| 1 | 1 | | 87R12372 SMH-D |
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| 2 | 2 | | By: Allison H.B. No. 4024 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to a limitation on the appraised value of real property for |
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| 8 | 8 | | ad valorem tax purposes. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Section 1.12(d), Tax Code, is amended to read as |
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| 11 | 11 | | follows: |
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| 12 | 12 | | (d) For purposes of this section, the appraisal ratio of |
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| 13 | 13 | | real property [a homestead] to which Section 23.23 applies is the |
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| 14 | 14 | | ratio of the property's market value as determined by the appraisal |
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| 15 | 15 | | district or appraisal review board, as applicable, to the market |
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| 16 | 16 | | value of the property according to law. The appraisal ratio is not |
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| 17 | 17 | | calculated according to the appraised value of the property as |
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| 18 | 18 | | limited by Section 23.23. |
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| 19 | 19 | | SECTION 2. The heading to Section 23.23, Tax Code, is |
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| 20 | 20 | | amended to read as follows: |
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| 21 | 21 | | Sec. 23.23. LIMITATION ON APPRAISED VALUE OF REAL PROPERTY |
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| 22 | 22 | | [RESIDENCE HOMESTEAD]. |
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| 23 | 23 | | SECTION 3. Section 23.23, Tax Code, is amended by amending |
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| 24 | 24 | | Subsections (a), (b), (c), and (e) and adding Subsections (a-1), |
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| 25 | 25 | | (a-2), (c-1), (c-2), (c-3), and (c-4) to read as follows: |
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| 26 | 26 | | (a) The [Notwithstanding the requirements of Section 25.18 |
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| 27 | 27 | | and regardless of whether the appraisal office has appraised the |
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| 28 | 28 | | property and determined the market value of the property for the tax |
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| 29 | 29 | | year, an appraisal office may increase the] appraised value of real |
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| 30 | 30 | | property [a residence homestead] for a tax year is equal to [an |
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| 31 | 31 | | amount not to exceed] the lesser of: |
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| 32 | 32 | | (1) the market value of the property for the most |
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| 33 | 33 | | recent tax year that the market value was determined by the |
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| 34 | 34 | | appraisal office; or |
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| 35 | 35 | | (2) the sum of: |
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| 36 | 36 | | (A) [10 percent of] the appraised value of the |
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| 37 | 37 | | property for the year in which the owner acquired the property |
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| 38 | 38 | | [preceding tax year]; and |
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| 39 | 39 | | (B) [the appraised value of the property for the |
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| 40 | 40 | | preceding tax year; and |
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| 41 | 41 | | [(C)] the market value of each [all] new |
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| 42 | 42 | | improvement [improvements] to the property as of January 1 of the |
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| 43 | 43 | | first tax year after the year in which the owner acquired the |
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| 44 | 44 | | property in which the improvement was added to the appraisal roll. |
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| 45 | 45 | | (a-1) The appraised value of the property for the year in |
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| 46 | 46 | | which the owner acquired the property is equal to the purchase price |
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| 47 | 47 | | the owner paid for the property if the owner: |
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| 48 | 48 | | (1) acquired the property as a bona fide purchaser for |
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| 49 | 49 | | value in the 2021 tax year or a subsequent tax year; and |
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| 50 | 50 | | (2) discloses the purchase price the owner paid for |
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| 51 | 51 | | the property to the appraisal office. |
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| 52 | 52 | | (a-2) Subsection (a-1) does not apply to property if: |
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| 53 | 53 | | (1) the purchase of the property was made: |
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| 54 | 54 | | (A) pursuant to a court order; |
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| 55 | 55 | | (B) from a trustee in bankruptcy; |
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| 56 | 56 | | (C) by one co-owner from one or more other |
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| 57 | 57 | | co-owners; |
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| 58 | 58 | | (D) from a spouse or a person or persons within |
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| 59 | 59 | | the first or second degree of lineal consanguinity of one or more of |
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| 60 | 60 | | the purchasers; or |
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| 61 | 61 | | (E) from a governmental entity; or |
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| 62 | 62 | | (2) the chief appraiser determines that the owner of |
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| 63 | 63 | | the property was not a bona fide purchaser for value under criteria |
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| 64 | 64 | | established by rules adopted by the comptroller for that purpose. |
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| 65 | 65 | | (b) When appraising real property [a residence homestead], |
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| 66 | 66 | | the chief appraiser shall: |
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| 67 | 67 | | (1) appraise the property at its market value; and |
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| 68 | 68 | | (2) include in the appraisal records both the market |
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| 69 | 69 | | value of the property and the amount computed under Subsection |
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| 70 | 70 | | (a)(2). |
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| 71 | 71 | | (c) The limitation provided by Subsection (a) takes effect |
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| 72 | 72 | | on January 1 of the tax year following the first tax year in which |
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| 73 | 73 | | the owner owns the property on January 1 or, if the property |
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| 74 | 74 | | qualifies as the [to a] residence homestead of the owner under |
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| 75 | 75 | | Section 11.13 in the tax year in which the owner acquires the |
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| 76 | 76 | | property, the limitation takes effect on January 1 of the tax year |
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| 77 | 77 | | following that [the first] tax year [the owner qualifies the |
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| 78 | 78 | | property for an exemption under Section 11.13]. Except as provided |
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| 79 | 79 | | by Subsection (c-1) or (c-2), the [The] limitation expires on |
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| 80 | 80 | | January 1 of the first tax year following the year in which [that |
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| 81 | 81 | | neither] the owner of the property ceases to own the property. |
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| 82 | 82 | | (c-1) If property subject to a limitation under this section |
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| 83 | 83 | | qualifies for an exemption under Section 11.13 when the ownership |
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| 84 | 84 | | of the property is transferred to the owner's spouse or surviving |
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| 85 | 85 | | spouse, the limitation expires on January 1 of the first tax year |
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| 86 | 86 | | following the year in which [when the limitation took effect nor] |
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| 87 | 87 | | the owner's spouse or surviving spouse ceases to own the property, |
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| 88 | 88 | | unless the limitation is further continued under this subsection on |
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| 89 | 89 | | the subsequent transfer to a spouse or surviving spouse [qualifies |
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| 90 | 90 | | for an exemption under Section 11.13]. |
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| 91 | 91 | | (c-2) If property subject to a limitation under Subsection |
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| 92 | 92 | | (a), other than a residence homestead, is owned by two or more |
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| 93 | 93 | | persons, the limitation expires on January 1 of the first tax year |
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| 94 | 94 | | following the year in which the ownership of at least a 50 percent |
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| 95 | 95 | | interest in the property is sold or otherwise transferred. |
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| 96 | 96 | | (c-3) For purposes of applying the limitation provided by |
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| 97 | 97 | | this section in the first tax year after the 2021 tax year in which |
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| 98 | 98 | | the property is appraised for taxation: |
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| 99 | 99 | | (1) the property is considered to have been appraised |
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| 100 | 100 | | for taxation in the 2021 tax year at a market value equal to the |
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| 101 | 101 | | appraised value of the property for that tax year; |
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| 102 | 102 | | (2) a person who acquired real property in a tax year |
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| 103 | 103 | | before the 2021 tax year is considered to have acquired the property |
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| 104 | 104 | | on January 1, 2021; and |
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| 105 | 105 | | (3) a person who qualified the property for an |
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| 106 | 106 | | exemption under Section 11.13 as the person's residence homestead |
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| 107 | 107 | | for any portion of the 2021 tax year is considered to have acquired |
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| 108 | 108 | | the property in the 2021 tax year. |
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| 109 | 109 | | (c-4) To receive a limitation on appraised value under this |
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| 110 | 110 | | section computed in accordance with Subsection (a-1), the owner of |
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| 111 | 111 | | the property must apply for the limitation. To apply for the |
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| 112 | 112 | | limitation, the owner must file an application with the chief |
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| 113 | 113 | | appraiser for each appraisal office in which the property subject |
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| 114 | 114 | | to the claimed limitation has situs. The application must be filed |
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| 115 | 115 | | not later than May 1 of the year after the year in which the owner |
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| 116 | 116 | | acquired the property. The comptroller by rule shall prescribe the |
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| 117 | 117 | | form for the application to ensure that the applicant provides the |
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| 118 | 118 | | information necessary to determine the applicant's eligibility for |
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| 119 | 119 | | the limitation, including the price for which the applicant |
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| 120 | 120 | | acquired the property. |
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| 121 | 121 | | (e) In this section, "new improvement" means an improvement |
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| 122 | 122 | | to real property [a residence homestead] made after the most recent |
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| 123 | 123 | | appraisal of the property that increases the market value of the |
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| 124 | 124 | | property and the value of which is not included in the appraised |
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| 125 | 125 | | value of the property for the preceding tax year. The term does not |
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| 126 | 126 | | include repairs to or ordinary maintenance of an existing structure |
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| 127 | 127 | | or the grounds or another feature of the property. |
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| 128 | 128 | | SECTION 4. Section 42.26(d), Tax Code, is amended to read as |
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| 129 | 129 | | follows: |
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| 130 | 130 | | (d) For purposes of this section, the value of the property |
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| 131 | 131 | | subject to the suit and the value of a comparable property or sample |
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| 132 | 132 | | property that is used for comparison must be the market value |
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| 133 | 133 | | determined by the appraisal district when the property is [a |
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| 134 | 134 | | residence homestead] subject to the limitation on appraised value |
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| 135 | 135 | | imposed by Section 23.23. |
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| 136 | 136 | | SECTION 5. Sections 403.302(d) and (i), Government Code, |
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| 137 | 137 | | are amended to read as follows: |
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| 138 | 138 | | (d) For the purposes of this section, "taxable value" means |
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| 139 | 139 | | the market value of all taxable property less: |
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| 140 | 140 | | (1) the total dollar amount of any residence homestead |
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| 141 | 141 | | exemptions lawfully granted under Section 11.13(b) or (c), Tax |
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| 142 | 142 | | Code, in the year that is the subject of the study for each school |
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| 143 | 143 | | district; |
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| 144 | 144 | | (2) one-half of the total dollar amount of any |
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| 145 | 145 | | residence homestead exemptions granted under Section 11.13(n), Tax |
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| 146 | 146 | | Code, in the year that is the subject of the study for each school |
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| 147 | 147 | | district; |
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| 148 | 148 | | (3) the total dollar amount of any exemptions granted |
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| 149 | 149 | | before May 31, 1993, within a reinvestment zone under agreements |
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| 150 | 150 | | authorized by Chapter 312, Tax Code; |
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| 151 | 151 | | (4) subject to Subsection (e), the total dollar amount |
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| 152 | 152 | | of any captured appraised value of property that: |
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| 153 | 153 | | (A) is within a reinvestment zone created on or |
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| 154 | 154 | | before May 31, 1999, or is proposed to be included within the |
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| 155 | 155 | | boundaries of a reinvestment zone as the boundaries of the zone and |
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| 156 | 156 | | the proposed portion of tax increment paid into the tax increment |
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| 157 | 157 | | fund by a school district are described in a written notification |
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| 158 | 158 | | provided by the municipality or the board of directors of the zone |
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| 159 | 159 | | to the governing bodies of the other taxing units in the manner |
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| 160 | 160 | | provided by former Section 311.003(e), Tax Code, before May 31, |
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| 161 | 161 | | 1999, and within the boundaries of the zone as those boundaries |
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| 162 | 162 | | existed on September 1, 1999, including subsequent improvements to |
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| 163 | 163 | | the property regardless of when made; |
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| 164 | 164 | | (B) generates taxes paid into a tax increment |
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| 165 | 165 | | fund created under Chapter 311, Tax Code, under a reinvestment zone |
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| 166 | 166 | | financing plan approved under Section 311.011(d), Tax Code, on or |
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| 167 | 167 | | before September 1, 1999; and |
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| 168 | 168 | | (C) is eligible for tax increment financing under |
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| 169 | 169 | | Chapter 311, Tax Code; |
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| 170 | 170 | | (5) the total dollar amount of any captured appraised |
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| 171 | 171 | | value of property that: |
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| 172 | 172 | | (A) is within a reinvestment zone: |
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| 173 | 173 | | (i) created on or before December 31, 2008, |
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| 174 | 174 | | by a municipality with a population of less than 18,000; and |
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| 175 | 175 | | (ii) the project plan for which includes |
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| 176 | 176 | | the alteration, remodeling, repair, or reconstruction of a |
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| 177 | 177 | | structure that is included on the National Register of Historic |
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| 178 | 178 | | Places and requires that a portion of the tax increment of the zone |
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| 179 | 179 | | be used for the improvement or construction of related facilities |
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| 180 | 180 | | or for affordable housing; |
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| 181 | 181 | | (B) generates school district taxes that are paid |
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| 182 | 182 | | into a tax increment fund created under Chapter 311, Tax Code; and |
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| 183 | 183 | | (C) is eligible for tax increment financing under |
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| 184 | 184 | | Chapter 311, Tax Code; |
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| 185 | 185 | | (6) the total dollar amount of any exemptions granted |
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| 186 | 186 | | under Section 11.251 or 11.253, Tax Code; |
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| 187 | 187 | | (7) the difference between the comptroller's estimate |
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| 188 | 188 | | of the market value and the productivity value of land that |
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| 189 | 189 | | qualifies for appraisal on the basis of its productive capacity, |
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| 190 | 190 | | except that the productivity value estimated by the comptroller may |
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| 191 | 191 | | not exceed the fair market value of the land; |
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| 192 | 192 | | (8) the portion of the appraised value of residence |
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| 193 | 193 | | homesteads of individuals who receive a tax limitation under |
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| 194 | 194 | | Section 11.26, Tax Code, on which school district taxes are not |
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| 195 | 195 | | imposed in the year that is the subject of the study, calculated as |
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| 196 | 196 | | if the residence homesteads were appraised at the full value |
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| 197 | 197 | | required by law; |
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| 198 | 198 | | (9) a portion of the market value of property not |
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| 199 | 199 | | otherwise fully taxable by the district at market value because of |
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| 200 | 200 | | action required by statute or the constitution of this state, other |
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| 201 | 201 | | than Section 11.311, Tax Code, that, if the tax rate adopted by the |
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| 202 | 202 | | district is applied to it, produces an amount equal to the |
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| 203 | 203 | | difference between the tax that the district would have imposed on |
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| 204 | 204 | | the property if the property were fully taxable at market value and |
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| 205 | 205 | | the tax that the district is actually authorized to impose on the |
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| 206 | 206 | | property, if this subsection does not otherwise require that |
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| 207 | 207 | | portion to be deducted; |
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| 208 | 208 | | (10) the market value of all tangible personal |
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| 209 | 209 | | property, other than manufactured homes, owned by a family or |
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| 210 | 210 | | individual and not held or used for the production of income; |
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| 211 | 211 | | (11) the appraised value of property the collection of |
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| 212 | 212 | | delinquent taxes on which is deferred under Section 33.06, Tax |
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| 213 | 213 | | Code; |
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| 214 | 214 | | (12) the portion of the appraised value of property |
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| 215 | 215 | | the collection of delinquent taxes on which is deferred under |
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| 216 | 216 | | Section 33.065, Tax Code; |
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| 217 | 217 | | (13) the amount by which the market value of real |
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| 218 | 218 | | property [a residence homestead] to which Section 23.23, Tax Code, |
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| 219 | 219 | | applies exceeds the appraised value of that property as calculated |
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| 220 | 220 | | under that section; and |
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| 221 | 221 | | (14) the total dollar amount of any exemptions granted |
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| 222 | 222 | | under Section 11.35, Tax Code. |
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| 223 | 223 | | (i) If the comptroller determines in the study that the |
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| 224 | 224 | | market value of property in a school district as determined by the |
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| 225 | 225 | | appraisal district that appraises property for the school district, |
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| 226 | 226 | | less the total of the amounts and values listed in Subsection (d) as |
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| 227 | 227 | | determined by that appraisal district, is valid, the comptroller, |
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| 228 | 228 | | in determining the taxable value of property in the school district |
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| 229 | 229 | | under Subsection (d), shall for purposes of Subsection (d)(13) |
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| 230 | 230 | | subtract from the market value as determined by the appraisal |
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| 231 | 231 | | district of properties [residence homesteads] to which Section |
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| 232 | 232 | | 23.23, Tax Code, applies the amount by which that amount exceeds the |
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| 233 | 233 | | appraised value of those properties as calculated by the appraisal |
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| 234 | 234 | | district under Section 23.23, Tax Code. If the comptroller |
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| 235 | 235 | | determines in the study that the market value of property in a |
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| 236 | 236 | | school district as determined by the appraisal district that |
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| 237 | 237 | | appraises property for the school district, less the total of the |
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| 238 | 238 | | amounts and values listed in Subsection (d) as determined by that |
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| 239 | 239 | | appraisal district, is not valid, the comptroller, in determining |
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| 240 | 240 | | the taxable value of property in the school district under |
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| 241 | 241 | | Subsection (d), shall for purposes of Subsection (d)(13) subtract |
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| 242 | 242 | | from the market value as estimated by the comptroller of properties |
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| 243 | 243 | | [residence homesteads] to which Section 23.23, Tax Code, applies |
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| 244 | 244 | | the amount by which that amount exceeds the appraised value of those |
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| 245 | 245 | | properties as calculated by the appraisal district under Section |
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| 246 | 246 | | 23.23, Tax Code. |
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| 247 | 247 | | SECTION 6. This Act applies only to the appraisal for ad |
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| 248 | 248 | | valorem tax purposes of real property for a tax year that begins on |
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| 249 | 249 | | or after the effective date of this Act. |
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| 250 | 250 | | SECTION 7. This Act takes effect January 1, 2022, but only |
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| 251 | 251 | | if the constitutional amendment proposed by the 87th Legislature, |
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| 252 | 252 | | Regular Session, 2021, to authorize the legislature to limit the |
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| 253 | 253 | | appraised value of real property for ad valorem tax purposes to the |
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| 254 | 254 | | value when the owner acquired the property and to provide for |
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| 255 | 255 | | determining that value on the basis of the purchase price of the |
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| 256 | 256 | | property, if applicable, is approved by the voters. If that |
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| 257 | 257 | | amendment is not approved by the voters, this Act has no effect. |
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