78R13219 RCJ-F
By: Eiland, Talton, Bonnen, Taylor, Dawson H.B. No. 1460
A BILL TO BE ENTITLED
AN ACT
relating to the appraisal of real property for ad valorem tax
purposes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 23.012, Tax Code, is amended to read as
follows:
Sec. 23.012. INCOME METHOD OF APPRAISAL. (a) If the [chief
appraiser uses the] income method of appraisal is the most
appropriate method to use to determine the market value of real
property, the chief appraiser shall:
(1) analyze comparable [use] rental [income and
expense] data available to the chief appraiser or the potential
earnings capacity of [pertaining to] the property, or both, to
estimate the gross income potential of the property [if possible
and applicable];
(2) analyze comparable operating expense data
available to the chief appraiser to estimate the operating [make
any projections of future rental income and] expenses of the
property [only from clear and appropriate evidence];
(3) analyze comparable [use] data available to the
chief appraiser to estimate rates of [from generally accepted
sources in determining an appropriate] capitalization or rates of
discount [rate]; and
(4) base projections of future rent or income
potential and expenses on reasonably clear and appropriate evidence
[determine a capitalization rate for income-producing property
that includes a reasonable return on investment, taking into
account the risk associated with the investment].
(b) In developing income and expense statements and
cash-flow projections, the chief appraiser shall consider:
(1) historical information and trends;
(2) current supply and demand factors affecting those
trends; and
(3) anticipated events such as competition from other
similar properties under construction.
SECTION 2. Subchapter A, Chapter 23, Tax Code, is amended by
adding Section 23.014 to read as follows:
Sec. 23.014. EXCLUSION OF PROPERTY AS REAL PROPERTY. In
determining the market value of real property, the chief appraiser
shall analyze the effect on that value of, and exclude from that
value the value of, any:
(1) tangible personal property, including trade
fixtures;
(2) intangible personal property; or
(3) other property that is not subject to appraisal as
real property.
SECTION 3. This Act takes effect January 1, 2004, and
applies only to the appraisal of real property for ad valorem tax
purposes for a tax year that begins on or after that date.