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79R5753 SMH-D
By: Otto H.B. No. 2187
A BILL TO BE ENTITLED
AN ACT
relating to the exemption from ad valorem taxation of rent-to-own
property not held by the lessee primarily to produce income and to
the method to be used to depreciate taxable rent-to-own property
for tax appraisal purposes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
adding Section 11.253 to read as follows:
Sec. 11.253. RENT-TO-OWN PROPERTY LEASED FOR PERSONAL USE.
(a) In this section, "rent-to-own property" means tangible
personal property of a type intended for personal use within the
home that is owned by a dealer engaged in the business of leasing
that type of property to customers under rent-to-own contracts.
(b) The owner of rent-to-own property that is subject to a
rent-to-own contract is entitled to an exemption from taxation of
the property if:
(1) the lessee does not hold the property for the
production of income; and
(2) the property is used primarily for activities that
do not involve the production of income.
(c) For purposes of this section, rent-to-own property is
presumed to be used primarily for activities that do not involve the
production of income if the majority of the time the property is
used in a year it is used for non-income producing purposes.
(d) The comptroller by rule shall establish exemption
application requirements and appropriate procedures to determine
whether rent-to-own property subject to a rent-to-own contract
qualifies for an exemption under Subsection (b).
(e) In connection with the requirements and procedures
under Subsection (d), the comptroller by rule shall adopt a form to
be completed by the lessee of rent-to-own property for which the
owner of the property may apply for an exemption under Subsection
(b). The form shall require the lessee to provide the lessee's name
and address and to certify under oath that the lessee does not hold
the property for the production of income and that the property is
used primarily for activities that do not involve the production of
income. The comptroller shall include on the form a notice of the
penalties prescribed by Section 37.10, Penal Code, for making a
false statement on the form.
(f) The owner of rent-to-own property that is subject to a
rent-to-own contract shall maintain the form completed by the
lessee of the property and make the form available for inspection
and copying by the chief appraiser of the applicable appraisal
district at all reasonable times. If the owner does not maintain a
completed form relating to the property, the owner:
(1) must render the property for taxation in the
applicable rendition statement or property report filed by the
owner under Chapter 22; and
(2) may not file an application for an exemption under
Subsection (b) for the property.
(g) The governing body of a municipality by ordinance
adopted before January 1, 2006, may provide for the taxation of
rent-to-own property otherwise exempted under Subsection (b). If
the governing body of a municipality provides for the taxation of
rent-to-own property under this subsection, the exemption provided
by Subsection (b) does not apply to the taxation of the property by
that municipality.
(h) In addition to the requirements of Subsections (d) and
(e), the comptroller by rule shall prescribe a property report form
to be completed by the lessor of rent-to-own property describing
the rent-to-own property that the lessor owns that is subject to
rent-to-own contracts. The property report form shall require the
lessor to list each item of rent-to-own property the lessor owns
that is subject to a rent-to-own contract on January 1, to provide a
description of each item, and to provide the name of the lessee, the
address at which the property is kept, and an indication of whether
the lessee has designated the property as not held for the
production and not used for the production of income.
(i) The lessor shall provide the chief appraiser with the
completed property report form adopted by the comptroller in the
manner provided by Subchapter B, Chapter 22.
SECTION 2. Section 22.07, Tax Code, is amended by amending
Subsection (c) and adding Subsection (c-1) to read as follows:
(c) The chief appraiser may request, either in writing or by
electronic means, that the property owner provide a statement
containing supporting information indicating how the value
rendered under Section 22.01(a)(5) was determined. The statement
must:
(1) summarize information sufficient to identify the
property, including:
(A) the physical and economic characteristics
relevant to the opinion of value, if appropriate; and
(B) the source of the information used;
(2) state the effective date of the opinion of value;
and
(3) explain the basis of the value rendered.
(c-1) Except as otherwise provided by this subsection, if
[If] the property owner is a business with 50 employees or less, the
property owner may base the estimate of value on the depreciation
schedules used for federal income tax purposes. If the property is
described by Section 23.12(g), the property owner shall base the
estimate of value on the depreciation method prescribed by that
section.
SECTION 3. Section 23.12, Tax Code, is amended by adding
Subsection (g) to read as follows:
(g) In appraising an inventory of tangible personal
property of a type intended for personal use within the home that is
owned by a dealer engaged in the business of leasing that type of
property to customers under rent-to-own contracts, the chief
appraiser shall depreciate the property by using the straight-line
method and a recovery period of three years.
SECTION 4. This Act applies only to the appraisal of
property for ad valorem tax purposes for a tax year beginning on or
after the effective date of this Act.
SECTION 5. 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 exempt from
ad valorem taxation rent-to-own property not held by the person
renting the property primarily to produce income and to prescribe
the method to be used to depreciate taxable rent-to-own property
for tax appraisal purposes is approved by the voters. If that
amendment is not approved by the voters, this Act has no effect.