89R12475 LHC-D
By: Lowe H.B. No. 3823
A BILL TO BE ENTITLED
AN ACT
relating to the determination of the appraised value of a residence
homestead for ad valorem tax purposes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 23.23, Tax Code, is amended by amending
Subsections (a), (e), and (f) and adding Subsection (h) to read as
follows:
(a) Except as provided by Subsection (h), if
[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 a residence
homestead 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 as [that the market value was] determined by the
appraisal office; or
(2) the sum of:
(A) 15 [10] percent of the appraised value of the
property for the last [preceding tax] year in which the property was
appraised for taxation;
(B) the appraised value of the property for the
last [preceding tax] year in which the property was appraised for
taxation; and
(C) the market value of all new improvements to
the property.
(e) In this section, "new improvement" means an improvement
to a residence homestead 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.
(f) Notwithstanding Subsections (a) and (e) and except as
provided by Subdivision (2), 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 uninhabitable or unusable by a casualty
or by wind or water damage. For purposes of appraising the
property under Subsection (a) in the tax year in which the structure
would have constituted a new improvement:
(1) the last year in which the property was appraised
for taxation before [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 last year in which the property was
appraised for taxation for purposes of Subsection (a)(2)(A)
[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 (a)]; 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.
(h) The commissioners court of a county may call an election
in the county to permit the voters of the county to determine by
majority vote whether a percentage limitation on maximum appraised
value determined in the manner provided by Subsection (a)(2) using
a percentage that is greater than the percentage specified by
Subsection (a)(2)(A) will apply to the taxation of a residence
homestead in the county by each taxing unit having territory in the
county. The election shall be held on the date of the next general
election for state and county officers. The ballot proposition
shall specify the proposed percentage limitation on maximum
appraised value. If a majority of the votes cast at the election
favor the establishment of the proposed limitation, the limitation
applies beginning with the tax year following the year in which the
election is held and remains in effect until amended or repealed by
the voters of the county at a subsequent election called by the
commissioners court of the county for that purpose. An election to
amend or repeal a limitation must be held on the date of the general
election for state and county officers. If the voters of a county
amend or repeal a limitation, the amendment or repeal applies
beginning with the tax year after the year in which the election is
held. A limitation established under this subsection applies to
the taxation of all residence homesteads in the county by each
taxing unit having territory in the county.
SECTION 2. Section 25.18, Tax Code, is amended by amending
Subsection (b) and adding Subsections (b-1), (b-2), and (b-3) to
read as follows:
(b) The plan shall provide for the following reappraisal
activities for all real and personal property in the district at
least once every three years, except as provided by Subsections
(b-1), (b-2), and (b-3):
(1) identifying properties to be appraised through
physical inspection or by other reliable means of identification,
including deeds or other legal documentation, aerial photographs,
land-based photographs, surveys, maps, and property sketches;
(2) identifying and updating relevant characteristics
of each property in the appraisal records;
(3) defining market areas in the district;
(4) identifying property characteristics that affect
property value in each market area, including:
(A) the location and market area of property;
(B) physical attributes of property, such as
size, age, and condition;
(C) legal and economic attributes; and
(D) easements, covenants, leases, reservations,
contracts, declarations, special assessments, ordinances, or legal
restrictions;
(5) developing an appraisal model that reflects the
relationship among the property characteristics affecting value in
each market area and determines the contribution of individual
property characteristics;
(6) applying the conclusions reflected in the model to
the characteristics of the properties being appraised; and
(7) reviewing the appraisal results to determine
value.
(b-1) The plan shall provide for the reappraisal of a
residence homestead not more often than once every three years. The
appraised value of a residence homestead may not be increased for a
tax year in which the property is not appraised.
(b-2) Subsection (b-1) does not prohibit the reappraisal of
a residence homestead in the tax year in which a limitation on
appraised value under Section 23.23(a) expires.
(b-3) Notwithstanding Subsection (b-1), at any time during
a tax year before the date the chief appraiser certifies the
appraisal roll for the appraisal district, an owner of a residence
homestead is entitled to a reappraisal of the owner's residence
homestead for that year on written request delivered to the chief
appraiser.
SECTION 3. Section 42.26(d), Tax Code, as effective until
January 1, 2027, 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 subject
to a [the] limitation on appraised value imposed by or established
under Section 23.23 or 23.231.
SECTION 4. Section 42.26(d), Tax Code, as effective January
1, 2027, 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 a [the] limitation on appraised
value imposed by or established under Section 23.23.
SECTION 5. This Act applies only to the determination of the
appraised value of a residence homestead for ad valorem taxation
for a tax year that begins on or after the effective date of this
Act.
SECTION 6. This Act takes effect January 1, 2026, but only
if the constitutional amendment proposed by the 89th Legislature,
Regular Session, 2025, authorizing the legislature to limit the
maximum appraised value of a residence homestead for ad valorem tax
purposes to the lesser of the most recent market value of the
residence homestead or 115 percent, or a greater percentage, of the
appraised value of the residence homestead for the last year in
which the residence homestead was appraised for ad valorem tax
purposes, to limit the frequency of the reappraisal of a residence
homestead for those purposes, and to permit the voters of a county
to establish a higher limitation on the maximum appraised value of a
residence homestead for those purposes is approved by the voters.
If that amendment is not approved by the voters, this Act has no
effect.