Texas House Bill HB3557

Texas 2025 - 89th Regular

• Filed: 2/28/25

Caption

Relating to the exclusion from the market value of real property for ad valorem tax purposes of the value of any incomplete structure located on the property.

Impact

The bill is intended to assist property owners, particularly developers or individuals constructing homes, by ensuring they are not penalized with higher property taxes for structures that are not yet habitable. By incorporating this exclusion, it is expected to alleviate some financial burdens during the construction phase, thus encouraging development activities within Texas. This impact is particularly relevant in fast-growing areas where construction is prevalent, and delays are common due to various factors.

Summary

House Bill 3557 seeks to amend the Texas Tax Code by introducing a provision that excludes the value of any incomplete structures intended for human occupancy from the market value of real property when determining ad valorem taxes. This legislative change is significant as it provides property owners some financial relief by not taxing structures that are not complete as of January 1 of the tax year. This exemption would apply only to structures that are separate from any other structures on the property and are recognized as incomplete according to the definitions provided in the bill.

Contention

While the bill seems beneficial for property owners, it may raise concerns regarding the potential loss of tax revenue for municipalities. Local governments often rely on property taxes for funding essential services, and excluding incomplete structures from valuation could lead to a decrease in anticipated revenue. Critics may argue that this reduction could affect public service funding, prompting a debate about the balance between stimulating construction and ensuring adequate taxation to support community services.

Texas Constitutional Statutes Affected

Tax Code

• Chapter 23. Appraisal Methods And Procedures
  • Section: New Section