By: Howard of Travis, et al. H.B. No. 770
        (Senate Sponsor - Jackson)
         (In the Senate - Received from the House May 8, 2009;
  May 8, 2009, read first time and referred to Committee on Finance;
  May 25, 2009, reported adversely, with favorable Committee
  Substitute by the following vote:  Yeas 11, Nays 0; May 25, 2009,
  sent to printer.)
 
  COMMITTEE SUBSTITUTE FOR H.B. No. 770 By:  Deuell
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the ad valorem taxation of a residence homestead that is
  rendered uninhabitable or unusable by a casualty or by wind or water
  damage.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter B, Chapter 11, Tax Code, is amended by
  adding Section 11.135 to read as follows:
         Sec. 11.135.  CONTINUATION OF RESIDENCE HOMESTEAD EXEMPTION
  WHILE REPLACEMENT STRUCTURE IS CONSTRUCTED; SALE OF PROPERTY. (a)
  If a qualified residential structure for which the owner receives
  an exemption under Section 11.13 is rendered uninhabitable or
  unusable by a casualty or by wind or water damage, the owner may
  continue to receive the exemption for the structure and the land and
  improvements used in the residential occupancy of the structure
  while the owner constructs a replacement qualified residential
  structure on the land if the owner does not establish a different
  principal residence for which the owner receives an exemption under
  Section 11.13 during that period and intends to return and occupy
  the structure as the owner's principal residence. To continue to
  receive the exemption, the owner must begin active construction of
  the replacement qualified residential structure or other physical
  preparation of the site on which the structure is to be located not
  later than the first anniversary of the date the owner ceases to
  occupy the former qualified residential structure as the owner's
  principal residence. The owner may not receive the exemption for
  that property under the circumstances described by this subsection
  for more than two years.
         (b)  For purposes of Subsection (a), the site of a
  replacement qualified residential structure is under physical
  preparation if the owner has engaged in architectural or
  engineering work, soil testing, land clearing activities, or site
  improvement work necessary for the construction of the structure or
  has conducted an environmental or land use study relating to the
  construction of the structure.
         (c)  If an owner receives an exemption for property under
  Section 11.13 under the circumstances described by Subsection (a)
  and sells the property before the owner completes construction of a
  replacement qualified residential structure on the property, an
  additional tax is imposed on the property equal to the difference
  between the taxes imposed on the property for each of the years in
  which the owner received the exemption and the tax that would have
  been imposed had the owner not received the exemption in each of
  those years, plus interest at an annual rate of seven percent
  calculated from the dates on which the differences would have
  become due.
         (d)  A tax lien attaches to property on the date a sale under
  the circumstances described by Subsection (c) occurs to secure
  payment of the additional tax and interest imposed by that
  subsection and any penalties incurred. The lien exists in favor of
  all taxing units for which the additional tax is imposed.
         (e)  A determination that a sale of property under the
  circumstances described by Subsection (c) has occurred is made by
  the chief appraiser. The chief appraiser shall deliver a notice of
  the determination to the owner of the property as soon as possible
  after making the determination and shall include in the notice an
  explanation of the owner's right to protest the determination. If
  the owner does not file a timely protest or if the final
  determination of the protest is that the additional taxes are due,
  the assessor for each taxing unit shall prepare and deliver a bill
  for the additional taxes plus interest as soon as practicable. The
  taxes and interest are due and become delinquent and incur
  penalties and interest as provided by law for ad valorem taxes
  imposed by the taxing unit if not paid before the next February 1
  that is at least 20 days after the date the bill is delivered to the
  owner of the property.
         (f)  The sanctions provided by Subsection (c) do not apply if
  the sale is:
               (1)  for right-of-way; or
               (2)  to this state or a political subdivision of this
  state to be used for a public purpose.
         (g)  The comptroller shall adopt rules and forms to implement
  this section.
         SECTION 2.  Section 11.26, Tax Code, is amended by adding
  Subsections (n) and (o) to read as follows:
         (n)  Notwithstanding Subsection (c), the limitation on tax
  increases required by this section does not expire if the owner of
  the structure qualifies for an exemption under Section 11.13 under
  the circumstances described by Section 11.135(a).
         (o)  Notwithstanding Subsections (a), (a-3), and (b), an
  improvement to property that would otherwise constitute an
  improvement under Subsection (b) is not treated as an improvement
  under that subsection if the improvement is a replacement structure
  for a structure that was rendered uninhabitable or unusable by a
  casualty or by wind or water damage. For purposes of appraising the
  property in the tax year in which the structure would have
  constituted an improvement under Subsection (b), the replacement
  structure is considered to be an improvement under that subsection
  only if:
               (1)  the square footage of the replacement structure
  exceeds that of the replaced structure as that structure existed
  before the casualty or damage occurred; or
               (2)  the exterior of the replacement structure is of
  higher quality construction and composition than that of the
  replaced structure.
         SECTION 3.  Section 11.261, Tax Code, is amended by adding
  Subsections (l) and (m) to read as follows:
         (l)  Notwithstanding Subsection (d), a limitation on county,
  municipal, or junior college district tax increases provided by
  this section does not expire if the owner of the structure qualifies
  for an exemption under Section 11.13 under the circumstances
  described by Section 11.135(a).
         (m)  Notwithstanding Subsections (b) and (c), an improvement
  to property that would otherwise constitute an improvement under
  Subsection (c) is not treated as an improvement under that
  subsection if the improvement is a replacement structure for a
  structure that was rendered uninhabitable or unusable by a casualty
  or by wind or water damage. For purposes of appraising the property
  in the tax year in which the structure would have constituted an
  improvement under Subsection (c), the replacement structure is
  considered to be an improvement under that subsection only if:
               (1)  the square footage of the replacement structure
  exceeds that of the replaced structure as that structure existed
  before the casualty or damage occurred; or
               (2)  the exterior of the replacement structure is of
  higher quality construction and composition than that of the
  replaced structure.
         SECTION 4.  Section 23.23(f), Tax Code, is amended to read as
  follows:
         (f)  Notwithstanding Subsections (a) and (e) 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 wind [mold] or water damage. For purposes of appraising the
  property under Subsection (a) in the tax year in which the structure
  would have constituted a new improvement:
               (1)  the appraised value the property would have had in
  the preceding tax [last] year if the casualty or damage had not
  occurred [in which the property was appraised for taxation before
  the casualty or damage occurred] is considered to be the appraised
  value of the property for that year, regardless of whether that
  appraised value exceeds the actual appraised value of the property
  for that year as limited by Subsection (a) [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 if:
                     (A)  the square footage of the replacement
  structure exceeds that of [to the extent it is a significant
  improvement over] the replaced structure as that structure existed
  before the casualty or damage occurred; or
                     (B)  the exterior of the replacement structure is
  of higher quality construction and composition than that of the
  replaced structure.
         SECTION 5.  This Act applies only to ad valorem taxes imposed
  for a tax year beginning on or after the effective date of this Act.
         SECTION 6.  This Act takes effect January 1, 2010.
 
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