89R16282 CJC-F
By: Phelan H.B. No. 5210
A BILL TO BE ENTITLED
AN ACT
relating to an exemption from ad valorem taxation of the total
appraised value of real property for which the owner of the property
has prepaid those taxes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
adding Section 11.121 to read as follows:
Sec. 11.121. REAL PROPERTY ON WHICH TAXES ARE PREPAID. (a)
Except as otherwise provided by this section, real property for
which the taxes have been prepaid in the manner provided by this
section is exempt from taxation.
(b) A property owner may prepay the taxes on real property
by submitting to the comptroller an enrollment form and subsequent
payment in an amount equal to the amount computed under Subsection
(d) and presented to the property owner. On receipt of an
enrollment form that is administratively complete and payment in
full of the designated amount, the comptroller shall issue to the
property owner a certificate of prepayment of taxes for the
property. The comptroller by rule shall establish an annual
deadline for enrollment for prepayment of taxes and the date by
which the designated prepayment must be made to qualify the
property for an exemption under this section in subsequent tax
years.
(c) A property owner shall include a copy of the certificate
of prepayment of taxes received under Subsection (b) when filing an
application for the exemption provided by this section with the
chief appraiser of the appraisal district in which the property is
located. The chief appraiser shall approve an application that is
administratively complete and includes a copy of the certificate of
prepayment of taxes. If the chief appraiser approves the
application, the chief appraiser shall notify each taxing unit that
taxes the real property of the approval and enter the exemption in
the appraisal records.
(d) The amount a property owner is required to prepay
pursuant to an approved application submitted under Subsection (b)
is equal to the product of the appraised value of the property for
the tax year in which the property owner submits the enrollment form
and the ad valorem tax prepayment rate determined by the
comptroller for that tax year under Section 403.030, Government
Code.
(e) The exemption provided by this section does not expire
as to real property for which a certificate of prepayment is issued,
regardless of whether the property is sold or ownership of the
property otherwise changes.
(f) The exemption provided by this section does not apply to
a new improvement to the real property made during the tax year in
which the property owner submits an enrollment form under
Subsection (b) or a subsequent tax year unless the property owner
pays a supplemental prepayment amount to the comptroller in the
manner provided by comptroller rule in the amount determined as
provided by Subsection (d) for the increase in the appraised value
of the property attributable to the improvement. For purposes of
this subsection, "new improvement" has the meaning assigned by
Section 23.23, except that the term is not limited to an improvement
to a residence homestead.
(g) If after real property receives an exemption under this
section a taxing unit is established that imposes taxes on the real
property or the territory of a taxing unit is changed to include the
property, the exemption provided by this subsection does not apply
to the taxes imposed by that taxing unit unless the property owner
pays a supplemental prepayment amount to the comptroller in the
manner prescribed by comptroller rule in the amount determined as
provided by Subsection (d) in prepayment of the taxes due to the
taxing unit.
(h) The comptroller shall deposit each prepayment and
supplemental prepayment received under this section to the credit
of the prepaid property tax trust fund established under Section
49-s, Article III, Texas Constitution.
SECTION 2. Subchapter B, Chapter 403, Government Code, is
amended by adding Section 403.030 to read as follows:
Sec. 403.030. ADOPTION OF AD VALOREM TAX PREPAYMENT RATE;
REIMBURSEMENT RATE FOR POLITICAL SUBDIVISION. (a) In this
section:
(1) "Eligible taxing unit" means a taxing unit that is
eligible for a distribution from the fund.
(2) "Fund" means the fund established under Section
49-s, Article III, Texas Constitution.
(3) "No-new-revenue tax rate" means the
no-new-revenue tax rate calculated under Chapter 26, Tax Code.
(4) "Taxing unit" has the meaning assigned by Section
1.04, Tax Code.
(b) The comptroller shall determine and adopt an ad valorem
tax prepayment rate each year to compute tax prepayments under
Section 11.121, Tax Code, to be made to exempt property beginning in
the next tax year and shall publish the rate in the Texas Register.
The comptroller may consult with actuaries or any other persons as
necessary to determine a prepayment rate that will generate revenue
sufficient to adequately fund annual disbursements in the current
and future years to eligible taxing units from the fund.
(c) The comptroller shall adopt a procedure by which an
eligible taxing unit may request a distribution from the fund.
Subject to Subsection (d), an eligible taxing unit is entitled to an
annual disbursement from the fund in an amount equal to the product
of:
(1) the total appraised value of all real property in
the taxing unit that is exempt under Section 11.121, Tax Code, in
that year; and
(2) the taxing unit's no-new-revenue tax rate as
calculated for that year.
(d) If in any year the balance of the fund is not sufficient
to make a disbursement from the fund in the amount computed under
Subsection (c) to each eligible taxing unit, the comptroller may
proportionally reduce the amount of each disbursement from the fund
in that year to ensure that the fund remains solvent.
SECTION 3. Section 403.302(d), Government Code, as
effective until January 1, 2027, is 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, less the amount of any disbursement received by the
district in the applicable tax year from the prepaid property tax
trust fund under Section 49-s, Article III, Texas Constitution, and
Section 403.030 of this code 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 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.
SECTION 4. Section 403.302(d), Government Code, as
effective January 1, 2027, is 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, less the amount of any disbursement received by the
district in the applicable tax year from the prepaid property tax
trust fund under Section 49-s, Article III, Texas Constitution, and
Section 403.030 of this code 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 a
residence homestead to which Section 23.23, Tax Code, applies
exceeds the appraised value of that property as calculated under
that section; and
(14) the total dollar amount of any exemptions granted
under Section 11.35, Tax Code.
SECTION 5. This Act applies only to an ad valorem 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, to provide for an exemption from ad valorem
taxation of the total market value of real property on which the ad
valorem taxes have been prepaid and to establish the prepaid
property tax trust fund to provide annual distributions to
political subdivisions affected by the exemption is approved by the
voters. If that amendment is not approved by the voters, this Act
has no effect.