Changing Ag Land Use Triggers a Rollback Tax

Land with farm or open-space valuation is taxed at a lower rate than market value. If you buy that land and switch it to a home or business use, Texas law kicks in a rollback tax.

The rollback tax equals the difference between the taxes that were paid and what would have been owed at full market value for the past three years. On high-value land near Dallas, that amount can be large. Before you buy land with ag or open-space valuation, ask how much the rollback tax would be if you changed the use. Get the answer in writing and confirm it with the Dallas Central Appraisal District before closing.