JWB S.B. 1437 75(R)BILL ANALYSIS WAYS & MEANS S.B. 1437 By: Wentworth, et al. (Greenberg) 5-5-97 Committee Report (Unamended) BACKGROUND Current law allows persons aged 65 or over to receive a residence homestead exemption. If that person dies, a surviving spouse aged 55 or older is entitled to receive the same exemption. Once a person turns 65, however, the exemption may not be granted until January 1 of the subsequent tax year. PURPOSE The bill would grant immediate qualification for a residence homestead exemption to a qualifying person who turns 65, and requires that all persons receiving the age 65 or older residence homestead tax exemption be taxed on a prorated amount in the year the person initially qualifies for the exemption. The bill also provides qualifications for a surviving spouse to receive the exemption granted to a qualifying person over 65. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1.Amends Section 11.42(b), Tax Code (Exemption Qualification Date), by adding that an exemption authorized by Section 11.13(c) or (d) Tax Code (Residence Homestead), for an individual 65 or over is effective immediately on qualification for the exemption. SECTION 2.Amends Section 11.13(q), Tax Code (Residence Homestead), by replacing the word "received" with the words "qualified for." SECTION 3.Amends Section 11.26, Tax Code (Limitation of School Tax on Homesteads of Elderly), by adding Subsections (g), (h), and (i) as follows: (g) provides that the surviving spouse of an individual who received an exemption under Section 11.13(c), Tax Code (Residence Homestead), is entitled to the limitation if: 1) the surviving spouse is 55 years or older when the individual dies; 2) the residence homestead of the individual is the residence homestead of the surviving spouse on the date the individual dies and remains the residence homestead of the surviving spouse. (h) provides that if an individual who received an exemption under Section 11.13(c), Tax Code (Residence Homestead), dies in the year in which the individual turns 65 years of age, except as provided by Subsection (i), the surviving spouse's school district taxes are limited under Subsection (g), as the amount of school district taxes imposed on the residence homestead in that year calculated under Section 26.112 [a new section created by the bill], as if the deceased individual had lived for the entire year. (i) provides that if in the first tax year after the individual died, the amount of school district taxes imposed on the surviving spouse is less that the amount imposed in the preceding year as limited by Subsection (h), then in a subsequent tax year the surviving spouse's school district taxes are limited to the taxes imposed in that first tax year. SECTION 4.Amends Section 11.43, Tax Code (Application for Exemption), by amending Subsection (d) and adding Subsection (j) as follows: (d) adds the words "Except as provided by Subsection (j)" to the beginning of the subsection. (j) provides a notification deadline to the chief appraiser for a person who qualifies for a portion of a tax year for the exemption authorized by Section 11.13(c) or (d) for an individual age 65 years or older. SECTION 5.Amends Section 26.10, Tax Code (Prorating Taxes--Loss of Exemption), by providing a formula for determining property tax due when an exemption is terminated during a tax year. SECTION 6.Amends Chapter 26, Tax Code (Assessment), by adding Section 26.112. Sec. 26.112. PRORATING TAXES--QUALIFICATION BY ELDERLY PERSON FOR 65 AND OLDER RESIDENCE HOMESTEAD EXEMPTION. Provides a formula for calculating the residence homestead taxes of a qualifying person after the beginning of a tax year: subtracting the amount of taxes that otherwise would be imposed for the entire year had the individual qualified for the emption on January 1 from the amount of taxes that would otherwise be imposed for the entire year had the individual not qualified for the exemption; multiplying the remainder by a fraction, the denominator of which is 365 and the numerator of which is the number of days that elapsed prior to the date the exemption terminated; adding the product and the amount of taxes that otherwise would be imposed for the entire year had the individual qualified for the exemption on January 1. SECTION 7. Section 5 of this Act takes effect January 1, 1998. SECTION 8.Emergency clause. Effective date upon passage.