82R5361 CJC-D

By: Farias H.B. No. 2927

A BILL TO BE ENTITLED

AN ACT

relating to the system for appraising property for ad valorem tax purposes.

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

SECTION 1. Section 5.041(b), Tax Code, is amended to read as follows:

(b) The course established under Subsection (a) must be offered at least four times each year. A member of the appraisal review board established for an appraisal district must complete the course established under Subsection (a). A member of the appraisal review board may not participate in a hearing conducted by the board unless the person has completed the course established under Subsection (a) and received a certificate of course completion.

SECTION 2. Section 23.23, Tax Code, is amended by adding Subsections (a-1), (a-2), (a-3), and (a-4) and amending Subsections (b) and (f) to read as follows:

(a-1) If the owner of real property qualifies the property for a residence homestead exemption under Section 11.13 and the owner acquired the property as a bona fide purchaser for value in the preceding year, the appraised value of the residence homestead for the first tax year in which the property qualified for that exemption may not exceed the lesser of:

(1) the market value of the property;

(2) the appraised value of the property as determined under Subsection (a), if applicable; or

(3) an amount equal to the sum of:

(A) the purchase price of the property paid by the owner; and

(B) the market value of all new improvements to the property.

(a-2) Subsection (a-1) does not apply to a residence homestead if:

(1) the purchase was made:

(A) pursuant to a court order;

(B) from a trustee in bankruptcy;

(C) by one co-owner from one or more other co-owners;

(D) from a spouse or a person or persons within the first or second degree of lineal consanguinity of one or more of the purchasers; or

(E) from a governmental entity; or

(2) the chief appraiser determines that the applicant was not a bona fide purchaser for value under criteria established by rules adopted by the comptroller for that purpose.

(a-3) To receive a limitation on appraised value under Subsection (a-1), an owner of the property must apply for the limitation. To apply for the limitation, the owner must file an application with the chief appraiser for each appraisal district in which the property subject to the claimed limitation is located. The application must be filed not later than the latest date on which the owner may file an application for an exemption under Section 11.13 on the property for the year under Section 11.43. The comptroller by rule shall prescribe the form for the application to ensure that the applicant furnishes the information necessary to determine the applicant's eligibility for the limitation.

(a-4) For the first tax year following the tax year in which a limitation on appraised value under Subsection (a-1) applies to a residence homestead, in making a computation under Subsection (a)(2), the appraised value of the property as limited by Subsection (a-1) is considered to be the appraised value of the property for the last year in which the property was appraised.

(b) When appraising a residence homestead, the chief appraiser shall:

(1) appraise the property at its market value; and

(2) include in the appraisal records both the market value of the property and the amount computed under Subsection (a)(2) or (a-1)(3), as applicable.

(f) Notwithstanding Subsections (a), (a-1), 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 or water damage. For purposes of appraising the property under Subsection (a) or (a-1) 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 year if the casualty or damage had not 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) or (a-1); 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 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 3. Subchapter B, Chapter 23, Tax Code, is amended by adding Section 23.235 to read as follows:

Sec. 23.235. PROHIBITION ON REQUESTING PERMISSION TO ENTER RESIDENCE HOMESTEAD. In determining the value of a residence homestead, the chief appraiser or other employee of an appraisal district may not:

(1) ask the owner of the residence homestead for permission to enter the residence; or

(2) state that entry of the residence by the chief appraiser or other employee of the appraisal district is a prerequisite to the owner's right to protest under Section 41.41.

SECTION 4. Section 25.18, Tax Code, is amended by amending Subsection (b) and adding Subsections (b-1), (b-2), (b-3), (b-4), and (b-5) to read as follows:

(b) The plan shall provide for the following reappraisal activities for all real and personal property in the district at least once every three years, except as provided by Subsections (b-1), (b-2), (b-3), (b-4), and (b-5):

(1) identifying properties to be appraised through physical inspection or by other reliable means of identification, including deeds or other legal documentation, aerial photographs, land-based photographs, surveys, maps, and property sketches;

(2) identifying and updating relevant characteristics of each property in the appraisal records;

(3) defining market areas in the district;

(4) identifying property characteristics that affect property value in each market area, including:

(A) the location and market area of property;

(B) physical attributes of property, such as size, age, and condition;

(C) legal and economic attributes; and

(D) easements, covenants, leases, reservations, contracts, declarations, special assessments, ordinances, or legal restrictions;

(5) developing an appraisal model that reflects the relationship among the property characteristics affecting value in each market area and determines the contribution of individual property characteristics;

(6) applying the conclusions reflected in the model to the characteristics of the properties being appraised; and

(7) reviewing the appraisal results to determine value.

(b-1) The plan shall provide for the reappraisal of a residence homestead not more often than once every three years. The market value of a residence homestead may not be increased for a tax year in which the property is not appraised. The plan may not prevent the chief appraiser from reappraising a residence homestead in a year in which the housing market is down.

(b-2) Subsection (b-1) does not apply to the appraisal of a residence homestead in:

(1) the tax year in which a limitation on appraised value under Section 23.23(a) expires; or

(2) the tax year immediately following the tax year in which the homestead is appraised under Section 23.23(a-1).

(b-3) Notwithstanding Subsection (b-1), at any time during a tax year before the date the chief appraiser submits the completed appraisal records to the appraisal review board under Section 25.22, an owner of a residence homestead is entitled to a reappraisal of the owner's residence homestead for that year on written request delivered to the chief appraiser.

(b-4) Notwithstanding Subsection (b-1), if the market value of a residence homestead was reduced in the preceding tax year as a result of a protest brought on the ground of unequal appraisal, the plan must allow the chief appraiser to reappraise the property for the current tax year and increase the market value if appropriate.

(b-5) Notwithstanding Subsection (b-1), the plan must allow the chief appraiser, for a tax year in which a residence homestead is not reappraised, to add to the market value of the property the amount of any increase in the value of the property attributable to an improvement to the property made during the preceding tax year. For purposes of this subsection, an improvement that would not constitute a new improvement under Section 23.23 is not an improvement.

SECTION 5. Section 403.302(d), Government Code, as amended by Chapters 1186 (H.B. 3676) and 1328 (H.B. 3646), Acts of the 81st Legislature, Regular Session, 2009, is reenacted and amended to read as follows:

(d) For the purposes of this section, "taxable value" means the market value of all taxable property less:

(1) the total dollar amount of any residence homestead exemptions lawfully granted under Section 11.13(b) or (c), Tax Code, in the year that is the subject of the study for each school district;

(2) one-half of the total dollar amount of any residence homestead exemptions granted under Section 11.13(n), Tax Code, in the year that is the subject of the study for each school district;

(3) the total dollar amount of any exemptions granted before May 31, 1993, within a reinvestment zone under agreements authorized by Chapter 312, Tax Code;

(4) subject to Subsection (e), the total dollar amount of any captured appraised value of property that:

(A) is within a reinvestment zone created on or before May 31, 1999, or is proposed to be included within the boundaries of a reinvestment zone as the boundaries of the zone and the proposed portion of tax increment paid into the tax increment fund by a school district are described in a written notification provided by the municipality or the board of directors of the zone to the governing bodies of the other taxing units in the manner provided by Section 311.003(e), Tax Code, before May 31, 1999, and within the boundaries of the zone as those boundaries existed on September 1, 1999, including subsequent improvements to the property regardless of when made;

(B) generates taxes paid into a tax increment fund created under Chapter 311, Tax Code, under a reinvestment zone financing plan approved under Section 311.011(d), Tax Code, on or before September 1, 1999; and

(C) is eligible for tax increment financing under Chapter 311, Tax Code;

(5) the total dollar amount of any captured appraised value of property that:

(A) is within a reinvestment zone:

(i) created on or before December 31, 2008, by a municipality with a population of less than 18,000; and

(ii) the project plan for which includes the alteration, remodeling, repair, or reconstruction of a structure that is included on the National Register of Historic Places and requires that a portion of the tax increment of the zone be used for the improvement or construction of related facilities or for affordable housing;

(B) generates school district taxes that are paid into a tax increment fund created under Chapter 311, Tax Code; and

(C) is eligible for tax increment financing under Chapter 311, Tax Code;

(6) the total dollar amount of any exemptions granted under Section 11.251 or 11.253, Tax Code;

(7) the difference between the comptroller's estimate of the market value and the productivity value of land that qualifies for appraisal on the basis of its productive capacity, except that the productivity value estimated by the comptroller may not exceed the fair market value of the land;

(8) the portion of the appraised value of residence homesteads of individuals who receive a tax limitation under Section 11.26, Tax Code, on which school district taxes are not imposed in the year that is the subject of the study, calculated as if the residence homesteads were appraised at the full value required by law;

(9) a portion of the market value of property not otherwise fully taxable by the district at market value because of:

(A) action required by statute or the constitution of this state that, if the tax rate adopted by the district is applied to it, produces an amount equal to the difference between the tax that the district would have imposed on the property if the property were fully taxable at market value and the tax that the district is actually authorized to impose on the property, if this subsection does not otherwise require that portion to be deducted; or

(B) action taken by the district under Subchapter B or C, Chapter 313, Tax Code, before the expiration of the subchapter;

(10) the market value of all tangible personal property, other than manufactured homes, owned by a family or individual and not held or used for the production of income;

(11) the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.06, Tax Code;

(12) the portion of the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.065, Tax Code; [and]

(13) the amount by which the market value of a residence homestead to which Section 23.23, Tax Code, applies exceeds the appraised value of that property as calculated under that section; and

(14) the amount by which the market value of a residence homestead to which Section 25.18(b-1), Tax Code, applies exceeds the appraised value of that property because of the application of Section 25.18(b-1).

SECTION 6. Section 403.302(m), Government Code, as added by Chapter 1186 (H.B. 3676), Acts of the 81st Legislature, Regular Session, 2009, is amended to conform to Section 80, Chapter 1328 (H.B. 3646), Acts of the 81st Legislature, Regular Session, 2009, to read as follows:

(m) Subsection (d)(9) [(d)(10)] does not apply to property that was the subject of an application under Subchapter B or C, Chapter 313, Tax Code, made after May 1, 2009, that the comptroller recommended should be disapproved.

SECTION 7. Section 5.041(e), Tax Code, is repealed.

SECTION 8. To the extent of any conflict, this Act prevails over another Act of the 82nd Legislature, Regular Session, 2011, relating to nonsubstantive additions to and corrections in enacted codes.

SECTION 9. (a) This Act applies only to ad valorem taxes imposed for a tax year beginning on or after the effective date of this Act.

(b) Sections 23.23(a-1), (a-2), and (a-3), Tax Code, as added by this Act, apply only to a residence homestead that qualifies for an exemption under Section 11.13, Tax Code, on or after the effective date of this Act.

SECTION 10. (a) Except as provided by Subsection (b) of this section, this Act takes effect September 1, 2011.

(b) Sections 2, 4, and 5 of this Act take effect January 1, 2012, but only if the constitutional amendment proposed by the 82nd Legislature, Regular Session, 2011, authorizing the legislature to limit the maximum appraised value of certain residence homesteads for ad valorem tax purposes to the purchase price of the property and to limit the frequency of reappraisals of residence homesteads is approved by the voters. If that amendment is not approved by the voters, Sections 2, 4, and 5 of this Act have no effect.