BILL ANALYSIS
By: Van Arsdale
Local Government Ways & Means
Committee Report (Substituted)
BACKGROUND AND PURPOSE
Currently, an appraisal district can designate an area on a rural property, or on a contiguous parcel, as a “homesite” and assign it a higher market value than the market value attributed to the surrounding acres that are receiving an agricultural or a wildlife management valuation. By allocating significantly more market value to the homesite, appraisal districts attempt to “recoup lost revenue” from agricultural or a wildlife management land. This is possible because the homesite is taxed at market value, whereas, land receiving an agricultural or a wildlife management valuation is taxed at its productive value.
Under this bill, the appraisal districts are required to appraise the market value of the entire property owned by a landowner and attribute the same market value to the “homesite” as is given to the other acres on the property. Improvements to the “homesite”, if any, are appraised separately from the land. Furthermore, this bill clarifies that rural land cannot be appraised using comparable sales data pertaining to the sale of land located within the corporate limits of a municipality.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
CSHB 3630 adds a section to Chapter 23 of the Tax Code, to require appraisal districts to appraise the market value of rural land in units that correspond to ownership and allocate the market value evenly to all contiguous acres of the property. It also restricts the use of comparable sales data pertaining to the sale of land located in the corporate limits of a municipality. This bill does not change the existing law. Instead it clarifies that appraisals of a home sites at a different market value than the surrounding Ag land is not a generally accepted appraisal method as required by Section 23.01 of the Tax Code.
EFFECTIVE DATE
This Act takes effect January 1, 2008.
COMPARISON OF ORIGINAL TO SUBSTITUTE
HB 3630 as introduced directed the Chief Appraiser to consider the market value of surrounding Ag land when appraising residential home sites in rural areas. The Substitute specifies the process of appraisal when considering contiguous property owned by the same taxpayer.