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A BILL TO BE ENTITLED
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AN ACT
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relating to a limitation on increases in the appraised value for ad |
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valorem tax purposes of certain leased residential real property. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 1.12(d), Tax Code, as effective until |
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January 1, 2027, is amended to read as follows: |
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(d) For purposes of this section, the appraisal ratio of |
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property to which Section 23.23, [or] 23.231, or 23.232 applies is |
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the ratio of the property's market value as determined by the |
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appraisal district or appraisal review board, as applicable, to the |
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market value of the property according to law. The appraisal ratio |
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is not calculated according to the appraised value of the property |
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as limited by Section 23.23, [or] 23.231, or 23.232. |
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SECTION 2. Section 1.12(d), Tax Code, as effective January |
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1, 2027, is amended to read as follows: |
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(d) For purposes of this section, the appraisal ratio of |
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property [a homestead] to which Section 23.23 or 23.232 applies is |
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the ratio of the property's market value as determined by the |
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appraisal district or appraisal review board, as applicable, to the |
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market value of the property according to law. The appraisal ratio |
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is not calculated according to the appraised value of the property |
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as limited by Section 23.23 or 23.232. |
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SECTION 3. Subchapter B, Chapter 23, Tax Code, is amended by |
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adding Section 23.232 to read as follows: |
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Sec. 23.232. LIMITATION ON APPRAISED VALUE OF CERTAIN |
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LEASED RESIDENTIAL REAL PROPERTY. (a) In this section: |
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(1) "Fair market rent" means the most recent |
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applicable fair market rent established by the United States |
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Department of Housing and Urban Development for the zip code in |
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which the property is located. |
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(2) "New improvement" means an improvement to real |
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property described by Subsection (b) made after the most recent |
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appraisal of the property that increases the market value of the |
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property and the value of which is not included in the appraised |
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value of the property for the preceding tax year. The term does not |
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include repairs to or ordinary maintenance of an existing structure |
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or the grounds or another feature of the property. |
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(b) This section applies only to real property that: |
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(1) is a single-family residential property leased to |
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a lessee and used by the lessee as a primary residence; and |
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(2) is leased to a lessee for a rent that does not |
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exceed the fair market rent. |
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(c) This section does not apply to property appraised under |
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Subchapter C, D, E, F, G, or H. |
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(d) Notwithstanding the requirements of Section 25.18 and |
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regardless of whether the appraisal office has appraised the |
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property and determined the market value of the property for the tax |
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year, an appraisal office may increase the appraised value of real |
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property described by Subsection (b) for a tax year to an amount not |
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to exceed the lesser of: |
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(1) the market value of the property for the most |
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recent tax year that the market value was determined by the |
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appraisal office; or |
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(2) the sum of: |
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(A) 10 percent of the appraised value of the |
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property for the preceding tax year; |
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(B) the appraised value of the property for the |
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preceding tax year; and |
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(C) the market value of all new improvements to |
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the property. |
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(e) If only part of a parcel of real property qualifies for |
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the limitation provided by Subsection (d), the limitation applies |
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only to that part of the parcel. |
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(f) When appraising real property described by Subsection |
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(b), the chief appraiser shall: |
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(1) appraise the property at its market value; and |
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(2) include in the appraisal records both the market |
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value of the property and the amount computed under Subsection |
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(d)(2). |
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(g) The limitation provided by Subsection (d) takes effect |
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as to a parcel or part of a parcel of real property described by |
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Subsection (b) on January 1 of the tax year following the first tax |
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year in which the owner of the property leases the property for an |
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amount described by Subsection (b). Except as provided by |
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Subsection (h), the limitation expires on January 1 of the tax year |
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following the first tax year in which the owner of the property |
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ceases to lease the property for an amount described by Subsection |
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(b). |
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(h) Notwithstanding Subsections (a)(2) and (d) and except |
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as provided by Subdivision (2) of this subsection, an improvement |
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to property that would otherwise constitute a new improvement is |
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not treated as a new improvement if the improvement is a replacement |
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structure for a structure that was rendered unusable by a casualty |
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or by wind or water damage. For purposes of appraising the property |
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under Subsection (d) in the tax year in which the structure would |
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have constituted a new 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 or damage had not occurred is |
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considered to be the appraised value of the property for that year, |
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regardless of whether that appraised value exceeds the actual |
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appraised value of the property for that year as limited by |
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Subsection (d); 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 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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(i) In this subsection, "disaster recovery program" means |
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the disaster recovery program administered by the General Land |
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Office or by a political subdivision of this state that is funded |
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with community development block grant disaster recovery money |
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authorized by federal law. Notwithstanding Subsection (h)(2), and |
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only to the extent necessary to satisfy the requirements of the |
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disaster recovery program, a replacement structure described by |
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that subdivision is not considered to be a new improvement if to |
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satisfy the requirements of the disaster recovery program it was |
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necessary that: |
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(1) the square footage of the replacement structure |
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exceed that of the replaced structure as that structure existed |
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before the casualty or damage occurred; or |
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(2) the exterior of the replacement structure be of |
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higher quality construction and composition than that of the |
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replaced structure. |
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(j) To receive a limitation under Subsection (d), a person |
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claiming the limitation must annually apply for the limitation by |
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filing an application with the chief appraiser of the appraisal |
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district. The chief appraiser shall accept and approve or deny an |
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application. For property appraised by more than one appraisal |
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district, a separate application must be filed in each appraisal |
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district to receive the limitation in that district. |
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(k) The comptroller, in prescribing the contents of the |
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application form for a limitation under Subsection (d), shall |
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ensure that the form requires an applicant to provide the |
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information necessary to determine the validity of the limitation |
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claim. The form must require an applicant to provide the |
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applicant's name and driver's license number, personal |
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identification certificate number, social security number, or |
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taxpayer identification number. The comptroller shall include on |
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the form a notice of the penalties prescribed by Section 37.10, |
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|
Penal Code, for making or filing an application containing a false |
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statement and shall include on the form a statement explaining that |
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the application must be made annually. In this subsection, |
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"driver's license" and "personal identification certificate" have |
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the meanings assigned by Section 11.43(f). |
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(l) To receive a limitation under Subsection (d) for a tax |
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year, a person must apply for the limitation not later than May 1 of |
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that year. Except as provided by Subsection (m), if the person |
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fails to timely file a completed application, the person may not |
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receive the limitation for that year. |
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(m) The chief appraiser shall accept and approve or deny an |
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application for a limitation under Subsection (d) for a tax year |
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after the deadline for filing the application has passed if the |
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application is filed not later than one year after the delinquency |
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date for the taxes on the property for that tax year. If a late |
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application is approved after approval of the appraisal records by |
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the appraisal review board, the chief appraiser shall notify the |
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collector for each taxing unit in which the property is located. If |
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the tax has not been paid, the collector shall deduct from the |
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person's tax bill the difference between the taxes that would have |
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been due had the property not qualified for the limitation and the |
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taxes due after taking the limitation into account. If the tax has |
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been paid, the collector shall refund the difference. |
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(n) This subsection expires January 1, 2030. For purposes |
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of applying the limitation provided by Subsection (d) in the first |
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tax year after the 2025 tax year in which the property is appraised |
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for taxation: |
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(1) the property is considered to have been appraised |
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|
for taxation in the 2025 tax year at a market value equal to the |
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appraised value of the property for that tax year; and |
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(2) a person who acquired real property described by |
|
|
Subsection (b) in a tax year before the 2025 tax year is considered |
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to have acquired the property on January 1, 2025. |
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SECTION 4. Section 41.41(a), Tax Code, as effective until |
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January 1, 2027, is amended to read as follows: |
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(a) A property owner is entitled to protest before the |
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|
appraisal review board the following actions: |
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|
(1) determination of the appraised value of the |
|
|
owner's property or, in the case of land appraised as provided by |
|
|
Subchapter C, D, E, or H, Chapter 23, determination of its appraised |
|
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or market value; |
|
|
(2) unequal appraisal of the owner's property; |
|
|
(3) inclusion of the owner's property on the appraisal |
|
|
records; |
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|
(4) denial to the property owner in whole or in part of |
|
|
a partial exemption; |
|
|
(4-a) determination that the owner's property does not |
|
|
qualify for the circuit breaker limitation on appraised value |
|
|
provided by Section 23.231; |
|
|
(4-b) determination that the owner's property does not |
|
|
qualify for the limitation on appraised value provided by Section |
|
|
23.232; |
|
|
(5) determination that the owner's land does not |
|
|
qualify for appraisal as provided by Subchapter C, D, E, or H, |
|
|
Chapter 23; |
|
|
(6) identification of the taxing units in which the |
|
|
owner's property is taxable in the case of the appraisal district's |
|
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appraisal roll; |
|
|
(7) determination that the property owner is the owner |
|
|
of property; |
|
|
(8) a determination that a change in use of land |
|
|
appraised under Subchapter C, D, E, or H, Chapter 23, has occurred; |
|
|
or |
|
|
(9) any other action of the chief appraiser, appraisal |
|
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district, or appraisal review board that applies to and adversely |
|
|
affects the property owner. |
|
|
SECTION 5. Section 41.41(a), Tax Code, as effective January |
|
|
1, 2027, is amended to read as follows: |
|
|
(a) A property owner is entitled to protest before the |
|
|
appraisal review board the following actions: |
|
|
(1) determination of the appraised value of the |
|
|
owner's property or, in the case of land appraised as provided by |
|
|
Subchapter C, D, E, or H, Chapter 23, determination of its appraised |
|
|
or market value; |
|
|
(2) unequal appraisal of the owner's property; |
|
|
(3) inclusion of the owner's property on the appraisal |
|
|
records; |
|
|
(4) denial to the property owner in whole or in part of |
|
|
a partial exemption; |
|
|
(4-a) determination that the owner's property does not |
|
|
qualify for the limitation on appraised value provided by Section |
|
|
23.232; |
|
|
(5) determination that the owner's land does not |
|
|
qualify for appraisal as provided by Subchapter C, D, E, or H, |
|
|
Chapter 23; |
|
|
(6) identification of the taxing units in which the |
|
|
owner's property is taxable in the case of the appraisal district's |
|
|
appraisal roll; |
|
|
(7) determination that the property owner is the owner |
|
|
of property; |
|
|
(8) a determination that a change in use of land |
|
|
appraised under Subchapter C, D, E, or H, Chapter 23, has occurred; |
|
|
or |
|
|
(9) any other action of the chief appraiser, appraisal |
|
|
district, or appraisal review board that applies to and adversely |
|
|
affects the property owner. |
|
|
SECTION 6. Section 42.26(d), Tax Code, as effective until |
|
|
January 1, 2027, is amended to read as follows: |
|
|
(d) For purposes of this section, the value of the property |
|
|
subject to the suit and the value of a comparable property or sample |
|
|
property that is used for comparison must be the market value |
|
|
determined by the appraisal district when the property is subject |
|
|
to the limitation on appraised value imposed by Section 23.23, [or] |
|
|
23.231, or 23.232. |
|
|
SECTION 7. Section 42.26(d), Tax Code, as effective January |
|
|
1, 2027, is amended to read as follows: |
|
|
(d) For purposes of this section, the value of the property |
|
|
subject to the suit and the value of a comparable property or sample |
|
|
property that is used for comparison must be the market value |
|
|
determined by the appraisal district when the property is [a |
|
|
residence homestead] subject to the limitation on appraised value |
|
|
imposed by Section 23.23 or 23.232. |
|
|
SECTION 8. Sections 403.302(d) and (i), Government Code, as |
|
|
effective until January 1, 2027, are 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 former 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 |
|
|
action required by statute or the constitution of this state, other |
|
|
than Section 11.311, Tax Code, 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; |
|
|
(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; |
|
|
(13) the amount by which the market value of property |
|
|
to which Section 23.23, [or] 23.231, or 23.232, Tax Code, applies |
|
|
exceeds the appraised value of that property as calculated under |
|
|
Section 23.23, [or] 23.231, or 23.232, Tax Code, as applicable; and |
|
|
(14) the total dollar amount of any exemptions granted |
|
|
under Section 11.35, Tax Code. |
|
|
(i) If the comptroller determines in the study that the |
|
|
market value of property in a school district as determined by the |
|
|
appraisal district that appraises property for the school district, |
|
|
less the total of the amounts and values listed in Subsection (d) as |
|
|
determined by that appraisal district, is valid, the comptroller, |
|
|
in determining the taxable value of property in the school district |
|
|
under Subsection (d), shall for purposes of Subsection (d)(13) |
|
|
subtract from the market value as determined by the appraisal |
|
|
district of properties to which Section 23.23, [or] 23.231, or |
|
|
23.232, Tax Code, applies the amount by which that amount exceeds |
|
|
the appraised value of those properties as calculated by the |
|
|
appraisal district under Section 23.23, [or] 23.231, or 23.232, Tax |
|
|
Code, as applicable. If the comptroller determines in the study |
|
|
that the market value of property in a school district as determined |
|
|
by the appraisal district that appraises property for the school |
|
|
district, less the total of the amounts and values listed in |
|
|
Subsection (d) as determined by that appraisal district, is not |
|
|
valid, the comptroller, in determining the taxable value of |
|
|
property in the school district under Subsection (d), shall for |
|
|
purposes of Subsection (d)(13) subtract from the market value as |
|
|
estimated by the comptroller of properties to which Section 23.23, |
|
|
[or] 23.231, or 23.232, Tax Code, applies the amount by which that |
|
|
amount exceeds the appraised value of those properties as |
|
|
calculated by the appraisal district under Section 23.23, [or] |
|
|
23.231, or 23.232, Tax Code, as applicable. |
|
|
SECTION 9. Sections 403.302(d) and (i), Government Code, as |
|
|
effective January 1, 2027, are 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 former 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, |
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|
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 |
|
|
action required by statute or the constitution of this state, other |
|
|
than Section 11.311, Tax Code, 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; |
|
|
(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; |
|
|
(13) the amount by which the market value of property |
|
|
[a residence homestead] to which Section 23.23 or 23.232, Tax Code, |
|
|
applies exceeds the appraised value of that property as calculated |
|
|
under Section 23.23 or 23.232, Tax Code, as applicable [that |
|
|
section]; and |
|
|
(14) the total dollar amount of any exemptions granted |
|
|
under Section 11.35, Tax Code. |
|
|
(i) If the comptroller determines in the study that the |
|
|
market value of property in a school district as determined by the |
|
|
appraisal district that appraises property for the school district, |
|
|
less the total of the amounts and values listed in Subsection (d) as |
|
|
determined by that appraisal district, is valid, the comptroller, |
|
|
in determining the taxable value of property in the school district |
|
|
under Subsection (d), shall for purposes of Subsection (d)(13) |
|
|
subtract from the market value as determined by the appraisal |
|
|
district of properties [residence homesteads] to which Section |
|
|
23.23 or 23.232, Tax Code, applies the amount by which that amount |
|
|
exceeds the appraised value of those properties as calculated by |
|
|
the appraisal district under Section 23.23 or 23.232, Tax Code, as |
|
|
applicable. If the comptroller determines in the study that the |
|
|
market value of property in a school district as determined by the |
|
|
appraisal district that appraises property for the school district, |
|
|
less the total of the amounts and values listed in Subsection (d) as |
|
|
determined by that appraisal district, is not valid, the |
|
|
comptroller, in determining the taxable value of property in the |
|
|
school district under Subsection (d), shall for purposes of |
|
|
Subsection (d)(13) subtract from the market value as estimated by |
|
|
the comptroller of properties [residence homesteads] to which |
|
|
Section 23.23 or 23.232, Tax Code, applies the amount by which that |
|
|
amount exceeds the appraised value of those properties as |
|
|
calculated by the appraisal district under Section 23.23 or 23.232, |
|
|
Tax Code, as applicable. |
|
|
SECTION 10. This Act applies only to the appraisal of |
|
|
residential real property for ad valorem tax purposes for a tax year |
|
|
that begins on or after the effective date of this Act. |
|
|
SECTION 11. This Act takes effect January 1, 2026, but only |
|
|
if the constitutional amendment proposed by the 89th Legislature, |
|
|
Regular Session, 2025, to authorize the legislature to provide for |
|
|
a limitation on the maximum appraised value for ad valorem tax |
|
|
purposes of certain leased residential real property is approved by |
|
|
the voters. If that amendment is not approved by the voters, this |
|
|
Act has no effect. |