By: Bohac, et al. (Senate Sponsor - Janek) H.B. No. 3223
(In the Senate - Received from the House May 12, 2003;
May 13, 2003, read first time and referred to Committee on
Intergovernmental Relations; May 26, 2003, reported adversely,
with favorable Committee Substitute by the following vote: Yeas 3,
Nays 0; May 26, 2003, sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 3223 By: Madla
A BILL TO BE ENTITLED
AN ACT
relating to limiting the maximum average annual increase in the
appraised value of real property for ad valorem tax purposes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1
SECTION 1.01. Section 1.12(d), Tax Code, is amended to read
as follows:
(d) For purposes of this section, the appraisal ratio of
real property [a homestead] to which Section 23.23 or 23.231
applies is the ratio of the property's market value as determined by
the appraisal district or appraisal review board, as applicable, to
the market value of the property according to law. The appraisal
ratio is not calculated according to the appraised value of the
property as limited by Section 23.23 or 23.231.
SECTION 1.02. The heading to Section 23.23, Tax Code, is
amended to read as follows:
Sec. 23.23. LIMITATION ON APPRAISED VALUE OF RESIDENCE
HOMESTEAD FOR SCHOOL OR PUBLIC JUNIOR COLLEGE TAXES.
SECTION 1.03. Section 23.23(a), Tax Code, is amended to
read as follows:
(a) The appraised value of a residence homestead for
taxation by a school or public junior college district for a tax
year may not exceed the lesser of:
(1) the market value of the property; or
(2) the sum of:
(A) 10 percent of the appraised value of the
property for the last year in which the property was appraised for
taxation times the number of years since the property was last
appraised;
(B) the appraised value of the property for the
last year in which the property was appraised; and
(C) the market value of all new improvements to
the property.
SECTION 1.04. Subchapter B, Chapter 23, Tax Code, is
amended by adding Section 23.231 to read as follows:
Sec. 23.231. LIMITATION ON APPRAISED VALUE OF REAL PROPERTY
FOR TAXATION BY TAXING UNITS OTHER THAN SCHOOL OR PUBLIC JUNIOR
COLLEGE DISTRICT. (a) The appraised value of real property for
taxation by a taxing unit other than a school or public junior
college district for a tax year may not exceed the lesser of:
(1) the market value of the property; or
(2) the sum of:
(A) five percent of the appraised value of the
property for the last year in which the property was appraised for
taxation times the number of years since the property was last
appraised;
(B) the appraised value of the property for the
last year in which the property was appraised; and
(C) the market value of all new improvements to
the property.
(b) When appraising real property for purposes of this
section, the chief appraiser shall:
(1) appraise the property at its market value; and
(2) include in the appraisal records both the market
value of the property and the amount computed under Subsection
(a)(2).
(c) The limitation provided by Subsection (a) takes effect
on January 1 of the tax year following the first tax year in which
the owner owns the property on January 1, or, if the property
qualifies as the residence homestead of the owner under Section
11.13 in the tax year in which the owner acquires the property, the
limitation takes effect on January 1 of the tax year following that
tax year. Except as provided by Subsection (d) or (e), the
limitation expires on January 1 of the first tax year following the
year in which the owner of the property ceases to own the property.
(d) If property subject to a limitation under this section
qualifies for an exemption under Section 11.13 when the ownership
of the property is transferred to the owner's spouse or surviving
spouse, the limitation expires on January 1 of the first tax year
following the year in which the owner's spouse or surviving spouse
ceases to own the property, unless the limitation is further
continued under this subsection on the subsequent transfer to a
spouse or surviving spouse.
(e) If property subject to a limitation under Subsection
(a), other than a residence homestead, is owned by two or more
persons, the limitation expires on January 1 of the first tax year
following the year in which the ownership of at least a 50 percent
interest in the property is sold or otherwise transferred.
(f) This section does not apply to property appraised under
Subchapter C,D,E,F, or G or mineral interests.
(g) In this section, "new improvement" means an improvement
to real property that is made after the appraisal of the property
for the most recent year in which the property was appraised for
taxation and that increases the market value of the property. The
term does not include ordinary maintenance of an existing structure
or the grounds or another feature of the property.
(h) The limitation provided by this section applies only to
the appraisal of real property for taxation for a tax year that
begins on or after January 1, 2004. For purposes of applying the
limitation in the first tax year after the 2003 tax year in which
the property is appraised for taxation:
(1) the property is considered to have been appraised
for taxation in the 2003 tax year at a market value equal to the
appraised value of the property for that tax year;
(2) a person who acquired real property in a tax year
before the 2003 tax year is considered to have acquired the property
on January 1, 2003; and
(3) a person who qualified the property for an
exemption under Section 11.13 as the person's residence homestead
for any portion of the 2003 tax year is considered to have acquired
the property in the 2003 tax year.
ARTICLE 2
SECTION 2.01. Section 1.12(d), Tax Code, is amended to read
as follows:
(d) For purposes of this section, the appraisal ratio of a
homestead to which Section 23.23 applies is the ratio of the
property's market value as determined by the appraisal district or
appraisal review board, as applicable, to the market value of the
property according to law. The appraisal ratio is not calculated
according to the appraised value of the property as limited by
Section 23.23.
SECTION 2.02. The heading to Section 23.23, Tax Code, is
amended to read as follows:
Sec. 23.23. LIMITATION ON APPRAISED VALUE OF RESIDENCE
HOMESTEAD.
SECTION 2.03. Section 23.23(a), Tax Code, is amended to
read as follows:
(a) The appraised value of a residence homestead for a tax
year may not exceed the lesser of:
(1) the market value of the property; or
(2) the sum of:
(A) 10 percent of the appraised value of the
property for the last year in which the property was appraised for
taxation times the number of years since the property was last
appraised;
(B) the appraised value of the property for the
last year in which the property was appraised; and
(C) the market value of all new improvements to
the property.
ARTICLE 3
SECTION 3.01. Except as provided by Section 3.02 of this
Act, this Act takes effect January 1, 2004, and applies only to the
appraisal for ad valorem tax purposes of real property for a tax
year that beings on or after January 1, 2004, but only if the
constitutional amendment proposed by the 78th Legislature, Regular
Session, 2003, authorizing the legislature to limit the maximum
average annual increase in the appraised value of real property for
ad valorem tax purposes to five percent or more is approved by the
voters. If that amendment is not approved by the voters, this Act
has no effect.
SECTION 3.02. Article 2 of this Act takes effect January 1,
2006, and applies only to the appraisal for a valorem tax purposes
of a residence homestead for a tax year that begins on or after that
date.
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