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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 commercial or industrial 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, is amended to read as |
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follows: |
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(d) For purposes of this section, the appraisal ratio of a |
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homestead to which Section 23.23 applies or of commercial or |
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industrial real property to which Section 23.231 applies is the |
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ratio of the property's market value as determined by the appraisal |
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district or appraisal review board, as applicable, to the market |
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value of the property according to law. The appraisal ratio is not |
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calculated according to the appraised value of the property as |
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limited by Section 23.23 or 23.231. |
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SECTION 2. Subchapter B, Chapter 23, Tax Code, is amended by |
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adding Section 23.231 to read as follows: |
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Sec. 23.231. LIMITATION ON APPRAISED VALUE OF COMMERCIAL OR |
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INDUSTRIAL REAL PROPERTY. (a) In this section, "new improvement" |
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means an improvement to commercial or industrial real property made |
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after the most recent appraisal of the property that increases the |
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market value of the property and the value of which is not included |
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in the appraised value of the property for the preceding tax |
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year. The term does not include repairs to or ordinary maintenance |
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of an existing structure or the grounds or another feature of the |
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property. |
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(b) This section does not apply to: |
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(1) residential property; |
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(2) a mineral interest; or |
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(3) property appraised under Subchapter C, D, E, F, G, |
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or H. |
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(c) 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 a |
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parcel of commercial or industrial real property for a tax year to |
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an amount not 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) 20 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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(d) When appraising a parcel of commercial or industrial |
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real property, 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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(c)(2). |
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(e) The limitation provided by Subsection (c) takes effect |
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as to a parcel of commercial or industrial real property on January |
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1 of the tax year following the first tax year in which the owner |
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owns the property on January 1 and in which the property qualifies |
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as commercial or industrial real property under this section. |
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Except as provided by Subsection (f), the limitation expires on |
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January 1 of the tax year following the first tax year in which the |
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owner of the property ceases to own the property or the property |
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ceases to qualify as commercial or industrial real property. |
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(f) If property subject to a limitation under this section |
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is owned by two or more persons, the limitation expires on January 1 |
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of the tax year following the first tax year in which the ownership |
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of at least a 50 percent interest in the property is sold or |
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otherwise transferred. |
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(g) Notwithstanding Subsections (a) and (c) and except as |
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provided by Subdivision (2) of this subsection, an improvement to |
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property that would otherwise constitute a new improvement is not |
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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 (c) 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 (c); 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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(h) 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 that is funded with community development block grant |
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disaster recovery money authorized by the Consolidated Security, |
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Disaster Assistance, and Continuing Appropriations Act, 2009 (Pub. |
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L. No. 110-329), and the Consolidated and Further Continuing |
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Appropriations Act, 2012 (Pub. L. No. 112-55). Notwithstanding |
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Subsection (g)(2), and only to the extent necessary to satisfy the |
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requirements of the disaster recovery program, a replacement |
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structure described by that subdivision is not considered to be a |
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new improvement if to satisfy the requirements of the disaster |
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recovery program it was 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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SECTION 3. Sections 25.19(b) and (g), Tax Code, are amended |
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to read as follows: |
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(b) The chief appraiser shall separate real from personal |
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property and include in the notice for each: |
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(1) a list of the taxing units in which the property is |
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taxable; |
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(2) the appraised value of the property in the |
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preceding year; |
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(3) the taxable value of the property in the preceding |
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year for each taxing unit taxing the property; |
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(4) the appraised value of the property for the |
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current year, the kind and amount of each exemption and partial |
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exemption, if any, approved for the property for the current year |
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and for the preceding year, and, if an exemption or partial |
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exemption that was approved for the preceding year was canceled or |
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reduced for the current year, the amount of the exemption or partial |
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exemption canceled or reduced; |
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(4-a) a statement of whether the property qualifies |
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for the limitation on appraised value provided by Section 23.231; |
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(5) if the appraised value is greater than it was in |
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the preceding year, the amount of tax that would be imposed on the |
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property on the basis of the tax rate for the preceding year; |
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(6) in italic typeface, the following |
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statement: "The Texas Legislature does not set the amount of your |
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local taxes. Your property tax burden is decided by your locally |
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elected officials, and all inquiries concerning your taxes should |
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be directed to those officials"; |
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(7) a detailed explanation of the time and procedure |
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for protesting the value; |
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(8) the date and place the appraisal review board will |
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begin hearing protests; and |
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(9) a brief explanation that the governing body of |
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each taxing unit decides whether or not taxes on the property will |
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increase and the appraisal district only determines the value of |
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the property. |
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(g) By April 1 or as soon thereafter as practicable if the |
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property is a single-family residence that qualifies for an |
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exemption under Section 11.13, or by May 1 or as soon thereafter as |
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practicable in connection with any other property, the chief |
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appraiser shall deliver a written notice to the owner of each |
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property not included in a notice required to be delivered under |
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Subsection (a), if the property was reappraised in the current tax |
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year, if the ownership of the property changed during the preceding |
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year, or if the property owner or the agent of a property owner |
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authorized under Section 1.111 makes a written request for the |
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notice. The chief appraiser shall separate real from personal |
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property and include in the notice for each property: |
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(1) the appraised value of the property in the |
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preceding year; |
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(2) the appraised value of the property for the |
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current year and the kind of each partial exemption, if any, |
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approved for the current year; |
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(2-a) a statement of whether the property qualifies |
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for the limitation on appraised value provided by Section 23.231; |
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(3) a detailed explanation of the time and procedure |
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for protesting the value; and |
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(4) the date and place the appraisal review board will |
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begin hearing protests. |
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SECTION 4. Section 41.41(a), Tax Code, is amended to read as |
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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 |
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owner's property or, in the case of land appraised as provided by |
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Subchapter C, D, E, or H, Chapter 23, determination of its appraised |
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or market value; |
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(2) unequal appraisal of the owner's property; |
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(3) inclusion of the owner's property on the appraisal |
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records; |
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(4) denial to the property owner in whole or in part of |
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a partial exemption; |
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(4-a) determination that the owner's property does not |
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qualify for the limitation on appraised value provided by Section |
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23.231; |
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(5) determination that the owner's land does not |
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qualify for appraisal as provided by Subchapter C, D, E, or H, |
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Chapter 23; |
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(6) identification of the taxing units in which the |
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owner's property is taxable in the case of the appraisal district's |
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appraisal roll; |
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(7) determination that the property owner is the owner |
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of property; |
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(8) a determination that a change in use of land |
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appraised under Subchapter C, D, E, or H, Chapter 23, has occurred; |
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or |
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(9) any other action of the chief appraiser, appraisal |
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district, or appraisal review board that applies to and adversely |
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affects the property owner. |
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SECTION 5. Section 42.26(d), Tax Code, is amended to read as |
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follows: |
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(d) For purposes of this section, the value of the property |
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subject to the suit and the value of a comparable property or sample |
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property that is used for comparison must be the market value |
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determined by the appraisal district when the property is [a
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residence homestead] subject to the limitation on appraised value |
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imposed by Section 23.23 or 23.231. |
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SECTION 6. Sections 403.302(d) and (i), Government Code, |
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are amended to read as follows: |
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(d) For the purposes of this section, "taxable value" means |
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the market value of all taxable property less: |
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(1) the total dollar amount of any residence homestead |
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exemptions lawfully granted under Section 11.13(b) or (c), Tax |
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Code, in the year that is the subject of the study for each school |
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district; |
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(2) one-half of the total dollar amount of any |
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residence homestead exemptions granted under Section 11.13(n), Tax |
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Code, in the year that is the subject of the study for each school |
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district; |
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(3) the total dollar amount of any exemptions granted |
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before May 31, 1993, within a reinvestment zone under agreements |
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authorized by Chapter 312, Tax Code; |
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(4) subject to Subsection (e), the total dollar amount |
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of any captured appraised value of property that: |
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(A) is within a reinvestment zone created on or |
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before May 31, 1999, or is proposed to be included within the |
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boundaries of a reinvestment zone as the boundaries of the zone and |
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the proposed portion of tax increment paid into the tax increment |
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fund by a school district are described in a written notification |
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provided by the municipality or the board of directors of the zone |
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to the governing bodies of the other taxing units in the manner |
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provided by former Section 311.003(e), Tax Code, before May 31, |
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1999, and within the boundaries of the zone as those boundaries |
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existed on September 1, 1999, including subsequent improvements to |
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the property regardless of when made; |
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(B) generates taxes paid into a tax increment |
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fund created under Chapter 311, Tax Code, under a reinvestment zone |
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financing plan approved under Section 311.011(d), Tax Code, on or |
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before September 1, 1999; and |
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(C) is eligible for tax increment financing under |
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Chapter 311, Tax Code; |
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(5) the total dollar amount of any captured appraised |
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value of property that: |
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(A) is within a reinvestment zone: |
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(i) created on or before December 31, 2008, |
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by a municipality with a population of less than 18,000; and |
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(ii) the project plan for which includes |
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the alteration, remodeling, repair, or reconstruction of a |
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structure that is included on the National Register of Historic |
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Places and requires that a portion of the tax increment of the zone |
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be used for the improvement or construction of related facilities |
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or for affordable housing; |
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(B) generates school district taxes that are paid |
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into a tax increment fund created under Chapter 311, Tax Code; and |
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(C) is eligible for tax increment financing under |
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Chapter 311, Tax Code; |
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(6) the total dollar amount of any exemptions granted |
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under Section 11.251 or 11.253, Tax Code; |
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(7) the difference between the comptroller's estimate |
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of the market value and the productivity value of land that |
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qualifies for appraisal on the basis of its productive capacity, |
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except that the productivity value estimated by the comptroller may |
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not exceed the fair market value of the land; |
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(8) the portion of the appraised value of residence |
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homesteads of individuals who receive a tax limitation under |
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Section 11.26, Tax Code, on which school district taxes are not |
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imposed in the year that is the subject of the study, calculated as |
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if the residence homesteads were appraised at the full value |
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required by law; |
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(9) a portion of the market value of property not |
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otherwise fully taxable by the district at market value because of: |
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(A) action required by statute or the |
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constitution of this state, other than Section 11.311, Tax Code, |
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that, if the tax rate adopted by the district is applied to it, |
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produces an amount equal to the difference between the tax that the |
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district would have imposed on the property if the property were |
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fully taxable at market value and the tax that the district is |
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actually authorized to impose on the property, if this subsection |
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does not otherwise require that portion to be deducted; or |
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(B) action taken by the district under Subchapter |
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B or C, Chapter 313, Tax Code, before the expiration of the |
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subchapter; |
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(10) the market value of all tangible personal |
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property, other than manufactured homes, owned by a family or |
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individual and not held or used for the production of income; |
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(11) the appraised value of property the collection of |
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delinquent taxes on which is deferred under Section 33.06, Tax |
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Code; |
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(12) the portion of the appraised value of property |
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the collection of delinquent taxes on which is deferred under |
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Section 33.065, Tax Code; and |
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(13) the amount by which the market value of property |
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[a residence homestead] to which Section 23.23 or 23.231, Tax Code, |
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applies exceeds the appraised value of that property as calculated |
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under Section 23.23 or 23.231, Tax Code, as applicable [that
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section]. |
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(i) If the comptroller determines in the study that the |
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market value of property in a school district as determined by the |
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appraisal district that appraises property for the school district, |
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less the total of the amounts and values listed in Subsection (d) as |
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determined by that appraisal district, is valid, the comptroller, |
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in determining the taxable value of property in the school district |
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under Subsection (d), shall for purposes of Subsection (d)(13) |
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subtract from the market value as determined by the appraisal |
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district of properties [residence homesteads] to which Section |
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23.23 or 23.231, Tax Code, applies the amount by which that amount |
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exceeds the appraised value of those properties as calculated by |
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the appraisal district under Section 23.23 or 23.231, Tax Code, as |
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applicable. If the comptroller determines in the study that the |
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market value of property in a school district as determined by the |
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appraisal district that appraises property for the school district, |
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less the total of the amounts and values listed in Subsection (d) as |
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determined by that appraisal district, is not valid, the |
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comptroller, in determining the taxable value of property in the |
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school district under Subsection (d), shall for purposes of |
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Subsection (d)(13) subtract from the market value as estimated by |
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the comptroller of properties [residence homesteads] to which |
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Section 23.23 or 23.231, Tax Code, applies the amount by which that |
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amount exceeds the appraised value of those properties as |
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calculated by the appraisal district under Section 23.23 or 23.231, |
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Tax Code, as applicable. |
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SECTION 7. This Act applies only to the appraisal of |
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commercial or industrial real property for ad valorem tax purposes |
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for a tax year that begins on or after the effective date of this |
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Act. |
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SECTION 8. This Act takes effect January 1, 2018, but only |
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if the constitutional amendment proposed by the 85th Legislature, |
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1st Called Session, 2017, to authorize the legislature to limit |
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increases in the appraised value of commercial or industrial real |
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property for ad valorem tax purposes to 20 percent or more of the |
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appraised value of the property for the preceding tax year is |
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approved by the voters. If that amendment is not approved by the |
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voters, this Act has no effect. |