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A BILL TO BE ENTITLED
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AN ACT
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relating to the determination of the capitalization rate to be used |
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in the appraisal for ad valorem tax purposes of certain property |
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used for low-income housing. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 11.1825, Tax Code, is amended by |
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amending Subsections (q) and (r) and adding Subsection (r-1) to |
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read as follows: |
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(q) If property qualifies for an exemption under this |
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section, the chief appraiser shall use the income method of |
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appraisal as described by Section 23.012 to determine the appraised |
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value of the property. The chief appraiser shall use that method |
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regardless of whether the chief appraiser considers that method to |
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be the most appropriate method of appraising the property. In |
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appraising the property, the chief appraiser shall: |
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(1) consider the restrictions provided by this section |
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on the income of the individuals or families to whom the dwelling |
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units of the housing project may be rented and the amount of rent |
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that may be charged for purposes of computing the actual rental |
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income from the property or projecting future rental income; and |
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(2) except as provided by Subsection (r-1), use the |
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same capitalization rate that the chief appraiser uses to appraise |
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other rent-restricted properties. |
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(r) Not later than January 31 of each year, the appraisal |
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district shall give public notice in the manner determined by the |
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district, including posting on the district's website if |
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applicable, of the capitalization rate to be used in that year to |
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appraise property receiving an exemption under this section, other |
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than property described by Subsection (r-1). The appraisal |
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district shall post on the district's website the capitalization |
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rate adopted by the Texas Department of Housing and Community |
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Affairs to be used in the applicable year to appraise property |
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described by Subsection (r-1) as soon as practicable after the rate |
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is submitted to the district. |
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(r-1) Not later than January 31 of each year, the Texas |
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Department of Housing and Community Affairs shall adopt the |
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capitalization rate that must be used by the chief appraiser of each |
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appraisal district in this state to appraise property receiving an |
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exemption under this section that also receives financial |
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assistance administered under Subchapter DD, Chapter 2306, |
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Government Code. The department shall give public notice, in the |
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manner determined by the department, of the capitalization rate |
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adopted under this subsection and shall post the rate on the |
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department's website and submit the rate to the chief appraiser of |
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each appraisal district in this state. The department may not give |
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public notice of the capitalization rate until the department has |
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provided the public a reasonable opportunity to comment on the rate |
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adopted by the department and its applicability to the areas of this |
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state in which the rate will be used. When determining the |
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capitalization rate under this subsection, the department must |
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consider data available to the department with regard to income |
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received and expenses incurred by similar rent-restricted |
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properties. |
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SECTION 2. This Act applies only to an ad valorem tax year |
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that begins on or after the effective date of this Act. |
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SECTION 3. This Act takes effect January 1, 2026. |