Texas House Bill HB132

Texas 2021 - 87th 3rd C.S.

Caption

Relating to the ad valorem taxation of residential real property.

Impact

The bill also establishes a limitation on the amount of taxes that can be imposed on residence homesteads after owners have qualified for the exemption for at least 25 consecutive tax years. Specifically, the bill mandates that taxes may not increase beyond the amount paid in the 25th tax year, thereby providing ongoing financial relief to long-term homeowners and ensuring housing affordability over time. These changes are designed to promote stability in housing costs and assist families in maintaining their residences without the fear of escalating tax burdens.

Summary

House Bill 132 introduces amendments to the Tax Code concerning the ad valorem taxation of residential real property. The key provision allows for significant tax exemptions for individuals qualifying for the residence homestead exemption, specifically targeting first-time homeowners with properties valued under $300,000. This exemption would eliminate taxes on the total appraised value for the first year of ownership, aiming to reduce the fiscal burden on new homeowners and encourage property ownership among lower- and middle-income families.

Contention

Despite its seemingly beneficial intentions, the provisions of HB 132 have sparked debate among stakeholders. Supporters argue that the bill significantly aids first-time homeowners and stabilizes communities by preventing long-term tax increases. Conversely, critics express concerns that the tax exemptions could lead to diminished funding for local schools and services, as property taxes are a substantial revenue source for public education and other communal funds. There are fears that the increased reliance on state funds to offset lost local revenue may not adequately fill this gap, potentially straining school districts and municipalities in the long run.