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A BILL TO BE ENTITLED
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AN ACT
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relating to the treatment of a replacement structure for a |
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structure that was rendered uninhabitable or unusable by a |
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casualty, a natural disaster, or wind or water damage as a new |
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improvement for ad valorem tax purposes. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 11.26, Tax Code, is amended by amending |
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Subsection (o) and adding Subsection (o-1) to read as follows: |
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(o) Notwithstanding Subsections (a) and (b), an improvement |
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to property that would otherwise constitute an improvement under |
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Subsection (b) is not treated as an improvement under that |
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subsection if the improvement is a replacement structure for a |
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structure that was rendered uninhabitable or unusable by a |
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casualty, a natural disaster declared by the president of the |
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United States or the governor, or [by] wind or water damage. For |
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purposes of appraising the property in the tax year in which the |
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structure would have constituted an improvement under Subsection |
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(b), the replacement structure is considered to be an improvement |
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under that subsection only if: |
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(1) the square footage of the replacement structure |
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exceeds that of the replaced structure as that structure existed |
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before the casualty, disaster, or damage occurred; or |
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(2) the exterior of the replacement structure is of |
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higher quality construction and composition than that of the |
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replaced structure. |
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(o-1) Notwithstanding Subsection (o)(2), a replacement |
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structure is not considered to be an improvement if: |
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(1) the materials used for the construction and |
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composition of the exterior of the replaced structure are no longer |
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available; and |
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(2) the materials used for the construction and |
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composition of the exterior of the replacement structure are the |
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materials most comparable in quality to the materials used for the |
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exterior of the replaced structure. |
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SECTION 2. Section 11.261, Tax Code, is amended by amending |
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Subsection (m) and adding Subsection (m-1) to read as follows: |
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(m) Notwithstanding Subsections (b) and (c), an improvement |
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to property that would otherwise constitute an improvement under |
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Subsection (c) is not treated as an improvement under that |
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subsection if the improvement is a replacement structure for a |
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structure that was rendered uninhabitable or unusable by a |
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|
casualty, a natural disaster declared by the president of the |
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|
United States or the governor, or [by] wind or water damage. For |
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|
purposes of appraising the property in the tax year in which the |
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structure would have constituted an improvement under Subsection |
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(c), the replacement structure is considered to be an improvement |
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under that subsection only if: |
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(1) the square footage of the replacement structure |
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exceeds that of the replaced structure as that structure existed |
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before the casualty, disaster, or damage occurred; or |
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(2) the exterior of the replacement structure is of |
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higher quality construction and composition than that of the |
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replaced structure. |
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(m-1) Notwithstanding Subsection (m)(2), a replacement |
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structure is not considered to be an improvement if: |
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(1) the materials used for the construction and |
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composition of the exterior of the replaced structure are no longer |
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available; and |
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(2) the materials used for the construction and |
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composition of the exterior of the replacement structure are the |
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materials most comparable in quality to the materials used for the |
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exterior of the replaced structure. |
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SECTION 3. Section 23.23, Tax Code, is amended by amending |
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Subsection (f) and adding Subsection (f-1) to read as follows: |
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(f) Notwithstanding Subsections (a) and (e) and except as |
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provided by Subdivision (2), an improvement to property that would |
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otherwise constitute a new improvement is not treated as a new |
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improvement if the improvement is a replacement structure for a |
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structure that was rendered uninhabitable or unusable by a |
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casualty, a natural disaster declared by the president of the |
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United States or the governor, or [by] wind or water damage. For |
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purposes of appraising the property under Subsection (a) in the tax |
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year in which the structure would have constituted a new |
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improvement: |
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(1) the appraised value the property would have had in |
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the preceding tax year if the casualty, disaster, or damage had not |
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occurred is considered to be the appraised value of the property for |
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that year, regardless of whether that appraised value exceeds the |
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actual appraised value of the property for that year as limited by |
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Subsection (a); and |
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(2) the replacement structure is considered to be a |
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new improvement only if: |
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(A) the square footage of the replacement |
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structure exceeds that of the replaced structure as that structure |
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existed before the casualty, disaster, or damage occurred; or |
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(B) the exterior of the replacement structure is |
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of higher quality construction and composition than that of the |
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replaced structure. |
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(f-1) Notwithstanding Subsection (f)(2)(B), a replacement |
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structure is not considered to be an improvement if: |
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(1) the materials used for the construction and |
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composition of the exterior of the replaced structure are no longer |
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available; and |
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(2) the materials used for the construction and |
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composition of the exterior of the replacement structure are the |
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materials most comparable in quality to the materials used for the |
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exterior of the replaced structure. |
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SECTION 4. This Act applies only to ad valorem taxes imposed |
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for a tax year beginning on or after the effective date of this Act. |
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SECTION 5. This Act takes effect January 1, 2026. |