83R3441 SMH-D
By: Raymond H.B. No. 2797
A BILL TO BE ENTITLED
AN ACT
relating to a limitation on increases in the appraised value for ad
valorem tax purposes of real property owned or leased by a small
business and used for business purposes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1.12(d), Tax Code, is amended to read as
follows:
(d) For purposes of this section, the appraisal ratio of a
homestead to which Section 23.23 applies or of real property to
which Section 23.231 applies is the ratio of the property's market
value as determined by the appraisal district or appraisal review
board, as applicable, to the market value of the property according
to law. The appraisal ratio is not calculated according to the
appraised value of the property as limited by Section 23.23 or
23.231.
SECTION 2. Subchapter B, Chapter 23, Tax Code, is amended by
adding Section 23.231 to read as follows:
Sec. 23.231. LIMITATION ON APPRAISED VALUE OF CERTAIN REAL
PROPERTY USED FOR BUSINESS PURPOSES. (a) In this section:
(1) "Business entity" means any entity recognized by
law through which business for profit is conducted, including a
sole proprietorship, partnership, firm, corporation, holding
company, joint stock company, receivership, or trust.
(2) "New improvement" means an improvement to real
property described by Subsection (b) made after the most recent
appraisal of the property that increases the market value of the
property and the value of which is not included in the appraised
value of the property for the preceding tax year. The term does not
include repairs to or ordinary maintenance of an existing structure
or the grounds or another feature of the property.
(b) This section applies only to real property that is:
(1) owned or leased by a business entity that had less
than $1 million in gross receipts in its most recent fiscal year;
and
(2) used for business purposes by the business entity.
(c) This section does not apply to property appraised under
Subchapter C, D, E, F, G, or H.
(d) Notwithstanding the requirements of Section 25.18 and
regardless of whether the appraisal office has appraised the
property and determined the market value of the property for the tax
year, an appraisal office may increase the appraised value of real
property described by Subsection (b) for a tax year to an amount not
to exceed the lesser of:
(1) the market value of the property for the most
recent tax year that the market value was determined by the
appraisal office; or
(2) the sum of:
(A) 10 percent of the appraised value of the
property for the preceding tax year;
(B) the appraised value of the property for the
preceding tax year; and
(C) the market value of all new improvements to
the property.
(e) If only part of a parcel of real property is owned or
leased by an owner who qualifies for the limitation provided by
Subsection (d), the limitation applies only to that part of the
parcel.
(f) When appraising real property described by Subsection
(b), the chief appraiser shall:
(1) appraise the property at its market value; and
(2) include in the appraisal records both the market
value of the property and the amount computed under Subsection
(d)(2).
(g) The limitation provided by Subsection (d) takes effect
as to a parcel or part of a parcel of real property described by
Subsection (b) on January 1 of the tax year following the first tax
year in which the owner or lessee of the property owns or leases the
property on January 1, meets the limitation on annual gross
receipts prescribed by Subsection (b), and uses the property for
business purposes. Except as provided by Subsection (h), the
limitation expires on January 1 of the tax year following the first
tax year in which the owner or lessee of the property ceases to own
or lease the property, meet the limitation on gross receipts
prescribed by Subsection (b), or use the property for business
purposes.
(h) If property subject to a limitation under Subsection (d)
is owned or leased by two or more persons, the limitation expires on
January 1 of the tax year following the first tax year in which the
ownership of at least a 50 percent interest in the property or in
the leasehold interest in the property is sold or otherwise
transferred.
(i) Notwithstanding Subsections (a)(2) and (d) and except
as provided by Subdivision (2) of this subsection, an improvement
to property that would otherwise constitute a new improvement is
not treated as a new improvement if the improvement is a replacement
structure for a structure that was rendered unusable by a casualty
or by wind or water damage. For purposes of appraising the property
under Subsection (d) in the tax year in which the structure would
have constituted a new improvement:
(1) the appraised value the property would have had in
the preceding tax year if the casualty or damage had not occurred is
considered to be the appraised value of the property for that year,
regardless of whether that appraised value exceeds the actual
appraised value of the property for that year as limited by
Subsection (d); and
(2) the replacement structure is considered to be a
new improvement only if:
(A) the square footage of the replacement
structure exceeds that of the replaced structure as that structure
existed before the casualty or damage occurred; or
(B) the exterior of the replacement structure is
of higher quality construction and composition than that of the
replaced structure.
(j) To receive a limitation under Subsection (d), a person
claiming the limitation must apply for the limitation by filing an
application with the chief appraiser of the appraisal district.
The chief appraiser shall accept and approve or deny an
application. For property appraised by more than one appraisal
district, a separate application must be filed in each appraisal
district to receive the limitation in that district. A limitation
provided by Subsection (d), once allowed, need not be claimed in
subsequent years and applies to the property until the limitation
expires as provided by this section or until the person's
qualification for the limitation ends. However, the chief
appraiser may require a person allowed a limitation in a prior year
to file a new application to confirm the person's current
qualification for the limitation by delivering not later than April
1 a written notice that a new application is required, accompanied
by an appropriate application form, to the person previously
allowed the limitation.
(k) The comptroller, in prescribing the contents of the
application form for a limitation under Subsection (d), shall
ensure that the form requires an applicant to provide the
information necessary to determine the validity of the limitation
claim. The form must require an applicant to provide the
applicant's name and driver's license number, personal
identification certificate number, or social security number. The
comptroller shall include on the form a notice of the penalties
prescribed by Section 37.10, Penal Code, for making or filing an
application containing a false statement and shall include on the
form a statement explaining that the application need not be made
annually and that if the limitation is allowed, the applicant has a
duty to notify the chief appraiser when the applicant's
qualification for the limitation ends. In this subsection,
"driver's license" and "personal identification certificate" have
the meanings assigned by Section 11.43(f).
(l) A person who is required to apply for a limitation under
Subsection (d) to receive the limitation for a tax year must apply
for the limitation not later than May 1 of that year. Except as
provided by Subsection (m), if the person fails to timely file a
completed application, the person may not receive the limitation
for that year.
(m) The chief appraiser shall accept and approve or deny an
application for a limitation under Subsection (d) for a tax year
after the deadline for filing the application has passed if the
application is filed not later than one year after the delinquency
date for the taxes on the property for that tax year. If a late
application is approved after approval of the appraisal records by
the appraisal review board, the chief appraiser shall notify the
collector for each taxing unit in which the property is located. If
the tax has not been paid, the collector shall deduct from the
person's tax bill the difference between the taxes that would have
been due had the property not qualified for the limitation and the
taxes due after taking the limitation into account. If the tax has
been paid, the collector shall refund the difference.
(n) A person who receives a limitation under Subsection (d)
shall notify the appraisal office in writing before May 1 after the
person's qualification for the limitation ends.
(o) This subsection expires January 1, 2018. For purposes
of applying the limitation provided by Subsection (d) in the first
tax year after the 2013 tax year in which the property is appraised
for taxation:
(1) the property is considered to have been appraised
for taxation in the 2013 tax year at a market value equal to the
appraised value of the property for that tax year; and
(2) a person who acquired real property described by
Subsection (b) in a tax year before the 2013 tax year is considered
to have acquired the property on January 1, 2013.
SECTION 3. Section 41.41(a), Tax Code, is amended to read as
follows:
(a) A property owner is entitled to protest before the
appraisal review board the following actions:
(1) determination of the appraised value of the
owner's property or, in the case of land appraised as provided by
Subchapter C, D, E, or H, Chapter 23, determination of its appraised
or market value;
(2) unequal appraisal of the owner's property;
(3) inclusion of the owner's property on the appraisal
records;
(4) denial to the property owner in whole or in part of
a partial exemption;
(4-a) determination that the owner's property does not
qualify for the limitation on appraised value provided by Section
23.231;
(5) determination that the owner's land does not
qualify for appraisal as provided by Subchapter C, D, E, or H,
Chapter 23;
(6) identification of the taxing units in which the
owner's property is taxable in the case of the appraisal district's
appraisal roll;
(7) determination that the property owner is the owner
of property;
(8) a determination that a change in use of land
appraised under Subchapter C, D, E, or H, Chapter 23, has occurred;
or
(9) any other action of the chief appraiser, appraisal
district, or appraisal review board that applies to and adversely
affects the property owner.
SECTION 4. Section 42.26(d), Tax Code, is amended to read as
follows:
(d) For purposes of this section, the value of the property
subject to the suit and the value of a comparable property or sample
property that is used for comparison must be the market value
determined by the appraisal district when the property is a
residence homestead subject to the limitation on appraised value
imposed by Section 23.23 or real property subject to the limitation
on appraised value imposed by Section 23.231.
SECTION 5. Sections 403.302(d) and (i), Government Code,
are amended to read as follows:
(d) For the purposes of this section, "taxable value" means
the market value of all taxable property less:
(1) the total dollar amount of any residence homestead
exemptions lawfully granted under Section 11.13(b) or (c), Tax
Code, in the year that is the subject of the study for each school
district;
(2) one-half of the total dollar amount of any
residence homestead exemptions granted under Section 11.13(n), Tax
Code, in the year that is the subject of the study for each school
district;
(3) the total dollar amount of any exemptions granted
before May 31, 1993, within a reinvestment zone under agreements
authorized by Chapter 312, Tax Code;
(4) subject to Subsection (e), the total dollar amount
of any captured appraised value of property that:
(A) is within a reinvestment zone created on or
before May 31, 1999, or is proposed to be included within the
boundaries of a reinvestment zone as the boundaries of the zone and
the proposed portion of tax increment paid into the tax increment
fund by a school district are described in a written notification
provided by the municipality or the board of directors of the zone
to the governing bodies of the other taxing units in the manner
provided by former Section 311.003(e), Tax Code, before May 31,
1999, and within the boundaries of the zone as those boundaries
existed on September 1, 1999, including subsequent improvements to
the property regardless of when made;
(B) generates taxes paid into a tax increment
fund created under Chapter 311, Tax Code, under a reinvestment zone
financing plan approved under Section 311.011(d), Tax Code, on or
before September 1, 1999; and
(C) is eligible for tax increment financing under
Chapter 311, Tax Code;
(5) the total dollar amount of any captured appraised
value of property that:
(A) is within a reinvestment zone:
(i) created on or before December 31, 2008,
by a municipality with a population of less than 18,000; and
(ii) the project plan for which includes
the alteration, remodeling, repair, or reconstruction of a
structure that is included on the National Register of Historic
Places and requires that a portion of the tax increment of the zone
be used for the improvement or construction of related facilities
or for affordable housing;
(B) generates school district taxes that are paid
into a tax increment fund created under Chapter 311, Tax Code; and
(C) is eligible for tax increment financing under
Chapter 311, Tax Code;
(6) the total dollar amount of any exemptions granted
under Section 11.251 or 11.253, Tax Code;
(7) the difference between the comptroller's estimate
of the market value and the productivity value of land that
qualifies for appraisal on the basis of its productive capacity,
except that the productivity value estimated by the comptroller may
not exceed the fair market value of the land;
(8) the portion of the appraised value of residence
homesteads of individuals who receive a tax limitation under
Section 11.26, Tax Code, on which school district taxes are not
imposed in the year that is the subject of the study, calculated as
if the residence homesteads were appraised at the full value
required by law;
(9) a portion of the market value of property not
otherwise fully taxable by the district at market value because of:
(A) action required by statute or the
constitution of this state that, if the tax rate adopted by the
district is applied to it, produces an amount equal to the
difference between the tax that the district would have imposed on
the property if the property were fully taxable at market value and
the tax that the district is actually authorized to impose on the
property, if this subsection does not otherwise require that
portion to be deducted; or
(B) action taken by the district under Subchapter
B or C, Chapter 313, Tax Code, before the expiration of the
subchapter;
(10) the market value of all tangible personal
property, other than manufactured homes, owned by a family or
individual and not held or used for the production of income;
(11) the appraised value of property the collection of
delinquent taxes on which is deferred under Section 33.06, Tax
Code;
(12) the portion of the appraised value of property
the collection of delinquent taxes on which is deferred under
Section 33.065, Tax Code; and
(13) the amount by which the market value of property
[a residence homestead] to which Section 23.23 or 23.231, Tax Code,
applies exceeds the appraised value of that property as calculated
under the applicable [that] section.
(i) If the comptroller determines in the study that the
market value of property in a school district as determined by the
appraisal district that appraises property for the school district,
less the total of the amounts and values listed in Subsection (d) as
determined by that appraisal district, is valid, the comptroller,
in determining the taxable value of property in the school district
under Subsection (d), shall for purposes of Subsection (d)(13)
subtract from the market value as determined by the appraisal
district of properties [residence homesteads] to which Section
23.23 or 23.231, Tax Code, applies the amount by which that amount
exceeds the appraised value of those properties as calculated by
the appraisal district under the applicable section [Section 23.23,
Tax Code]. If the comptroller determines in the study that the
market value of property in a school district as determined by the
appraisal district that appraises property for the school district,
less the total of the amounts and values listed in Subsection (d) as
determined by that appraisal district, is not valid, the
comptroller, in determining the taxable value of property in the
school district under Subsection (d), shall for purposes of
Subsection (d)(13) subtract from the market value as estimated by
the comptroller of properties [residence homesteads] to which
Section 23.23 or 23.231, Tax Code, applies the amount by which that
amount exceeds the appraised value of those properties as
calculated by the appraisal district under the applicable section
[Section 23.23, Tax Code].
SECTION 6. This Act applies only to the appraisal of real
property for ad valorem tax purposes for a tax year that begins on
or after the effective date of this Act.
SECTION 7. This Act takes effect January 1, 2014, but only
if the constitutional amendment proposed by the 83rd Legislature,
Regular Session, 2013, to authorize the legislature to limit the
maximum appraised value for ad valorem tax purposes of real
property owned or leased by a small business and used for business
purposes to 110 percent or more of the appraised value of the
property for the preceding tax year is approved by the voters. If
that amendment is not approved by the voters, this Act has no
effect.