Another "land locked" property question - Texas Ghost Town

[SPIKER]

I agree with the crowd that says it is probably more hassle that it will ever be worth. that being said I bought 22 acres that was in Ohio's CAUV program already. BUT in order to maintain it as a CAUV I have yearly obligations to report earnings/losses on my property and to maintain it as such. I had mine started as forested land of which I had ~10 acres in mature woods and rest as crop/pasture lands. I had to get a Forester involved to develop a plan for my acres. Had him come out and work with me to develop said plan and help to administer it with follow up inspections. I put the Crop/Pasture lands into Trees using him advice. I bought a good number of trees thru the county AG extension office and started planting them. I also worked for a paper company at the time and managed to get granted a large number of 2~4year old seedlings to "Forest" the open/crop/pasture lands. I planted a LOT of Maple, Pine, Spruce, Nutting hard woods and on the boarders planted trees for wildlife use.

He has not been back in close to 8 years now and due to have him out sometime for inspection on what the land use has been.

How much I save in taxes per year, maybe enough to justify it on my acres but much less the hassle ??? probably not BUT with mine already IN the program to take it out I would have owed BACK TAXES for I believe it is 3 years worth of the CAUV abatement's.

Mark

 

[Ken45101]

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.

In dry years when the pasture was overgrazed, we turned the horses loose in the yard to graze.

 

[Ken73]

Thanks for all the comments guys - our intentions were to have diary goats that my wife could milk and make cheese from to sell. Also to have chickens where we'd sell the eggs (that we weren't consuming ourselves.) The garden we currently have is mostly for our consumption but it's near the house on the "homestead" part anyway.

I'll just deal with the taxes I suppose; sounds like it's more trouble than its worth.

Either way, we're still going ahead with our plans - I was looking to save $$ on taxes.

 

[dave1949]

Good for your wife on the dairy goats.

I had the unique chance to taste test fresh unpasteurized goat's milk from five different breeds/varieties all eating the same feed. I liked the milk from sables the best, although I don't know if that would have much to do with the eventual taste of the cheese.

Even if you skip the TX ag exemption, it is probably worth your while to use the IRS Farm filing if you generate sufficient sales revenue and intend to make a profit. Here is a good overview article, it's from 2004, so probably a bit dated. Farm Income and Taxes - Hobby Farms

 

[MNBobcat]

The "exemption" benefit is that they tax the property based on farm use and not what the property would be worth if it were sold and developed for housing. We have a farm on a golf course. For development purposes, it would be valued at 10 times what its value is for farming. So it can make a big difference on tax depending upon your situation.

We have another farm and the County values farm land at $3,000 per acre for tax purposes. As it turns out, that's also what it was valued at outside of the "exemption". So in that case, the "exemption" made no difference at all in actual taxes paid. However, if the housing market continues heating up then land prices for housing will go up and in that case we'll see a benefit from the exemption.

Also, here they always figure your house on 1 acre for tax purposes and then the remaining property is part of the exemption and taxed at a different rate.

 

[300UGUY]

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.

Amen to that. Here in Michigan, the government is still fixated on the automotive industry. We actually have had a declining population, mainly due to the downsizing of the industry. The local economic development folks keep trying to cut deals for small supplier plants, usually pretty low tech places. Wages in these shops are low, and few benefits. In return for crappy jobs, the factories get reduced taxes, sometimes loans from the state. And when the tax exemption is up, the companies get new exemptions or they move. Meanwhile, we spend less on education every year, and more on prisons. ( 85% are in for drug related crimes )

 

[Ken73]

For those of you interested in the history, here's a pic of the land plots; you can see where the railroad used to go through (no longer there either, but evidence of it is strewn around other properties in the county as well as the neighboring county) and how there was a small "downtown" area with scattered small homestead plots. I'm not zoomed in enough on the map to see which ones are still supposedly "owned" by someone else but we drove by there yesterday and verified; it's actually cow field, not rice fields. (The rice fields are to the southwest.)

 

[dmccarty]

For those of you interested in the history, here's a pic of the land plots; you can see where the railroad used to go through (no longer there either, but evidence of it is strewn around other properties in the county as well as the neighboring county) and how there was a small "downtown" area with scattered small homestead plots. I'm not zoomed in enough on the map to see which ones are still supposedly "owned" by someone else but we drove by there yesterday and verified; it's actually cow field, not rice fields. (The rice fields are to the southwest.)

View attachment 318127

That is danged interesting. I would have to dig more to find out the history of the land. :laughing: I wonder why the "landlocked" smaller parcels were created?

Later,
Dan

 

[two_bit_score]

Ken73, thanks for the pic and the story. Interesting. I am always amazed at the things you can run across in old records or in courthouses.

Good luck on your place.

.

 

[rrbrown]

Why buy the property? In florida one can give the owner (many times absentee and same tax problem) Give owner 99 year revocable lease for $1 dollar a year for agriculture grazing. You are resposible for fence up keep. Besure to have animals on it and required equipment. Water tank, bale ring mineral box ect. The tax man will review the property, drive by, satilite pictures and will want to see the above. Including livestock trails to the water and feed boxes.
Rule number 1 Do not ask for info from tax folks, they do not want tax reciepts to go down.
Rule number 2 find a local estate planning attorney to help file the first paper. These folks have a list of older folks in their pocket looking for ways to reduce the taxes on their estate owned property.
Good luck