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What Are Rollback Taxes?

what are rollback taxes

Tom Branch Real Estate Agent Plano, TX (972) 999-1669 Contact Profile

I recently sold a property out in the country. The home sits on about 7 acres and 6 of them have an agricultural exemption meaning the owner is using the land to produce a crop and the county does not tax the land used for crop production. This saves the owner about a thousand dollars in taxes each year in property taxes.

When the land is sold, the new owner may continue to produce the crop and claim the agricultural exemption. If they decide not to do so, the county will assess a rollback tax. The county will go back and calculate what the taxes would have been without the exemption for the past three years and

the new owner will pay the amount due. While in this case the cost will only be about $3000, the costs could be substantial for larger parcels or land that has a particularly high value due to its location.

Note that the amount of time covered in the rollback period varies from place to place. I was talking to a gentleman from Washington and he told me they go back seven years where he is currently living.

If you are purchasing property with some kind of exemption and you decide that you are not going to continue that exemption, you can negotiate who will pay the rollback taxes as part of the purchase contract.

Photo - Copyright 2011 Imaged2Sell

Posted on September 12, 2011 12:16 AM

Category: Taxes

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