BILL ANALYSIS

H.B. 862

By: King, Susan

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

Current law allows the transfer of the freeze on property taxes on a residence homestead owned by an individual who is disabled or an individual who is 65 years of age or older to another qualifying property. Interested parties assert that a loophole exists allowing property owners to transfer the frozen tax rate from a low value property to a much higher value property without any additional tax obligations. H.B. 862 seeks to close this particular loophole so that school districts, community colleges, and other local jurisdictions receive the taxes owed to them.

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

H.B. 862 amends the Tax Code to establish that the freeze on school district, county, municipal, and junior college district property taxes on the residence homestead of a disabled individual or an individual 65 years of age or older does not transfer to another homestead that the individual subsequently qualifies for a residence homestead exemption if the following conditions apply:

· the individual received the property tax freeze on the individual's former homestead in the last tax year in which the individual received the homestead exemption;

· the property taxes were not imposed on the former homestead in that year; and

· the taxable value of the subsequently qualified homestead in the tax year in which the individual first receives the homestead exemption for that homestead exceeds the average taxable value of the homesteads in the school district, county, municipality, or junior college district, as applicable, in which that homestead is located in that tax year.

EFFECTIVE DATE

January 1, 2014.