By Chisum H.B. No. 2306
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the extension of residence homestead ad valorem tax
1-3 exemptions and protection from forced sale to a homestead owned by
1-4 a family-owned business.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 11.13(j), Tax Code, is amended by amending
1-7 Subdivision (1) and adding Subdivision (4) to read as follows:
1-8 (1) "Residence homestead" means a structure (including
1-9 a mobile home) or a separately secured and occupied portion of a
1-10 structure (together with the land, not to exceed 20 acres, and
1-11 improvements used in the residential occupancy of the structure, if
1-12 the structure and the land and improvements have identical
1-13 ownership) that:
1-14 (A) is owned by one or more individuals, whether
1-15 [either] directly, [or] through a beneficial interest in a
1-16 qualifying trust, or through an interest in a family-owned
1-17 business;
1-18 (B) is designed or adapted for human residence;
1-19 (C) is used as a residence; and
1-20 (D) is occupied as the individual's [his]
1-21 principal residence by:
1-22 (i) an owner who qualifies for the
1-23 exemption;
1-24 (ii) [or,] for property owned through a
2-1 beneficial interest in a qualifying trust, [by] a trustor of the
2-2 trust who qualifies for the exemption; or
2-3 (iii) for property owned through an
2-4 interest in a family-owned business, an owner of an interest in the
2-5 family-owned business who qualifies for the exemption.
2-6 (4) "Family-owned business" means a firm, corporation,
2-7 association, partnership, registered limited liability partnership,
2-8 limited partnership, limited liability company, holding company,
2-9 joint-stock company, joint venture, receivership, trust, or other
2-10 business entity, a majority of the legal or beneficial interest in
2-11 which is directly or indirectly owned by persons who are:
2-12 (A) related within the second degree by affinity
2-13 or within the third degree by consanguinity, as determined under
2-14 Chapter 573, Government Code; or
2-15 (B) acting in a fiduciary capacity for persons
2-16 so related.
2-17 SECTION 2. Section 11.26(f), Tax Code, is amended to read as
2-18 follows:
2-19 (f) The limitation on tax increases required by this section
2-20 does not expire because the owner of an interest in the structure
2-21 conveys the interest to:
2-22 (1) a qualifying trust as defined by Section 11.13(j)
2-23 if the owner or the owner's spouse is a trustor of the trust and is
2-24 entitled to occupy the structure; or
2-25 (2) a family-owned business as defined by Section
2-26 11.13(j) in which the owner owns an interest as long as the owner
2-27 or the owner's spouse continues to reside in the structure.
3-1 SECTION 3. Section 11.43, Tax Code, is amended by adding
3-2 Subsection (j) to read as follows:
3-3 (j) Conveyance of a residence homestead by its owner to a
3-4 family-owned business as defined by Section 11.13(j) in which the
3-5 owner owns an interest does not constitute a change of ownership
3-6 of the homestead for purposes of Subsection (c) as long as the
3-7 owner or the owner's spouse continues to reside in the property.
3-8 SECTION 4. Section 23.23(c), Tax Code, is amended to read as
3-9 follows:
3-10 (c) The limitation provided by Subsection (a) takes effect
3-11 as to a residence homestead on January 1 of the tax year following
3-12 the first tax year the owner qualifies the property for an
3-13 exemption under Section 11.13. The limitation expires on January 1
3-14 of the first tax year that neither the owner of the property when
3-15 the limitation took effect nor the owner's spouse or surviving
3-16 spouse qualifies for an exemption under Section 11.13. The
3-17 limitation does not expire because the owner of the property
3-18 conveys the property to a family-owned business as defined by
3-19 Section 11.13(j) in which the owner owns an interest as long as the
3-20 owner or the owner's spouse or surviving spouse continues to reside
3-21 in the property.
3-22 SECTION 5. Section 25.135, Tax Code, is amended to read as
3-23 follows:
3-24 Sec. 25.135. QUALIFYING TRUSTS; FAMILY-OWNED BUSINESSES. (a)
3-25 The interest of a qualifying trust as defined by Section 11.13(j)
3-26 in a residence homestead shall be listed in the name of the trustor
3-27 of the trust.
4-1 (b) The interest of a family-owned business as defined by
4-2 Section 11.13(j) in a residence homestead shall be listed in the
4-3 name of the person who occupies the homestead as the person's
4-4 principal residence.
4-5 SECTION 6. Section 32.07(c), Tax Code, is amended to read as
4-6 follows:
4-7 (c) A qualifying trust as defined by Section 11.13(j) and
4-8 each trustor of the trust are jointly and severally liable for the
4-9 tax imposed on the interest of the trust in a residence homestead.
4-10 A family-owned business and the person in whose name the residence
4-11 homestead is listed are jointly and severally liable for the tax
4-12 imposed on the interest of the family-owned business in a residence
4-13 homestead.
4-14 SECTION 7. Subchapter A, Chapter 41, Property Code, is
4-15 amended by adding Section 41.0035 to read as follows:
4-16 Sec. 41.0035. HOMESTEAD OWNED BY FAMILY-OWNED BUSINESS. (a)
4-17 In this section, "family-owned business" has the meaning assigned
4-18 by Section 11.13(j), Tax Code.
4-19 (b) Property owned by a family-owned business that otherwise
4-20 qualifies as a homestead may constitute the homestead of an
4-21 individual if the individual owns an interest in the family-owned
4-22 business. The homestead rights of the individual do not affect the
4-23 validity or enforceability of any conveyance, mortgage, or
4-24 encumbrance of the property by the family-owned business.
4-25 (c) If a homestead claimant conveys the homestead to a
4-26 family-owned business in which the homestead claimant owns an
4-27 interest, the homestead claimant may continue to claim homestead
5-1 rights in the homestead, subject to the provisions of Subsection
5-2 (b).
5-3 SECTION 8. This Act takes effect on the date on which the
5-4 constitutional amendment proposed by the 77th Legislature, Regular
5-5 Session, 2001, to extend residence homestead ad valorem tax
5-6 exemptions and protection from forced sale to a homestead owned by
5-7 a family-owned business is approved by the voters. If that
5-8 amendment is not approved by the voters, this Act has no effect.