Sec. 23.74. CAPITALIZATION RATE. (a) The capitalization rate to be used in determining the appraised value of qualified timber land as provided by this subchapter is the greater of: (1) the interest rate specified by the Farm Credit Bank of Texas or its successor on December 31 of the preceding year plus 2-1/2 percentage points; or (2) the capitalization rate used in determining the appraised value of qualified timber land as provided by this subchapter for the preceding tax year. (b) Notwithstanding Subsection (a): (1) in the first tax year in which the capitalization rate determined under that subsection equals or exceeds 10 percent, the capitalization rate for that tax year is the rate determined under Subsection (a)(1); and (2) for each tax year following the tax year described by Subdivision (1), the capitalization rate is the average of the rate determined under Subsection (a)(1) for the current tax year and the capitalization rate used for each of the four tax years preceding the current tax year other than a tax year preceding the tax year described by Subdivision (1).
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