80R10991 UM-D

By: Watson S.B. No. 1918

A BILL TO BE ENTITLED

AN ACT

relating to a phase-in of the ad valorem taxes imposed by certain taxing units on the increase in market value of the residence homestead of a low-income or moderate-income person attributable to a new improvement to the homestead.

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

SECTION 1. Chapter 31, Tax Code, is amended by adding Section 31.054 to read as follows:

Sec. 31.054. TEMPORARY TAX RELIEF FOR NEW IMPROVEMENT TO CERTAIN RESIDENCE HOMESTEADS. (a) In this section, "new improvement" has the meaning assigned by Section 23.23.

(b) This section does not apply to taxes imposed by a school district or hospital district.

(c) A person is entitled to a reduction in the taxes imposed on the person's residence homestead by a taxing unit for the tax year in which the person applies for the reduction and for the following three tax years if the person:

(1) receives an exemption under Section 11.13 on the person's residence homestead;

(2) has made a new improvement to the homestead; and

(3) has a family income that is not more than the greater of:

(A) the area median family income for the household's place of residence, as adjusted for family size and as established by the United States Department of Housing and Urban Development; or

(B) the statewide area median family income, as adjusted for family size and as established by the United States Department of Housing and Urban Development.

(d) To receive a tax reduction from a taxing unit under this section, a person must submit an application to the tax assessor for the taxing unit not later than May 1 of the tax year following the tax year in which the person makes a new improvement to the person's residence homestead.

(e) On receipt of the application, the assessor for the taxing unit shall deliver a copy of the application to the chief appraiser of the appraisal district that appraises the residence homestead for taxation by the taxing unit. The chief appraiser shall approve or deny the application and notify the applicant and assessor of the chief appraiser's determination. If the chief appraiser approves the application, the chief appraiser shall determine the ratio of the market value of the new improvement to the market value of the homestead for the current year and the following three years and deliver that information to the assessor in each of those years.

(f) In each tax year for which the person is entitled to a tax reduction under this section, the amount of the reduction under this section of the taxes imposed by the taxing unit on a person's residence homestead is equal to the amount computed by:

(1) multiplying the amount of taxes that would otherwise be imposed by the taxing unit on the homestead by the ratio computed under Subsection (e); and

(2) multiplying the amount computed under Subdivision (1) by:

(A) 80 percent, for purposes of computing the amount of the tax credit in the tax year in which the person applies for the tax credit;

(B) 60 percent, for purposes of computing the amount of the tax credit in the first tax year after the tax year in which the person applies for the tax credit;

(C) 40 percent, for purposes of computing the amount of the tax credit in the second tax year after the tax year in which the person applies for the tax credit; and

(D) 20 percent, for purposes of computing the amount of the tax credit in the third tax year after the tax year in which the person applies for the tax credit.

SECTION 2. This Act takes effect January 1, 2008, but only if the constitutional amendment proposed by the 80th Legislature, Regular Session, 2007, authorizing the legislature to provide for a phase-in of the ad valorem taxes imposed by certain political subdivisions on the value of a new improvement to the residence homestead of a low-income or moderate-income person is approved by the voters. If that amendment is not approved by the voters, this Act has no effect.