OUTDOORS TAX BREAK By JEFF STEWART, CCIM, SRES

FISHING PIER ON PRIVATE RANCH LAKE

If you are like a lot of my friends who have long saved for a vacation place at the coast or on the lake, soaring property taxes may have just about put that dream place out of reach. While I do not have a solution for high property taxes, I might have a suggestion that would fit the lifestyles of a lot of my outdoorsy friends and clients. Let me introduce you to cows and bees! In Texas we are fortunate that the State of Texas loves cows, bees, song birds and deer and taxes land accordingly.  All of which can play into a legitimate strategy for Texans to enjoy and invest in their own piece of the great outdoors without being taxed to the breaking point.

Whenever I mention the benefits of agriculture (AG) valuation to clients, most are quick to inform me that they are not raising cows, hay, or bees.  Fair enough, but leasing the grazing rights for a property qualifies and requires very little effort on the owner’s end.  I have yet to do it, but I understand that having bee hives also qualifies as AG on tracts up to twenty acres or so.

Of course, the other option is to secure a wildlife exemption.  This is much more technical, but my friends who have done it found it to be educational and interesting. Hunting and livestock are both allowed.  It is my understanding that the land must have had an AG valuation for the preceding two years to be accepted into the wildlife program.

So, why consider any of this? First as an example, besides farm and ranch land, what other $650,000 real estate investment (with no residence) is only taxed $175 in property taxes?   As a comparison, I looked up a lake house that recently sold on Lake Travis.  The tax appraiser put the value at $653,000 and the taxes were a whopping $10,116 per year.  In another year or two, the taxes may be $1,000 per month . . . for a weekend lake place!

Another thought is the ability to utilize a 1031 IRS tax deferred exchange.  Have a large capital gain in a problem rental property? A 1031 exchange would allow you to sell the rental and roll the proceeds tax-free into a recreational / investment property that is suitable for hunting, fishing, or camping trips.

If you would like more details on AG or wildlife exemptions do not hesitate to call me.

nformation About Brokerage Services (IABS) 

Jeff Stewart, CCIM, SRES  Broker Associate

jstewart@stanberry.com

Stanberry Realtors