79S20289 SMH-D



By:  Bohac                                                        H.B. No. 54 







A BILL TO BE ENTITLED



AN ACT



relating to the limitation on the maximum average annual percentage 

increase in the appraised value of residence homesteads for ad 

valorem tax purposes.

	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        

	SECTION 1.  Section 23.23, Tax Code, is amended by amending 

Subsection (a) and adding Subsections (g) and (h) to read as 

follows:

	(a)  Except as provided under Subsection (g), [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)  for purposes of taxation by a school district 

other than a junior college district, five percent of the appraised 

value of the property for the last year in which the property was 

appraised for taxation, and for purposes of taxation by any other 

taxing unit, 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.             

	(g)  The governing body of a taxing unit other than a school 

district but including a junior college district, in the manner 

required by law for official action, may at any time provide that 

for purposes of taxation by the taxing unit in the following and 

each subsequent tax year a lower limitation on appraised value 

determined in the manner provided by Subsection (a)(2) using a 

percentage of less than 10 percent but not less than five percent in 

place of 10 percent in Subsection (a)(2)(A) will apply to the 

taxation of residence homesteads by the taxing unit.

	(h)  Subsection (g) does not affect the appraised value of a 

residence homestead for taxation by a taxing unit other than the 

taxing unit whose governing body provides for the application of a 

limitation on appraised value under that subsection.  If the 

governing body of the taxing unit sets the tax rate for more than 

one taxing unit, an action by the governing body under Subsection 

(g) does not apply to a taxing unit other than the taxing unit whose 

governing body takes that action.

	SECTION 2.  Section 42.26(d), Tax Code, is amended to read as 

follows:       

	(d)  For purposes of this section, the value of the property 

subject to the suit and the value of a comparable property or sample 

property that is used for comparison must be the market value 

determined by the appraisal district when the property is a 

residence homestead subject to the limitation on appraised value 

imposed by or authorized under Section 23.23.

	SECTION 3.  This Act takes effect January 1, 2006, and 

applies only to the appraisal of a residence homestead for ad 

valorem tax purposes for a tax year that begins on or after January 

1, 2006, but only if the constitutional amendment proposed by the 

79th Legislature, 2nd Called Session, 2005, authorizing the 

legislature to establish for purposes of ad valorem taxation by a 

school district a limit on the annual increase in the appraised 

value of residence homesteads of five percent or more, and to permit 

other political subdivisions to adopt a limit on those appraisal 

increases of less than 10 percent but not less than five percent, is 

approved by the voters.  If that amendment is not approved by the 

voters, this Act has no effect.