79R4146 MFC-D
By: Riddle H.B. No. 980
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 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 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 DISTRICTS. (a) The
appraised value of real property for taxation by a taxing unit other
than a school district for a tax year may not exceed the lesser of:
(1) the market value of the property; or
(2) the sum of:
(A) three 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
as to a parcel of real property 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
Subsections (d) and (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 real property subject to a limitation under
Subsection (a) 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 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 real 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 tax year
following the year in which the ownership of at least a 50 percent
interest in the property is sold or otherwise transferred to a
person other than those owners.
(f) This section does not apply to property appraised under
Subchapter C, D, E, F, or G.
(g) In this section, "new improvement" means an improvement
to real property that is made after the most recent appraisal of the
property and that increases the market value of the property. The
term does not include upkeep, repair, or ordinary maintenance of an
existing structure or the grounds or another feature of the
property.
(h) Notwithstanding Subsections (a) and (g) and except as
provided by Subdivision (2), an improvement to property that would
otherwise constitute a new improvement is not treated as a new
improvement if the improvement is a replacement structure for a
structure that was rendered uninhabitable or unusable by a casualty
or by mold or water damage. For purposes of appraising the property
in the tax year in which the structure would have constituted a new
improvement:
(1) the last year in which the property was appraised
for taxation before the casualty or damage occurred is considered
to be the last year in which the property was appraised for taxation
for purposes of Subsection (a)(2)(A); and
(2) the replacement structure is considered to be a
new improvement only to the extent it is a significant improvement
over the replaced structure as that structure existed before the
casualty or damage occurred.
(i) For purposes of applying the limitation provided by
Subsection (a) in the first tax year after the 2005 tax year in
which the real property is appraised for taxation:
(1) the property is considered to have been appraised
for taxation in the 2005 tax year at a market value equal to the
appraised value of the property for that tax year;
(2) a person who acquired in a tax year before the 2005
tax year real property that the person owns in the 2005 tax year is
considered to have acquired the property on January 1, 2005; 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 2005 tax year is considered to have acquired
the property in the 2005 tax year.
(j) This section expires December 31, 2007.
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. (a) Except as provided by Subsection (b) of
this section, this Act applies only to the appraisal for ad valorem
tax purposes of real property for a tax year that begins on or after
January 1, 2006.
(b) Article 2 of this Act applies only to the appraisal for
ad valorem tax purposes of a residence homestead for a tax year that
begins on or after January 1, 2008.
SECTION 3.02. (a) Except as provided by Subsection (b) of
this section, this Act takes effect January 1, 2006, but only if the
constitutional amendment proposed by the 79th Legislature, Regular
Session, 2005, authorizing the legislature to limit the maximum
average annual increase in the appraised value of real property for
ad valorem tax purposes to three percent or more is approved by the
voters. If that amendment is not approved by the voters, this Act
has no effect.
(b) Article 2 of this Act takes effect January 1, 2008, but
only if the other provisions of this Act take effect as provided by
Subsection (a) of this section.