By: Nixon S.B. No. 1375
97S0820/1
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the appraisal of certain leaseholds for tax purposes.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Section 23.13, Tax Code, is amended to read as
1-4 follows:
1-5 Sec. 23.13. TAXABLE LEASEHOLDS. (a) A taxable leasehold
1-6 or other possessory interest in real property that is exempt from
1-7 taxation to the owner of the estate or interest encumbered by the
1-8 possessory interest is appraised at the market value of the
1-9 leasehold or other possessory interest. Subject to the limitation
1-10 provided by Subsection (b), when appraising the leasehold or other
1-11 possessory interest in real property, the appraiser shall use the
1-12 equity method of valuation as follows:
1-13 (1) determine the market lease rate for comparable
1-14 properties with comparable restrictions;
1-15 (2) determine the actual lease rate for the property
1-16 being appraised;
1-17 (3) subtract the actual lease rate from the market
1-18 lease rate; and
1-19 (4) divide the remainder by a market capitalization
1-20 rate for property of comparable risk to determine the leasehold
1-21 value.
1-22 (b) The [However, the] appraised value may not be less than
1-23 the total rental paid for the interest for the current tax year.
2-1 SECTION 2. This Act takes effect September 1, 1997.
2-2 SECTION 3. The importance of this legislation and the
2-3 crowded condition of the calendars in both houses create an
2-4 emergency and an imperative public necessity that the
2-5 constitutional rule requiring bills to be read on three several
2-6 days in each house be suspended, and this rule is hereby suspended.