89R3283 DRS-D
By: Vasut H.B. No. 4082
A BILL TO BE ENTITLED
AN ACT
relating to a limitation on increases in the appraised value of real
property for ad valorem tax purposes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. (a) Section 1.12(d), Tax Code, as amended by
Section 4.01, Chapter 1 (S.B. 2), Acts of the 88th Legislature, 2nd
Called Session, 2023, and effective until January 1, 2027, is
amended to read as follows:
(d) For purposes of this section, the appraisal ratio of
property to which Section 23.23 [or 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].
(b) Section 4.02, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, which amended Section
1.12(d), Tax Code, effective January 1, 2027, is repealed.
SECTION 2. The heading to Section 23.23, Tax Code, is
amended to read as follows:
Sec. 23.23. LIMITATION ON APPRAISED VALUE OF REAL PROPERTY
[RESIDENCE HOMESTEAD].
SECTION 3. Section 23.23, Tax Code, is amended by amending
Subsections (a), (b), and (c) and adding Subsections (a-1), (a-2),
(a-3), (a-4), (a-5), (a-6), (a-7), (a-8), (c-2), (c-3), (c-4), and
(h) to read as follows:
(a) The appraised value of a parcel of real property for the
first tax year in which the owner owns the property on January 1 is
equal to the market value of the property. Notwithstanding Section
23.01, the appraised value of the property for each subsequent tax
year until the tax year in which the limitation provided by this
subsection expires is equal to the appraised value of the property
for the preceding tax year as increased by the chief appraiser for
the current tax year using the percentage by which the appraised
value may be increased as determined by the comptroller under
Subsection (a-8) [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 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].
(a-1) Notwithstanding Subsection (a), if the owner of real
property acquired the property as a bona fide purchaser for value,
the purchase price of the property paid by the property owner is
considered to be the market value of the property for the first tax
year in which the owner owns the property on January 1.
(a-2) If the first tax year the property owner owned the
property on January 1 was a tax year before the 2026 tax year:
(1) the property owner is considered to have acquired
the property on January 1, 2025; and
(2) the appraised value of the property as shown on the
2025 appraisal roll is considered to be the market value of the
property for that tax year for purposes of Subsection (a).
(a-3) Subsection (a-1) does not apply to real property if:
(1) the purchase was made:
(A) pursuant to a court order;
(B) from a trustee in bankruptcy;
(C) by one co-owner from one or more other
co-owners;
(D) from a spouse or a person or persons within
the first or second degree of lineal consanguinity of one or more of
the purchasers; or
(E) from a governmental entity; or
(2) the chief appraiser determines that the applicant
was not a bona fide purchaser for value under criteria established
by rules adopted by the comptroller for that purpose.
(a-4) To receive a limitation on appraised value under
Subsection (a) computed in accordance with Subsection (a-1), an
owner of the property must apply for the limitation. To apply for
the limitation, the owner must file an application with the chief
appraiser for each appraisal district in which the property subject
to the claimed limitation is located. The application must be filed
not later than April 30. The comptroller by rule shall prescribe
the form for the application to ensure that the applicant provides
the information necessary to determine the applicant's eligibility
for the limitation, including the purchase price of the property
paid by the applicant.
(a-5) An application filed with a chief appraiser under
Subsection (a-4) is confidential and not open to public inspection.
The application and the information it contains may not be
disclosed to another person other than an employee of the appraisal
district who appraises property, except as provided by Subsection
(a-6).
(a-6) Information that is confidential under Subsection
(a-5) may be disclosed:
(1) in a judicial or administrative proceeding under a
lawful subpoena;
(2) to a purchaser, grantee, seller, or grantor named
in the application or in the deed to which the application applies
or to a representative of the purchaser, grantee, seller, or
grantor under a written authorization signed by the purchaser,
grantee, seller, or grantor;
(3) to the comptroller or to an assessor for a taxing
unit in which the property described in the application is located;
(4) in a judicial or administrative proceeding related
to real property taxation:
(A) to which the purchaser, grantee, seller, or
grantor is a party;
(B) to which an owner of the property described
in the application is a party; or
(C) by the appraisal district for the purpose of
establishing a value of the property or of providing evidence of
comparable sales to appraise another property;
(5) for statistical purposes if the information is
provided in a form that does not identify a specific property or
specific purchaser, grantee, seller, or grantor;
(6) if and to the extent that the information is
required to be included in a public document or record that the
appraisal office is required to prepare or maintain; or
(7) to a taxing unit or its legal representative that
is engaged in the collection of delinquent taxes on the property
described in the application.
(a-7) Information that is disclosed under Subsection (a-6)
does not lose its confidential character.
(a-8) For each tax year, using the index that the
comptroller considers to most accurately report changes in the
purchasing power of the dollar for consumers in this state, the
comptroller shall determine and publicize the percentage by which
the appraised value of real property may be increased under
Subsection (a). Each chief appraiser shall use the percentage
determined by the comptroller under this subsection to determine
the appraised value under Subsection (a) of real property appraised
by that chief appraiser.
(b) When appraising real property [a residence homestead],
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 (a)
[(a)(2)].
(c) The limitation provided by Subsection (a) takes effect
on January 1 of the first tax year in which the owner owns the
property on January 1 [as to a residence homestead on January 1 of
the tax year following the first tax year the owner qualifies the
property for an exemption under Section 11.13]. Except as provided
by Subsection (c-2) or (c-3), the [The] limitation expires on
January 1 of the first tax year following the year in which [that
neither] the owner of the property ceases to own the property.
(c-2) If property subject to a limitation under this section
qualifies for an exemption under Section 11.13 when the ownership
of the property is transferred to the owner's spouse or surviving
spouse, the limitation expires on January 1 of the first tax year
following the year in which [when the limitation took effect nor]
the owner's spouse or surviving spouse ceases to own the property,
unless the limitation is further continued under this subsection on
the subsequent transfer to a spouse or surviving spouse [qualifies
for an exemption under Section 11.13].
(c-3) If property subject to a limitation under Subsection
(a), other than a residence homestead, is owned by two or more
persons, the limitation expires on January 1 of the first tax year
following the year in which the ownership of at least a 50 percent
interest in the property is sold or otherwise transferred.
(c-4) Notwithstanding Subsection (c), a limitation
established under Subsection (a) does not expire if a change in
ownership of the property occurs by inheritance or under a will as
long as the person who acquires the property qualifies for an
exemption under Section 11.13.
(h) In this section, "real property" includes a
manufactured home as that term is defined by Section 1201.003,
Occupations Code, that qualifies as a residence homestead under
Section 11.13 of this code, regardless of whether the owner of the
manufactured home elects to treat the manufactured home as real
property under Section 1201.2055, Occupations Code.
SECTION 4. (a) Sections 25.19(b) and (g), Tax Code, as
amended by Section 4.04, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, and effective until January
1, 2027, are amended to read as follows:
(b) The chief appraiser shall separate real from personal
property and include in the notice for each:
(1) a list of the taxing units in which the property is
taxable;
(2) the appraised value of the property in the
preceding year;
(3) the taxable value of the property in the preceding
year for each taxing unit taxing the property;
(4) the appraised value of the property for the
current year, the kind and amount of each exemption and partial
exemption, if any, approved for the property for the current year
and for the preceding year, and, if an exemption or partial
exemption that was approved for the preceding year was canceled or
reduced for the current year, the amount of the exemption or partial
exemption canceled or reduced;
[(4-a) a statement of whether the property qualifies
for the circuit breaker limitation on appraised value provided by
Section 23.231;]
(5) in italic typeface, the following
statement: "The Texas Legislature does not set the amount of your
local taxes. Your property tax burden is decided by your locally
elected officials, and all inquiries concerning your taxes should
be directed to those officials";
(6) a detailed explanation of the time and procedure
for protesting the value;
(7) the date and place the appraisal review board will
begin hearing protests;
(8) an explanation of the availability and purpose of
an informal conference with the appraisal office before a hearing
on a protest; and
(9) a brief explanation that the governing body of
each taxing unit decides whether or not taxes on the property will
increase and the appraisal district only determines the value of
the property.
(g) By April 1 or as soon thereafter as practicable if the
property is a single-family residence that qualifies for an
exemption under Section 11.13, or by May 1 or as soon thereafter as
practicable in connection with any other property, the chief
appraiser shall deliver a written notice to the owner of each
property not included in a notice required to be delivered under
Subsection (a), if the property was reappraised in the current tax
year, if the ownership of the property changed during the preceding
year, or if the property owner or the agent of a property owner
authorized under Section 1.111 makes a written request for the
notice. The chief appraiser shall separate real from personal
property and include in the notice for each property:
(1) the appraised value of the property in the
preceding year;
(2) the appraised value of the property for the
current year and the kind of each partial exemption, if any,
approved for the current year;
[(2-a) a statement of whether the property qualifies
for the circuit breaker limitation on appraised value provided by
Section 23.231;]
(3) a detailed explanation of the time and procedure
for protesting the value; and
(4) the date and place the appraisal review board will
begin hearing protests.
(b) Section 4.05, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, which amended Sections
25.19(b) and (g), Tax Code, effective January 1, 2027, is repealed.
SECTION 5. (a) Section 41.41(a), Tax Code, as amended by
Section 4.07, Chapter 1 (S.B. 2), Acts of the 88th Legislature, 2nd
Called Session, 2023, and effective until January 1, 2027, 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 circuit breaker 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.
(b) Section 4.08, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, which amended Section
41.41(a), Tax Code, effective January 1, 2027, is repealed.
SECTION 6. (a) Section 42.26(d), Tax Code, as amended by
Section 4.09, Chapter 1 (S.B. 2), Acts of the 88th Legislature, 2nd
Called Session, 2023, and 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 the limitation on appraised value imposed by Section 23.23 [or
23.231].
(b) Section 4.10, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, which amended Section
42.26(d), Tax Code, effective January 1, 2027, is repealed.
SECTION 7. (a) Sections 403.302(d) and (i), Government
Code, as amended by Section 4.11, Chapter 1 (S.B. 2), Acts of the
88th Legislature, 2nd Called Session, 2023, and effective until
January 1, 2027, 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
action required by statute or the constitution of this state, other
than Section 11.311, Tax Code, 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;
(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;
(13) the amount by which the market value of property
to which Section 23.23 [or 23.231], Tax Code, applies exceeds the
appraised value of that property as calculated under that section
[Section 23.23 or 23.231, Tax Code, as applicable]; and
(14) the total dollar amount of any exemptions granted
under Section 11.35, Tax Code.
(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 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 Section 23.23 [or 23.231], Tax Code[, as applicable]. 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 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 Section 23.23 [or 23.231], Tax Code[, as
applicable].
(b) Section 4.12, Chapter 1 (S.B. 2), Acts of the 88th
Legislature, 2nd Called Session, 2023, which amended Sections
403.302(d) and (i), Government Code, effective January 1, 2027, is
repealed.
SECTION 8. The following provisions of the Tax Code are
repealed:
(1) Sections 23.23(c-1), (e), (f), and (g);
(2) Section 23.231; and
(3) Section 25.19(o).
SECTION 9. This Act applies only to ad valorem taxes imposed
for a tax year beginning on or after the effective date of this Act.
SECTION 10. 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 provide that
the appraised value of a parcel of real property for ad valorem tax
purposes for the first tax year in which the owner owns the property
on January 1 is the market value of the property and that, if the
owner purchased the property, the purchase price of the property is
considered to be the market value of the property for that tax year
and to limit increases in the appraised value of the property for
subsequent tax years based on the inflation rate is approved by the
voters. If that amendment is not approved by the voters, this Act
has no effect.