Texas Real Estate

Texas rural land averaged $5,158 per acre in Q3 2025 and closed Q4 2025 at $5,214 per acre per the Texas Real Estate Research Center at Texas A&M. Regional pricing varies dramatically: Panhandle and South Plains $1,862 per acre (drought-prone, Ogallala-irrigated); Far West Texas $2,787; West Texas $2,878; Austin-Waco-Hill Country $7,704 to $7,911 (Edwards Plateau, recreational and wildlife premium); Northeast Texas $9,313; Gulf Coast and Brazos Bottom $11,423 to $11,502 per acre (rice and row-crop demand). South Texas brush country ranches typically run $3,000 to $6,000 per acre depending on water, fencing, and game improvements. Falls County recorded the state's highest 2025 pastureland cash rent at $21 per acre.

In November 2025, Texas voters approved two constitutional amendments that materially affect farmland owners. Proposition 2 prohibits the legislature from imposing any tax on realized or unrealized capital gains of individuals, estates, and trusts. Proposition 8 prohibits any state estate, inheritance, legacy, succession, gift, or generation-skipping transfer tax. Proposition 8 passed in 253 of 254 counties. Texas had repealed its inheritance tax via SB 752 in 2015; Proposition 8 makes that constitutional. For Texas farmland sellers, the constitutional locks guarantee no state capital gains tax layered on top of federal long-term capital gains, and no state estate tax — meaningful advantages over states like California (13.3 percent capital gains) or Illinois ($4 million estate tax cliff at 16 percent).

Texas Tax Code Section 23.51 lets qualifying agricultural land be appraised on productive (income) value rather than market value, often reducing taxable value by 90 percent or more. Land qualifies if it has been "devoted principally to agricultural use" — cultivation, livestock, exotics, floriculture, viticulture, horticulture, idle with cover crop, or government-program participation — to the degree of intensity generally accepted in the area for at least 5 of the preceding 7 years. Applications file with the county appraisal district; intensity standards and acreage minimums vary widely by county. Once approved the owner does not refile annually. If the use changes, Texas imposes a 3-year rollback of taxes plus interest on the difference between productivity value and market value.

A 1995 constitutional amendment to Article VIII §1-d-1 (implemented by HB 1358) lets landowners maintain ag-equivalent appraisal without farming or ranching. The property must already carry a 1-d-1 or timber valuation — you cannot convert directly from market value. TPWD defines seven approved management categories; the owner must perform at least three each year per TPWD and Comptroller intensity standards: habitat control, erosion control, predator control, supplemental water, supplemental food, supplemental shelter, and census counts. A written wildlife management plan (Form PWD 885) is required, and some appraisal districts (Fort Bend, Bexar, others) require annual reports. Wildlife valuation is particularly important in the Hill Country where former ranches subdivided into recreational tracts can preserve productivity appraisal that cattle removal would otherwise terminate.

Different markets serve different goals. The Hill Country (Edwards Plateau — Kerr, Bandera, Llano, Mason, Blanco, Gillespie, Kendall, Comal, Burnet, and Real counties) closed Q3 2025 at $7,704 per acre averaged and finished 2025 at $7,911 — driven by recreational, wildlife, and live-water premium with proximity to Austin and San Antonio. South Texas brush country (Webb, McMullen, La Salle, Dimmit) is world-class whitetail and ranch territory with average tract sizes over 1,100 acres and median listings around $7,875 per acre. Hill Country suits weekend retreats, vineyards, and tourism plays. South Texas suits hunting outfitters, cattle operations, and oil and gas mineral plays. Hageman can pull comparable sales for both regions.

Texas operates a split water-rights system. Surface water (rivers, creeks, lakes) is owned by the state and regulated by TCEQ — landowners may use it for domestic and livestock purposes without a permit but need a TCEQ water-right permit for irrigation or commercial use, with senior rights cutting off junior rights during drought. Groundwater follows the rule of capture — confirmed by Edwards Aquifer Authority v. Day (2012), which held landowners have a vested ownership interest in groundwater beneath their land — but local Groundwater Conservation Districts (and the Edwards Aquifer Authority for the Edwards) can permit, meter, and limit pumping. The Texas Water Development Board projects total groundwater availability to fall 25 percent by 2070, with Ogallala (which supplies roughly 95 percent of Panhandle irrigation) declining roughly 50 percent. Properties with documented dependable water rights and infrastructure command a 15 to 25 percent premium.

Hageman holds a Texas brokerage license and serves landowners in every county in Texas.

Texas has no state estate, inheritance, gift, or generation-skipping transfer taxes — and Proposition 8 (November 2025) makes that constitutional. Combined with the OBBBA-mandated permanent federal estate exemption of $15 million per decedent (effective January 1, 2026), this makes Texas one of the most tax-favorable states for retirees holding appreciated farmland. Texas also adopted the Uniform Partition of Heirs Property Act in 2017 (Texas Property Code Chapter 23A), with §23A.007 giving non-petitioning cotenants 45 days to elect a buyout at proportional appraised value, and §23A.008 requiring open-market broker sale rather than courthouse-steps auction. This is particularly important for multi-generational ranch families where one cotenant wants to force a sale others would prefer to avoid.

Texas operates at the largest scale. Texas leads the nation in number of farms, total cropland, and acreage in cattle, cotton, hay, sheep, wool, goats, mohair, and horses. Cotton dominates West Texas acreage; rice and grain define the Gulf Coast near Houston. Texas's split water-rights system (state-owned surface, rule-of-capture groundwater) creates due-diligence complexity that doesn't exist in Indiana or Illinois. The Hill Country's tourism and wildlife economy contrasts sharply with the Panhandle's commodity economy. No state income tax, no state estate tax, and constitutionally banned state capital gains tax (Proposition 2, November 2025) make Texas extremely tax-favorable for sellers — a key reason retirees holding appreciated farmland often relocate to or retain Texas residency.