that land on the unit's appraisal roll.

Amended by 1981 Tex. Laws (1st C.S.), p. 148, ch. 13, Sec. 77.

Notes:

In calculating the minimum taxable value of timber land, the assessor uses the 1978 value of the entire parcel of land, rather than portions based on categories of timber land or average value per acre. Temple Eastex, Inc. v. Spurger Independent School District, 720 S.W.2d 607 (Tex. App.-Beaumont 1986, no writ).

Sec. 23.79. Action on Applications.

(a) The chief appraiser shall determine separately each applicant's right to have his land appraised under this subchapter. After considering the application and all relevant information, the chief appraiser shall, as the law and facts warrant:

(1) approve the application and allow appraisal under this subchapter;

(2) disapprove the application and request additional information from the applicant in support of the claim; or

(3) deny the application.

(b) If the chief appraiser requests additional information from an applicant, the applicant must furnish it within 30 days after the date of the request or the application is denied. However, for good cause shown the chief appraiser may extend the deadline for furnishing the information by written order for a single period not to exceed 15 days.

(c) The chief appraiser shall determine the validity of each application for appraisal under this subchapter filed with him before he submits the appraisal records for review and determination of protests as provided by Chapter 41 of this code.

(d) If the chief appraiser denies an application, he shall deliver a written notice of the denial to the applicant within five days after the date he makes the determination. He shall include with the notice a brief explanation of the procedures for protesting his action.

Added by 1981 Tex. Laws (1st C.S.), p. 148, ch. 13, Sec. 78.

Cross References:

Chief appraiser must deliver notice denying special appraisal before submitting records to appraisal review board, see Sec. 25.22(a).
Denial notice by certified mail, see Sec. 1.07(d).
Property owner may protest denial of special appraisal, see Sec. 41.41(1).
Improper grant of special appraisal, see Sec. 23.75(j).
Challenge of improper grant of special appraisal, see Sec. 41.03(4).