Selling Texas Land With an Ag Exemption: How the Rollback Tax Works
Selling Texas land with an ag valuation does not have to mean a surprise tax bill. Here is when the three-year rollback really applies, how open-space and the older ag designation differ, who pays, what a vacant land contract must say, what a new owner must file by May 1, and what changes for wildlife-valued land.
Updated Nov 5, 2026 · By the Twin Sun Land Company team
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The short version
- The “ag exemption” is a special appraisal on productivity value, not an exemption (Tax Code § 23.41).
- Open-space (1-d-1): the 3-year rollback follows a change of use, not the sale (§ 23.55).
- Older 1-d designation: a sale can trigger 3 years of extra taxes plus interest (§ 23.46).
- A vacant land contract needs the additional tax notice or a paragraph on who pays; skip both and the buyer can recover from you (Property Code § 5.010).
- A new buyer generally reapplies before May 1; a surviving spouse doesn’t have to (§ 23.54(e-1)).
- If the land stopped qualifying, the owner owes written notice or a 10% penalty can apply (§ 23.54(h)).
- Partial change of use: the rollback covers only the part that changed (§ 23.55(d)).
- Wildlife-valued land: same 3-year rollback, plus a written plan and a minimum size after a split (34 TAC § 9.2005).
What is the Texas ag exemption, really?
It isn’t an exemption. It is a special appraisal: the appraisal district values qualifying land on what it can produce, using a five-year average of net income, instead of its market value (Tax Code §§ 23.41, 23.52). The district records both values every year, and the gap between the two tax bills is what a rollback can claw back.
Texas has two versions. Open-space land (often called 1-d-1, in Subchapter D of Tax Code chapter 23) and the older agricultural-use designation (called 1-d, Subchapter C). Your appraisal district record shows which one your land has, and the difference matters when you sell. Neither number is a sale price: appraised value vs. market value in Texas.
Does selling land with an ag valuation trigger a rollback tax?
Under open-space valuation, the rollback is tied to a change of use, not to the sale itself: if the land stops being used for agriculture, an additional tax for the three prior years comes due (Tax Code § 23.55). Under the older 1-d designation, a sale itself can trigger three years of additional taxes plus interest (§ 23.46).
| Open-space (1-d-1) | Agricultural use (1-d) | |
|---|---|---|
| What triggers it | A change of use | A sale, or a change to nonagricultural use |
| How far back | 3 years before the year of the change | 3 years before the sale or change |
| Interest | Not in § 23.55; penalties and interest only if the bill is paid late | Plus interest at the delinquent-tax rate |
| Statute | Tax Code § 23.55 | Tax Code § 23.46(c) |
The rollback is the difference between the tax you paid on ag value and the tax you would have paid on market value for each of those years. A tax lien attaches on the date the use changes (§ 23.55(b)). The chief appraiser sends the owner of the land a notice with the right to protest, and the bill is due before the next February 1 that is at least 20 days after it is delivered (§ 23.55(e)).
Why do older sources say five years, interest, or that the buyer pays?
Because the law changed twice. A 2019 bill cut the open-space rollback from five years to three and its interest from 7% to 5% (H.B. 1743), and a 2021 bill removed the interest (H.B. 3833). Articles, attorney general opinions and bill analyses written before then describe the old rules.
| Change of use | Years back | Interest | Law |
|---|---|---|---|
| Before Sept. 1, 2019 | 5 | 7% a year | Tax Code § 23.55 before 2019 |
| Sept. 1, 2019 to June 14, 2021 | 3 | 5% a year | H.B. 1743 |
| On or after June 15, 2021 | 3 | None, unless the bill is paid late | H.B. 3833 |
Each bill applies only to a change of use on or after its effective date, so an old rollback bill can still show the old math. On who pays: many explainers say “the buyer pays” because the buyer is usually the one who changes the use after closing. The statute imposes the tax on the land and bills its owner (§ 23.55(a), (e)); it does not split the cost between buyer and seller, which is why the contract should settle it.
Who pays the rollback when Texas ag land is sold?
The lien sits on the land, not on a person, so the contract decides who pays if the use changes. If the buyer keeps farming or ranching it, no rollback comes due. If the buyer plans to build, say whether the price accounts for it. A missing notice can shift the bill back to the seller (Property Code § 5.010).
On the Texas Real Estate Commission’s land contract (TREC No. 9-18, paragraph 13B), the default is set: if the sale or the buyer’s use after closing triggers the rollback, the buyer owes it; if the seller’s own change of use before closing triggered it, the seller does. That form is where the common “the buyer pays” answer comes from. A different contract can change it. Who pays what at a Texas land closing.
When you sell to us, we put the rollback answer in writing before you sign, so it never surprises you at closing.
What must a Texas vacant land contract say about additional taxes?
An owner selling vacant land must put a bold notice about possible additional taxes in the contract, unless a separate paragraph says who pays those taxes (Property Code § 5.010). Skip both, and the buyer can recover from you the additional taxes caused by the transfer, or by a change of use within five years.
| Rule | What it means when you sell | Source |
|---|---|---|
| The notice | Bold text in the contract warning that the buyer may not qualify for the special appraisal, and that the transfer or a later change of use may bring an additional tax | § 5.010(a) |
| The alternative | A separate contract paragraph that expressly provides for paying those taxes | § 5.010(d) |
| If you do neither | The buyer can recover from you any additional taxes and interest they pay because of the transfer, or a change of use before the fifth anniversary of the transfer | § 5.010(e) |
| Buyers who don’t need it | Every buyer is a co-owner of an undivided interest, your spouse, or your lineal relative | § 5.010(c) |
| Transfers outside the rule | Court orders and foreclosure sales, bankruptcy trustees, fiduciaries administering an estate, guardianship or trust, mineral-only interests, and transfers to or from a government | § 5.010(b) |
This is why “the buyer pays” isn’t the whole answer. On a bare-bones contract with no notice and no tax paragraph, a buyer who builds within five years can come back to the seller for that bill. The notice text in the statute still says “plus interest,” even though § 23.55 no longer adds interest to the open-space rollback; use the statute’s wording as written. Whether a given paragraph, such as TREC 13B, meets § 5.010(d) is a question for your title company or attorney. The other Texas notices a land seller may owe.
Does a new owner have to reapply for the ag valuation?
Usually, yes. Open-space valuation carries over each year unless the ownership changes or the land stops qualifying (Tax Code § 23.54(e)). A new owner files with the appraisal district before May 1, and the chief appraiser can extend that up to 60 days for good cause (§ 23.54(d)). A surviving spouse is the main exception (§ 23.54(e-1)).
| Who owns it now | New application? | If it is late |
|---|---|---|
| A new buyer | Yes, before May 1 | Accepted until the review board approves the appraisal records, with a penalty of 10% of the tax difference (§ 23.541(a), (b)) |
| The surviving spouse of the former owner | No. Ownership is not treated as changed (§ 23.54(e-1)(1)) | Does not arise, unless the district asks for a new form |
| A new owner using the land in materially the same way, with the use overseen or conducted by the same individuals as the prior tax year | No. Ownership is not treated as changed (§ 23.54(e-1)(2)) | If one is filed, no penalty through the later of the tax delinquency date or one year after the transfer (§ 23.541(a-2)) |
| Heirs, when an owner died during the prior tax year | Yes, unless a row above fits | A surviving spouse or child, the executor or administrator, or a fiduciary for the spouse or child can file through the tax delinquency date with no penalty (§ 23.541(a-1)) |
Even where no new application is required, the chief appraiser can ask for one to confirm the land still qualifies (§ 23.54(e)), so ask the district how it reads the same-use rule for your land. Miss a required application and the land is ineligible for that year (§ 23.54(e)). Land that has lost the valuation generally has to show current ag use plus ag or timber use in five of the preceding seven years (§ 23.51(1)).
What if the land stopped qualifying before I sell?
You owe the appraisal office written notice before May 1 after eligibility ends or the category of ag use changes (Tax Code § 23.54(h)). Miss it and a penalty applies: 10 percent of the tax difference for each year the valuation was wrongly allowed. That penalty is a lien on the land (§ 23.54(i)).
The chief appraiser can also add the missed value back to the roll for any of the five preceding years as property that escaped taxation (§ 23.54(j)). This comes up most when a lease ended or the cattle left years before a sale. On the TREC form, assessments caused by the seller’s use or change in use before closing are the seller’s (paragraph 13B), and that obligation survives closing. If the land has sat unused, ask the appraisal district where it stands before you sign.
Does selling land with a wildlife valuation in Texas trigger a rollback?
Not by itself. Wildlife management is an agricultural use under the open-space law (Tax Code § 23.51), so the 3-year rollback comes due only if the use changes (§ 23.55), and a new buyer generally must reapply (§ 23.54). Two extra rules matter when you sell: a written wildlife plan, and a minimum size if the tract gets smaller.
| Wildlife rule | What it means when you sell | Source |
|---|---|---|
| Wildlife use must start on land already ag-valued | A new buyer generally keeps the wildlife valuation only by reapplying (the exceptions). If the valuation lapses, wildlife use can’t start fresh on land that wasn’t appraised as open-space (or timber) land when that use began | Tax Code § 23.51(7)(A) |
| 3 of 7 practices every year | Habitat control, erosion control, predator control, supplemental water, supplemental food, shelters, census counts. A buyer who wants the valuation has to keep doing at least three | Tax Code § 23.51(7)(A) |
| Written plan | On the Texas Parks and Wildlife form, provided to the appraisal district. Ask the district what the new owner must file with the new application | 34 TAC § 9.2003 |
| Minimum size after a split | If the tract has fewer acres than it had on January 1 of the prior tax year, it must meet a wildlife use requirement set by region | 34 TAC § 9.2005 |
The size rule is the one that catches sellers. The requirement is figured as (x – 1) / x, where x is the acres in the tract, and each appraisal district picks a percentage inside its region’s range. Solved for acres, the ranges work out roughly like this (standard tracts, not wildlife property associations or endangered-species habitat, which have lower ranges):
| Region | Range in the rule | Smallest qualifying tract |
|---|---|---|
| Trans-Pecos | 97% to 99% | About 33.3 to 100 acres |
| High Plains | 96% to 98% | About 25 to 50 acres |
| Rolling Plains | 96% to 98% | About 25 to 50 acres |
| Edwards Plateau (western) | 96% to 98% | About 25 to 50 acres |
| Edwards Plateau (eastern) | 93% to 95% | About 14.3 to 20 acres |
| Cross Timbers and Prairies | 93% to 95% | About 14.3 to 20 acres |
| Gulf Prairies and Marshes (upper coast) | 92% to 94% | About 12.5 to 16.7 acres |
| Gulf Prairies and Marshes (lower coast) | 96% to 98% | About 25 to 50 acres |
| Post Oak Savannah | 92% to 94% | About 12.5 to 16.7 acres |
| Blackland Prairie | 92% to 94% | About 12.5 to 16.7 acres |
| Pineywoods | 92% to 94% | About 12.5 to 16.7 acres |
| South Texas Plains | 96% to 98% | About 25 to 50 acres |
So if you sell 10 acres out of a 40-acre wildlife-valued tract in the Post Oak Savannah, the 10 acres fall under the roughly 12.5-acre floor and can’t keep a wildlife valuation on their own. If the new owner’s use changes, the § 23.55 rollback on that part follows (only the part that changed). Tracts that have qualified for wildlife use continuously since the 2002 tax year and are at least as large as on January 1, 2009 are exempt from the size rule (§ 9.2005(f)). Before you split wildlife land, ask your appraisal district for its adopted percentage, and put who pays any rollback in the contract. Older articles that say a wildlife rollback goes back five years describe the pre-2019 law.
When does a change of use not trigger the rollback?
The open-space rollback does not apply when the change comes from a sale for right-of-way, a condemnation, or a transfer to the state or a political subdivision for a public purpose (Tax Code § 23.55(f)). Claiming the land as part of your homestead is not a change of use by itself (§ 23.55(i)).
A change to a use that qualifies as timber land under Subchapter E is also outside the rollback (§ 23.55(g)). The older 1-d designation has its own rules: a homestead claim alone is not a diversion (§ 23.46(e)), a condemned right-of-way under 200 feet wide is not one if the rest of the parcel still qualifies (§ 23.46(e-1)), and additional taxes caused by a condemnation fall on the condemning entity, not the owner (§ 23.46(g)). Narrower exceptions cover cemeteries, religious, charitable and school organizations, and certain economic development transfers (§ 23.55(f)(4), (j), (l), (o) to (q)).
What if only part of the land changes use?
Then the rollback applies only to that part. If a buyer carves out a home site on five acres of a hundred-acre pasture, the additional tax is figured on the five acres that changed, not the whole tract (Tax Code § 23.55(d)). The rest keeps its valuation as long as it still qualifies.
The chief appraiser decides whether a change of use happened and must send the owner a notice that explains the right to protest (§ 23.55(e)).
If you sell to us: We pay all closing costs (title, closing fee, notary and recording), and there is no commission. Texas has no transfer tax or deed stamps. Only a mortgage, liens or back taxes owed on the land come out of the sale proceeds, paid off by the title company at closing. How selling land in Texas works.
Please note. General information, not legal advice. Laws change and every title is different, so confirm your situation with a Texas attorney or your county tax office before you act.
Who wrote this. Twin Sun Land Co. is a direct cash buyer of vacant and rural land in Oklahoma and Texas. We are one of the options on this page, so we have a stake in the answer. Our mission: Twin Sun Land Company exists to serve landowners: we make selling land simple, transparent, and fair, so every owner walks away with the most value their property can bring. The Texas rules here come from the Texas statutes linked in the sources.
Frequently asked questions
Does selling ag-exempt land in Texas trigger a rollback?
Under open-space (1-d-1) valuation, a change of use triggers it, not the sale itself (Tax Code 23.55). Under the older 1-d designation, a sale can trigger three years of additional taxes plus interest (23.46).
How many years does the Texas rollback tax go back?
Three years before the year the use changes, figured as the difference between the ag-value tax and the market-value tax.
Who pays the rollback tax when ag land is sold in Texas?
Whoever the contract says. On the TREC land contract (No. 9-18, para. 13B) it’s the buyer if the sale or the buyer’s use triggers it, the seller if the seller’s own earlier change did. The lien attaches to the land, so settle it in writing.
Does the ag valuation transfer to a new owner?
Not automatically. A new buyer files a new application with the appraisal district before May 1 (23.54). A surviving spouse does not need one, and neither does a new owner who keeps the same use under the same individuals (23.54(e-1)).
Does a surviving spouse have to reapply for the ag exemption in Texas?
No. The “ag exemption” is really a special appraisal, and a transfer to the surviving spouse isn’t treated as a change of ownership (Tax Code 23.54(e-1)), though the chief appraiser can still ask for an application to confirm the land qualifies. Other heirs generally apply; if the owner died in the prior tax year, a child or executor can file through the tax delinquency date with no late penalty (23.541(a-1)).
Does a Texas land contract need a rollback notice?
For vacant land, yes, unless a separate paragraph says who pays those taxes (Property Code 5.010). Without either, the buyer can recover from the seller the additional taxes caused by the transfer or by a change of use within five years.
What if I never told the appraisal district the land stopped qualifying?
The owner must give written notice before May 1 after eligibility ends (Tax Code 23.54(h)). Otherwise a penalty of 10 percent of the tax difference applies for each year wrongly allowed, and the district can reach back up to five years (23.54(j)).
Is the Texas rollback still five years?
No. For open-space land it has been three years since a 2019 bill (H.B. 1743), and a 2021 bill (H.B. 3833) removed the interest.
Does a wildlife exemption roll back when Texas land is sold?
Not because of the sale. Wildlife management is an agricultural use under Tax Code 23.51, so the 3-year rollback comes due only if the use changes (23.55). A new buyer generally must reapply (23.54) and keep a written wildlife management plan.
What is the minimum acreage for a Texas wildlife valuation after a split?
It depends on the region and the percentage your appraisal district adopts under 34 TAC 9.2005: roughly 12.5 to 16.7 acres in the Post Oak Savannah, Blackland Prairie and Pineywoods, up to about 33 to 100 acres in the Trans-Pecos.
Sources
Tax Code §§ 23.41, 23.46, 23.51, 23.52, 23.521, 23.54, 23.541 and 23.55, Property Code § 5.010 and TREC form 9-18 were read in their official text on November 4, 2026. The 2019 and 2021 bills were read October 27 and 28, 2026, and the wildlife rules (34 TAC §§ 9.2003 and 9.2005 and the TPWD acreage table) on November 3, 2026. How to cite: Twin Sun Land Company team, “Selling Texas Land With an Ag Exemption,” Twin Sun Land Co., November 2026.
- Ag use value: capitalized 5-year average net income (§ 23.41 for 1-d land; §§ 23.51(4) and 23.52 for open-space land): Tax Code § 23.41, § 23.51, § 23.52
- Older 1-d designation: a sale or diversion triggers 3 years of additional taxes plus interest: Tax Code § 23.46
- Open-space (1-d-1) application: file before May 1; a change of ownership needs a new one, with two exceptions; written notice and a 10% penalty when eligibility ends: Tax Code § 23.54
- Late applications: the 10% penalty, and the no-penalty windows after a death or for the same use under the same people: Tax Code § 23.541
- Vacant land contracts: the additional tax notice, who is excused, and the buyer’s right to recover if it is left out: Property Code § 5.010
- Open-space rollback: 3 preceding years on a change of use; lien; partial parcel; notice, protest and due date; exceptions: Tax Code § 23.55
- Contract default: rollback is the buyer’s if the sale or buyer’s use triggers it, the seller’s if the seller’s change of use did (para. 13B): TREC Unimproved Property Contract, TREC No. 9-18 (PDF)
- Rollback cut from 5 years to 3 and interest from 7% to 5%, for changes of use on or after Sept. 1, 2019: H.B. 1743 (86th Leg., 2019)
- Rollback interest removed, for changes of use on or after the Act’s effective date (2021): H.B. 3833 (87th Leg., 2021)
- Wildlife management is an agricultural use; it must start on land already appraised as open-space (or timber) land and use 3 of 7 practices: Tax Code § 23.51
- Wildlife standards: set by Texas Parks and Wildlife, adopted by the Comptroller; may set a minimum tract size and require a written plan: Tax Code § 23.521
- Written wildlife management plan on the TPWD form, provided to the appraisal district: 34 Tex. Admin. Code § 9.2003
- Reduced tracts: the (x-1)/x wildlife use requirement and the regional ranges: 34 Tex. Admin. Code § 9.2005, TPWD appraisal regions and minimum acreage (PDF)
More for Texas landowners
Last updated Nov 5, 2026. General information, not legal, tax or financial advice.
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