| |
| |
|
|
A BILL TO BE ENTITLED
|
|
|
AN ACT
|
|
|
relating to an exemption from ad valorem taxation of the total |
|
|
appraised value of real property for which the owner of the property |
|
|
has prepaid those taxes. |
|
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
|
SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by |
|
|
adding Section 11.121 to read as follows: |
|
|
Sec. 11.121. REAL PROPERTY ON WHICH TAXES ARE PREPAID. (a) |
|
|
Except as otherwise provided by this section, real property for |
|
|
which the taxes have been prepaid in the manner provided by this |
|
|
section is exempt from taxation. |
|
|
(b) A property owner may prepay the taxes on real property |
|
|
by submitting to the comptroller an enrollment form and subsequent |
|
|
payment in an amount equal to the amount computed under Subsection |
|
|
(d) and presented to the property owner. On receipt of an |
|
|
enrollment form that is administratively complete and payment in |
|
|
full of the designated amount, the comptroller shall issue to the |
|
|
property owner a certificate of prepayment of taxes for the |
|
|
property. The comptroller by rule shall establish an annual |
|
|
deadline for enrollment for prepayment of taxes and the date by |
|
|
which the designated prepayment must be made to qualify the |
|
|
property for an exemption under this section in subsequent tax |
|
|
years. |
|
|
(c) A property owner shall include a copy of the certificate |
|
|
of prepayment of taxes received under Subsection (b) when filing an |
|
|
application for the exemption provided by this section with the |
|
|
chief appraiser of the appraisal district in which the property is |
|
|
located. The chief appraiser shall approve an application that is |
|
|
administratively complete and includes a copy of the certificate of |
|
|
prepayment of taxes. If the chief appraiser approves the |
|
|
application, the chief appraiser shall notify each taxing unit that |
|
|
taxes the real property of the approval and enter the exemption in |
|
|
the appraisal records. |
|
|
(d) The amount a property owner is required to prepay |
|
|
pursuant to an approved application submitted under Subsection (b) |
|
|
is equal to the product of the appraised value of the property for |
|
|
the tax year in which the property owner submits the enrollment form |
|
|
and the ad valorem tax prepayment rate determined by the |
|
|
comptroller for that tax year under Section 403.030, Government |
|
|
Code. |
|
|
(e) The exemption provided by this section does not expire |
|
|
as to real property for which a certificate of prepayment is issued, |
|
|
regardless of whether the property is sold or ownership of the |
|
|
property otherwise changes. |
|
|
(f) The exemption provided by this section does not apply to |
|
|
a new improvement to the real property made during the tax year in |
|
|
which the property owner submits an enrollment form under |
|
|
Subsection (b) or a subsequent tax year unless the property owner |
|
|
pays a supplemental prepayment amount to the comptroller in the |
|
|
manner provided by comptroller rule in the amount determined as |
|
|
provided by Subsection (d) for the increase in the appraised value |
|
|
of the property attributable to the improvement. For purposes of |
|
|
this subsection, "new improvement" has the meaning assigned by |
|
|
Section 23.23, except that the term is not limited to an improvement |
|
|
to a residence homestead. |
|
|
(g) If after real property receives an exemption under this |
|
|
section a taxing unit is established that imposes taxes on the real |
|
|
property or the territory of a taxing unit is changed to include the |
|
|
property, the exemption provided by this subsection does not apply |
|
|
to the taxes imposed by that taxing unit unless the property owner |
|
|
pays a supplemental prepayment amount to the comptroller in the |
|
|
manner prescribed by comptroller rule in the amount determined as |
|
|
provided by Subsection (d) in prepayment of the taxes due to the |
|
|
taxing unit. |
|
|
(h) The comptroller shall deposit each prepayment and |
|
|
supplemental prepayment received under this section to the credit |
|
|
of the prepaid property tax trust fund established under Section |
|
|
49-s, Article III, Texas Constitution. |
|
|
SECTION 2. Subchapter B, Chapter 403, Government Code, is |
|
|
amended by adding Section 403.030 to read as follows: |
|
|
Sec. 403.030. ADOPTION OF AD VALOREM TAX PREPAYMENT RATE; |
|
|
REIMBURSEMENT RATE FOR POLITICAL SUBDIVISION. (a) In this |
|
|
section: |
|
|
(1) "Eligible taxing unit" means a taxing unit that is |
|
|
eligible for a distribution from the fund. |
|
|
(2) "Fund" means the fund established under Section |
|
|
49-s, Article III, Texas Constitution. |
|
|
(3) "No-new-revenue tax rate" means the |
|
|
no-new-revenue tax rate calculated under Chapter 26, Tax Code. |
|
|
(4) "Taxing unit" has the meaning assigned by Section |
|
|
1.04, Tax Code. |
|
|
(b) The comptroller shall determine and adopt an ad valorem |
|
|
tax prepayment rate each year to compute tax prepayments under |
|
|
Section 11.121, Tax Code, to be made to exempt property beginning in |
|
|
the next tax year and shall publish the rate in the Texas Register. |
|
|
The comptroller may consult with actuaries or any other persons as |
|
|
necessary to determine a prepayment rate that will generate revenue |
|
|
sufficient to adequately fund annual disbursements in the current |
|
|
and future years to eligible taxing units from the fund. |
|
|
(c) The comptroller shall adopt a procedure by which an |
|
|
eligible taxing unit may request a distribution from the fund. |
|
|
Subject to Subsection (d), an eligible taxing unit is entitled to an |
|
|
annual disbursement from the fund in an amount equal to the product |
|
|
of: |
|
|
(1) the total appraised value of all real property in |
|
|
the taxing unit that is exempt under Section 11.121, Tax Code, in |
|
|
that year; and |
|
|
(2) the taxing unit's no-new-revenue tax rate as |
|
|
calculated for that year. |
|
|
(d) If in any year the balance of the fund is not sufficient |
|
|
to make a disbursement from the fund in the amount computed under |
|
|
Subsection (c) to each eligible taxing unit, the comptroller may |
|
|
proportionally reduce the amount of each disbursement from the fund |
|
|
in that year to ensure that the fund remains solvent. |
|
|
SECTION 3. Section 403.302(d), Government Code, as |
|
|
effective until January 1, 2027, is 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, less the amount of any disbursement received by the |
|
|
district in the applicable tax year from the prepaid property tax |
|
|
trust fund under Section 49-s, Article III, Texas Constitution, and |
|
|
Section 403.030 of this code 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, Tax Code, applies exceeds the |
|
|
appraised value of that property as calculated under Section 23.23 |
|
|
or 23.231, Tax Code, as applicable; and |
|
|
(14) the total dollar amount of any exemptions granted |
|
|
under Section 11.35, Tax Code. |
|
|
SECTION 4. Section 403.302(d), Government Code, as |
|
|
effective January 1, 2027, is 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, less the amount of any disbursement received by the |
|
|
district in the applicable tax year from the prepaid property tax |
|
|
trust fund under Section 49-s, Article III, Texas Constitution, and |
|
|
Section 403.030 of this code 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 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 total dollar amount of any exemptions granted |
|
|
under Section 11.35, Tax Code. |
|
|
SECTION 5. This Act applies only to an ad valorem tax year |
|
|
that begins on or after the effective date of this Act. |
|
|
SECTION 6. This Act takes effect January 1, 2026, but only |
|
|
if the constitutional amendment proposed by the 89th Legislature, |
|
|
Regular Session, 2025, to provide for an exemption from ad valorem |
|
|
taxation of the total market value of real property on which the ad |
|
|
valorem taxes have been prepaid and to establish the prepaid |
|
|
property tax trust fund to provide annual distributions to |
|
|
political subdivisions affected by the exemption is approved by the |
|
|
voters. If that amendment is not approved by the voters, this Act |
|
|
has no effect. |