By Brown of Kaufman                                   H.B. No. 2416
         77R5201 JD-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to limiting the amount of county or municipal ad valorem
 1-3     taxes that may be imposed on the residence homesteads of the
 1-4     elderly and their surviving spouses.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
 1-7     adding Section 11.261 to read as follows:
 1-8           Sec. 11.261.  LIMITATION OF COUNTY OR MUNICIPAL TAX ON
 1-9     HOMESTEADS OF ELDERLY. (a)  This section applies only to a county
1-10     or municipality that has established a limitation on the total
1-11     amount of taxes that may be imposed by the county or municipality
1-12     on the residence homestead of an individual 65 years of age or
1-13     older under Section 1-b(h), Article VIII, Texas Constitution.
1-14           (b)  The tax officials shall appraise the property to which
1-15     the limitation applies and calculate taxes as on other property,
1-16     but if the tax so calculated exceeds the limitation provided by
1-17     this section, the tax imposed is the amount of the tax as limited
1-18     by this section, except as otherwise provided by this section.  The
1-19     county or municipality may not increase the total annual amount of
1-20     ad valorem taxes the county or municipality imposes on the
1-21     residence homestead of an individual 65 years of age or older above
1-22     the amount of the taxes the county or municipality imposed in the
1-23     first tax year, other than a tax year preceding the tax year in
1-24     which the county or municipality establishes the limitation
 2-1     described by Subsection (a), in which the individual qualified that
 2-2     residence homestead for the exemption provided by Section 11.13(c)
 2-3     for an individual 65 years of age or older. If the individual
 2-4     qualified that residence homestead for the exemption after the
 2-5     beginning of that first year and the residence homestead remains
 2-6     eligible for the exemption for the next year, and if the county or
 2-7     municipal taxes imposed on the residence homestead in the next year
 2-8     are less than the amount of taxes imposed in that first year, a
 2-9     county or municipality may not subsequently increase the total
2-10     annual amount of ad valorem taxes it imposes on the residence
2-11     homestead above the amount it imposed in the year immediately
2-12     following the first year, other than a tax year preceding the tax
2-13     year in which the county or municipality establishes the limitation
2-14     described by Subsection (a), for which the individual qualified
2-15     that residence homestead for the exemption, except as provided by
2-16     Subsection (c).
2-17           (c)  If an individual makes improvements to the individual's
2-18     residence homestead, other than improvements required to comply
2-19     with governmental requirements or repairs, the county or
2-20     municipality may increase the amount of taxes on the homestead in
2-21     the first year the value of the homestead is increased on the
2-22     appraisal roll because of the enhancement of value by the
2-23     improvements.  The amount of the tax increase is determined by
2-24     applying the current tax rate to the difference between the
2-25     appraised value of the homestead with the improvements and the
2-26     appraised value it would have had without the improvements.  A
2-27     limitation provided by this section then applies to the increased
 3-1     amount of county or municipal taxes until more improvements, if
 3-2     any, are made.
 3-3           (d)  A limitation on county or municipal tax increases
 3-4     provided by this section expires if on January 1:
 3-5                 (1)  none of the owners of the structure who qualify
 3-6     for the exemption and who owned the structure when the limitation
 3-7     first took effect is using the structure as a residence homestead;
 3-8     or
 3-9                 (2)  none of the owners of the structure qualifies for
3-10     the exemption.
3-11           (e)  If the appraisal roll provides for taxation of appraised
3-12     value for a prior year because a residence homestead exemption for
3-13     persons 65 years of age or older was erroneously allowed, the tax
3-14     assessor for the applicable county or municipality shall add, as
3-15     back taxes due as provided by Section 26.09(d), the positive
3-16     difference if any between the tax that should have been imposed for
3-17     that year and the tax that was imposed because of the provisions of
3-18     this section.
3-19           (f)  A limitation on tax increases provided by this section
3-20     does not expire because the owner of an interest in the structure
3-21     conveys the interest to a qualifying trust as defined by Section
3-22     11.13(j) if the owner or the owner's spouse is a trustor of the
3-23     trust and is entitled to occupy the structure.
3-24           (g)  Except as provided by Subsection (c), if an individual
3-25     who receives a limitation on county or municipal tax increases
3-26     provided by this section subsequently qualifies a different
3-27     residence homestead in the same county or municipality for an
 4-1     exemption under Section 11.13, the county or municipality may not
 4-2     impose ad valorem taxes on the subsequently qualified homestead in
 4-3     a year in an amount that exceeds the amount of taxes the county or
 4-4     municipality would have imposed on the subsequently qualified
 4-5     homestead in the first year in which the individual receives that
 4-6     exemption for the subsequently qualified homestead had the
 4-7     limitation on tax increases provided by this section not been in
 4-8     effect, multiplied by a fraction the numerator of which is the
 4-9     total amount of taxes the county or municipality imposed on the
4-10     former homestead in the last year in which the individual received
4-11     that exemption for the former homestead and the denominator of
4-12     which is the total amount of taxes the county or municipality would
4-13     have imposed on the former homestead in the last year in which the
4-14     individual received that exemption for the former homestead had the
4-15     limitation on tax increases provided by this section not been in
4-16     effect.
4-17           (h)  An individual who receives a limitation on county or
4-18     municipal tax increases under this section and who subsequently
4-19     qualifies a different residence homestead in the same county or
4-20     municipality for an exemption under Section 11.13, or an agent of
4-21     the individual, is entitled to receive from the chief appraiser of
4-22     the appraisal district in which the former homestead was located a
4-23     written certificate providing the information necessary to
4-24     determine whether the individual may qualify for a limitation on
4-25     the subsequently qualified homestead under Subsection (g) and to
4-26     calculate the amount of taxes the county or municipality may impose
4-27     on the subsequently qualified homestead.
 5-1           (i)  If an individual who qualifies for a limitation on
 5-2     county or municipal tax increases under this section dies, the
 5-3     surviving spouse of the individual is entitled to the limitation on
 5-4     taxes imposed by the county or municipality on the residence
 5-5     homestead of the individual if:
 5-6                 (1)  the surviving spouse is 55 years of age or older
 5-7     when the individual dies; and
 5-8                 (2)  the residence homestead of the individual:
 5-9                       (A)  is the residence homestead of the surviving
5-10     spouse on the date that the individual dies; and
5-11                       (B)  remains the residence homestead of the
5-12     surviving spouse.
5-13           (j)  If an individual who qualifies for a limitation on
5-14     county or municipal tax increases under this section dies in the
5-15     first year in which the individual qualified for the limitation and
5-16     the individual first qualified for the limitation after the
5-17     beginning of that year, except as provided by Subsection (k), the
5-18     amount to which the surviving spouse's county or municipal taxes
5-19     are limited under Subsection (i) is the amount of taxes imposed by
5-20     the county or municipality, as applicable, on the residence
5-21     homestead in that year determined as if the individual qualifying
5-22     for the exemption had lived for the entire year.
5-23           (k)  If in the first tax year after the year in which an
5-24     individual dies under the circumstances described by Subsection (j)
5-25     the amount of taxes imposed by a county or municipality on the
5-26     residence homestead of the surviving spouse is less than the amount
5-27     of taxes imposed by the county or municipality in the preceding
 6-1     year as limited by Subsection (j), in a subsequent tax year the
 6-2     surviving spouse's taxes imposed by the county or municipality on
 6-3     that residence homestead are limited to the amount of taxes imposed
 6-4     by the county or municipality in that first tax year after the year
 6-5     in which the individual dies.
 6-6           SECTION 2. Sections 23.19(b) and (g), Tax Code, are amended
 6-7     to read as follows:
 6-8           (b)  If an appraisal district receives a written request for
 6-9     the appraisal of real property and improvements of a cooperative
6-10     housing corporation according to the separate interests of the
6-11     corporation's stockholders, the chief appraiser shall separately
6-12     appraise the interests described by Subsection (d) [of this
6-13     section] if the conditions required by Subsections (e) and (f) [of
6-14     this section] have been met.  Separate appraisal under this section
6-15     is for the purposes of administration of tax exemptions,
6-16     determination of applicable limitations of taxes under Section
6-17     11.26 or 11.261 [of this code], and apportionment by a cooperative
6-18     housing corporation of property taxes among its stockholders but is
6-19     not the basis for determining value on which a tax is imposed under
6-20     this title.  A stockholder whose interest is separately appraised
6-21     under this section may protest and appeal the appraised value in
6-22     the manner provided by this title for protest and appeal of the
6-23     appraised value of other property.
6-24           (g)  A tax bill or a separate statement accompanying the tax
6-25     bill to a cooperative housing corporation for which interests of
6-26     stockholders are separately appraised under this section must
6-27     state, in addition to the information required by Section 31.01 [of
 7-1     this code], the appraised value and taxable value of each interest
 7-2     separately appraised.  Each exemption claimed as provided by this
 7-3     title by a person entitled to the exemption shall also be deducted
 7-4     from the total appraised value of the property of the corporation.
 7-5     The total tax imposed by a school district, county, or municipality
 7-6     shall be reduced by any amount that represents an increase in taxes
 7-7     attributable to separately appraised interests of the real property
 7-8     and improvements that are subject to the limitation of taxes
 7-9     prescribed by Section 11.26 or 11.261 [of this code].  The
7-10     corporation shall apportion among its stockholders liability for
7-11     reimbursing the corporation for property taxes according to the
7-12     relative taxable values of their interests.
7-13           SECTION 3. Sections 26.012(6), (13), and (14), Tax Code, are
7-14     amended to read as follows:
7-15                 (6)  "Current total value" means the total taxable
7-16     value of property listed on the appraisal roll for the current
7-17     year, including all appraisal roll supplements and corrections as
7-18     of the date of the calculation, less the taxable value of property
7-19     exempted for the current tax year for the first time under Section
7-20     11.31, except that:
7-21                       (A)  the current total value for a school
7-22     district excludes the total value of homesteads that qualify for a
7-23     tax limitation as provided by Section 11.26; and
7-24                       (B)  the current total value for a county or
7-25     municipality excludes the total value of homesteads that qualify
7-26     for a tax limitation as provided by Section 11.261.
7-27                 (13)  "Last year's levy" means the total of:
 8-1                       (A)  the amount of taxes that would be generated
 8-2     by multiplying the total tax rate adopted by the governing body in
 8-3     the preceding year by the total taxable value of property on the
 8-4     appraisal roll for the preceding year, including:
 8-5                             (i)  taxable value that was reduced in an
 8-6     appeal under Chapter 42; and
 8-7                             (ii)  all appraisal roll supplements and
 8-8     corrections other than corrections made pursuant to Section
 8-9     25.25(d), as of the date of the calculation, except that last
8-10     year's taxable value for a school district excludes the total value
8-11     of homesteads that qualified for a tax limitation as provided by
8-12     Section 11.26 and last year's taxable value for a county or
8-13     municipality excludes the total value of homesteads that qualified
8-14     for a tax limitation as provided by Section 11.261; and
8-15                       (B)  the amount of taxes refunded by the taxing
8-16     unit in the preceding year for tax years before that year.
8-17                 (14)  "Last year's total value" means the total taxable
8-18     value of property listed on the appraisal roll for the preceding
8-19     year, including all appraisal roll supplements and corrections,
8-20     other than corrections made pursuant to Section 25.25(d) [of this
8-21     code], as of the date of the calculation, except that:
8-22                       (A)  last year's taxable value for a school
8-23     district excludes the total value of homesteads that qualified for
8-24     a tax limitation as provided by Section 11.26; and
8-25                       (B)  last year's taxable value for a county or
8-26     municipality excludes the total value of homesteads that qualified
8-27     for a tax limitation as provided by Section 11.261 [of this code].
 9-1           SECTION 4. This Act takes effect January 1, 2002, and applies
 9-2     only to ad valorem taxes imposed on or after that date, but only if
 9-3     the constitutional amendment to permit a county or municipality to
 9-4     establish an ad valorem tax freeze on residence homesteads of the
 9-5     elderly and their spouses is approved by the voters.  If that
 9-6     amendment is not approved by the voters, this Act has no effect.