Lowe Bill Lifts Homestead Cap From 10 To 15 Percent

The text as introduced · 1,454 words

89R12475 LHC-D

By: Lowe
H.B. No. 3823

A BILL TO BE ENTITLED

AN ACT

relating to the determination of the appraised value of a residence

homestead for ad valorem tax purposes.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 23.23, Tax Code, is amended by amending

Subsections (a), (e), and (f) and adding Subsection (h) to read as

follows:

(a) Except as provided by Subsection (h), if

[ Notwithstanding the requirements of Section 25.18 and regardless

of whether ] the appraisal office has appraised the property and

determined the market value of the property for the tax year, an

appraisal office may increase the appraised value of a residence

homestead for a tax year to an amount not to exceed the lesser of:

(1) the market value of the property for the [ most

recent ] tax year as [ that the market value was ] determined by the

appraisal office; or

(2) the sum of:

(A) 15 [ 10 ] percent of the appraised value of the

property for the last [ preceding tax ] year in which the property was

appraised for taxation ;

(B) the appraised value of the property for the

last [ preceding tax ] year in which the property was appraised for

taxation ; and

(C) the market value of all new improvements to

the property.

(e) In this section, "new improvement" means an improvement

to a residence homestead made after the most recent appraisal of the

property that increases the market value of the property [ and the

value of which is not included in the appraised value of the

property for the preceding tax year ]. The term does not include

repairs to or ordinary maintenance of an existing structure or the

grounds or another feature of the property.

(f) Notwithstanding Subsections (a) and (e) and except as

provided by Subdivision (2), an improvement to property that would

otherwise constitute a new improvement is not treated as a new

improvement if the improvement is a replacement structure for a

structure that was rendered uninhabitable or unusable by a casualty

or by wind or water damage. For purposes of appraising the

property under Subsection (a) in the tax year in which the structure

would have constituted a new improvement:

(1) the last year in which the property was appraised

for taxation before [ appraised value the property would have had in

the preceding tax year if ] the casualty or damage [ had not ] occurred

is considered to be the last year in which the property was

appraised for taxation for purposes of Subsection (a)(2)(A)

[ appraised value of the property for that year, regardless of

whether that appraised value exceeds the actual appraised value of

the property for that year as limited by Subsection (a) ]; and

(2) the replacement structure is considered to be a

new improvement only if:

(A) the square footage of the replacement

structure exceeds that of the replaced structure as that structure

existed before the casualty or damage occurred; or

(B) the exterior of the replacement structure is

of higher quality construction and composition than that of the

replaced structure.

(h) The commissioners court of a county may call an election

in the county to permit the voters of the county to determine by

majority vote whether a percentage limitation on maximum appraised

value determined in the manner provided by Subsection (a)(2) using

a percentage that is greater than the percentage specified by

Subsection (a)(2)(A) will apply to the taxation of a residence

homestead in the county by each taxing unit having territory in the

county. The election shall be held on the date of the next general

election for state and county officers. The ballot proposition

shall specify the proposed percentage limitation on maximum

appraised value. If a majority of the votes cast at the election

favor the establishment of the proposed limitation, the limitation

applies beginning with the tax year following the year in which the

election is held and remains in effect until amended or repealed by

the voters of the county at a subsequent election called by the

commissioners court of the county for that purpose. An election to

amend or repeal a limitation must be held on the date of the general

election for state and county officers. If the voters of a county

amend or repeal a limitation, the amendment or repeal applies

beginning with the tax year after the year in which the election is

held. A limitation established under this subsection applies to

the taxation of all residence homesteads in the county by each

taxing unit having territory in the county.

SECTION 2. Section 25.18, Tax Code, is amended by amending

Subsection (b) and adding Subsections (b-1), (b-2), and (b-3) to

read as follows:

(b) The plan shall provide for the following reappraisal

activities for all real and personal property in the district at

least once every three years , except as provided by Subsections

(b-1), (b-2), and (b-3) :

(1) identifying properties to be appraised through

physical inspection or by other reliable means of identification,

including deeds or other legal documentation, aerial photographs,

land-based photographs, surveys, maps, and property sketches;

(2) identifying and updating relevant characteristics

of each property in the appraisal records;

(3) defining market areas in the district;

(4) identifying property characteristics that affect

property value in each market area, including:

(A) the location and market area of property;

(B) physical attributes of property, such as

size, age, and condition;

(C) legal and economic attributes; and

(D) easements, covenants, leases, reservations,

contracts, declarations, special assessments, ordinances, or legal

restrictions;

(5) developing an appraisal model that reflects the

relationship among the property characteristics affecting value in

each market area and determines the contribution of individual

property characteristics;

(6) applying the conclusions reflected in the model to

the characteristics of the properties being appraised; and

(7) reviewing the appraisal results to determine

value.

(b-1) The plan shall provide for the reappraisal of a

residence homestead not more often than once every three years. The

appraised value of a residence homestead may not be increased for a

tax year in which the property is not appraised.

(b-2) Subsection (b-1) does not prohibit the reappraisal of

a residence homestead in the tax year in which a limitation on

appraised value under Section 23.23(a) expires.

(b-3) Notwithstanding Subsection (b-1), at any time during

a tax year before the date the chief appraiser certifies the

appraisal roll for the appraisal district, an owner of a residence

homestead is entitled to a reappraisal of the owner's residence

homestead for that year on written request delivered to the chief

appraiser.

SECTION 3. 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 a [ the ] limitation on appraised value imposed by or established

under Section 23.23 or 23.231.

SECTION 4. 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 a [ the ] limitation on appraised

value imposed by or established under Section 23.23.

SECTION 5. This Act applies only to the determination of the

appraised value of a residence homestead for ad valorem taxation

for a 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, authorizing the legislature to limit the

maximum appraised value of a residence homestead for ad valorem tax

purposes to the lesser of the most recent market value of the

residence homestead or 115 percent, or a greater percentage, of the

appraised value of the residence homestead for the last year in

which the residence homestead was appraised for ad valorem tax

purposes, to limit the frequency of the reappraisal of a residence

homestead for those purposes, and to permit the voters of a county

to establish a higher limitation on the maximum appraised value of a

residence homestead for those purposes is approved by the voters.

If that amendment is not approved by the voters, this Act has no

effect.