It's a fact - today's rural land buyers are more likely to have hunting and fishing on their minds than cows or cotton. Recreation is the primary motive fueling the rural Texas land market.
Fortunately for recreationally motivated buyers, it is no longer necessary to demonstrate a legitimate farming or ranching practice to get a property tax break on rural land. If the land being purchased is classified as "open space" for appraisal purposes, converting it to wildlife management use can maintain that status and the favorable property tax treatment that goes with it.
What is Open Space Appraisal?
Rural landowners can receive substantial tax savings through either an agricultural use appraisal or an open space appraisal. Under agricultural use, the landowner must qualify based on his or her primary occupation and sources of income. For an open space appraisal, the land, not the landowner, must qualify based on its current and past usage. Rural land purchased by urban landowners is more apt to qualify for open space appraisal than agricultural use appraisal.
To qualify for open space appraisal, the land must have been devoted principally to agricultural use or the production of timber or forest products for five of the preceding seven years. The owner must file an application with the chief appraiser of the local appraisal district providing all necessary information before May 1.
Land uses that qualify for open space appraisal fall into five categories: planting and producing crops; raising or keeping livestock or exotic animals; devoting land to floriculture, viticulture and horticulture; producing or harvesting logs and posts for agricultural improvements; and wildlife management (Section 23.521, Texas Tax Code). The last category allows recreational landowners to qualify for open space appraisal without actively participating in farming and ranching.
According to the statute, wildlife management status requires the following.
At the time the landowner applies for wildlife management status, at least three of the following seven management practices must be in use to sustain a breeding, migrating or wintering population of indigenous wild animals.
Habitat control (habitat management). Using the land to create or promote an environment beneficial to wildlife. This includes any beneficial manipulation of plants, ground cover or shelter for the managed species.
Erosion control. Employing practices that attempt to reduce or keep soil erosion to a minimum for the benefit of wildlife.
Predator control. Engaging in practices designed to manage predators. This is necessary only when the number of predators is harmful to the managed species.
Providing supplemental water. Supplying water in addition to natural water sources.
Providing supplemental food. Supplying food or nutrition in addition to that produced by the land.
Providing shelter. Creating or maintaining vegetation or artificial structures that shelter the targeted species during nesting and breeding and protect them from the weather and predators.
Conducting census counts. Periodically taking surveys and inventories to determine the number, composition and other relevant information about the targeted wildlife population to see if the objectives of the management practices are being met.
What Land Qualifies?
The Texas Parks and Wildlife Department (TPWD) and the Texas Comptroller of Public Accounts develop standards for determining when land qualifies for wildlife management. Comptroller Office guidelines clarify some statutory requirements. For example, the statute states that land must qualify for open space appraisal before the landowner applies for wildlife management status.
The guidelines, however, state that the land must qualify for open space appraisal the year before the application is filed. Landowners applying for wildlife management status in 2003 must have received open space appraisal status on that land in 2002. Only open space appraisal status qualifies, according to the guidelines - agricultural use does not.
The targeted species must be indigenous to Texas. The guidelines define indigenous animals as those originating in or naturally migrating through an area and capable of living there naturally. Animals such as hummingbirds or waterfowl that live in an area seasonally qualify. Fish, whether indigenous or not, do not. The species cannot be imported or introduced to an area by man. Exotics, feral hogs and emus are among those that do not qualify.
The mere presence of an indigenous species is not sufficient to qualify land for wildlife management status. There must be a sufficient number of animals, including an adequate breeding population, to ensure a viable group for several generations. Does this rule disqualify land managed for an indigenous species such as bobwhite quail, which are steadily declining in some areas, or black bear, which have practically vanished from Texas?
Beyrl Armstrong, a property tax consultant with Plateau Integrated Land & Wildlife Management, Inc., and a member of the committee that developed the standards for the TPWD, says that managing land for a declining population of northern bobwhite by eliminating predators, improving food sources and providing cover should qualify. This should be true even if the population decreases for reasons beyond the control of the land manager, such as a prolonged drought.
According to Armstrong, "If the habitat exists, there will be a place for the population to recover and sustain itself. However, if the population decline is due to inappropriate land management practices, then either the plan needs to be changed or a different species targeted."
The statute states the targeted indigenous species must be managed for human food, medicine or recreation. The guidelines provide that the first two (food and medicine) require active management, while the third (recreation) can be either active or passive. Bird watching, hiking, hunting, photography and other hobby-type activities qualify as recreation. The owner's mere enjoyment in owning and managing the land for wildlife fulfills the test.
The statute requires wildlife management to be the primary use of the property. Land devoted to wildlife management may be used for other purposes, but those uses must be subordinate to wildlife management. The chief appraiser gathers and considers all the relevant facts to determine the land's primary use.
Updated guidelines issued in July 2002 offer additional standards to assist tax appraisers in determining when property qualifies for wildlife management status. Four qualifications were added. These include a written wildlife management plan, implementation of the plan, accomplishment of certain practices annually and dedication of a minimum percentage of the land to wildlife management in some cases.
A written wildlife management plan must be submitted to the chief appraiser on a TPWD-supplied form before May 1. Described activities and practices must be consistent with TPWD recommendations for the region where the property is located. The plan must describe:
The wildlife management plan must be implemented at the time the application is submitted, and a minimum of three of the seven management practices described earlier must be carried out each year.
A minimum percentage of the acreage within a tract must be dedicated to wildlife management if the tract was part of a larger tract that qualified for either ag use, open space or wildlife management appraisal the prior year. The minimum percentages, which translate into minimum required acreages, vary depending on the location of the tract.
Statewide, the minimum sizes range from 12½ acres in East Texas to 100 acres in the Trans Pecos. The appraisal district board of directors for each county makes the determination of the exact acreage needed within the statutory guidelines.
Plan, Implement, Document
Landowners and chief appraisers alike are perplexed by the statute's requirement that land granted wildlife management status be managed "to the degree of intensity typical for the area." How can this be measured? Because wildlife management is relatively new, there is little data to measure compliance. For this reason, TPWD divided the state into ten ecological areas and developed wildlife management guidelines and practices for each. Landowners may access these regional planning recommendations and other pertinent documents at TPWD's website.
Armstrong considers these regional guidelines indispensable in preparing a written plan. The guidelines help the landowner select management practices appropriate for the region and applicable to the targeted species.
According to Armstrong, the key factors in getting the application for wildlife management accepted are:
Once the application is accepted, minimum levels of intensity for each practice outlined in the guidelines are necessary to maintain the land's wildlife management tax status. The appraisal district requires periodic inspections and reports to document compliance. Reports may include photographs, receipts, aerial pictures, surveys and other data evidencing compliance. Landowners should maintain good communications with the appraisal district and promptly supply all required information.
Tax Neutral Status
Because land must be appraised as open space before it can be converted to wildlife management use, neither landowners nor appraisal districts achieve any additional tax benefit from the conversion. In this respect, wildlife management status is tax neutral.
Those who benefit from a wildlife management classification are landowners who no longer want to use their land primarily for agriculture or new landowners who have no agricultural intentions or skills. Some ranchers, for example, have discovered they can make more money from deer leases than from cattle. These people are freed from the burden of engaging in farming or ranching for tax purposes only.
Fambrough (firstname.lastname@example.org) is a member of the State Bar of Texas and a lawyer with the Real Estate Center at Texas A&M University.
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