By:  Smithee, Branch                                              H.B. No. 1185



A BILL TO BE ENTITLED

AN ACT

relating to the exemptions from ad valorem taxation of real and 
personal property of a religious organization or a school.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 11.21, Tax Code, is amended by adding 
Subsection (a-1) and amending Subsection (g) to read as follows:
	(a-1)  A person is entitled to an exemption from taxation of 
the buildings and tangible personal property that the person owns 
and that are used for a school if:
		(1)  the school is operated exclusively by an 
organization or other person that:
			(A)  is affiliated with or under common control 
with the person owning the property;
			(B)  is exempt from federal income taxation under 
Section 501(a), Internal Revenue Code of 1986, as an organization 
described by Section 501(c)(3) of that code; and
			(C)  meets the qualifications of Subsection (d);                      
		(2)  except as permitted by Subsection (b), the 
buildings and tangible personal property are used exclusively for 
educational functions; and
		(3)  the buildings and tangible personal property are 
reasonably necessary for the operation of the school.
	(g)  A property may not be exempted under Subsection (a)(2) 
for more than seven [five] years.
	SECTION 2.  Section 11.201(a), Tax Code, is amended to read 
as follows:      
	(a)  If land is sold or otherwise transferred to another 
person in a year in which the land receives an exemption under 
Section 11.20(a)(6), an additional tax is imposed on the land equal 
to the tax that would have been imposed on the land had the land been 
taxed for each of the seven [five] years preceding the year in which 
the sale or transfer occurs in which the land received an exemption 
under that subsection, plus interest at an annual rate of seven 
percent calculated from the dates on which the taxes would have 
become due.
	SECTION 3.  Section 2.05, Chapter 288, Acts of the 78th 
Legislature, Regular Session, 2003, is repealed.
	SECTION 4.  This Act applies only to taxes imposed for a tax 
year beginning on or after the effective date of this Act.
	SECTION 5.  This Act takes effect January 1, 2006.