85R3248 LHC-F     By: Keough H.B. No. 44       A BILL TO BE ENTITLED   AN ACT   relating to a limitation on the maximum appraised value of real   property for ad valorem tax purposes of 105 percent of the appraised   value of the property for the preceding tax year.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 1.12(d), Tax Code, is amended to read as   follows:          (d)  For purposes of this section, the appraisal ratio of   real property [a homestead] to which Section 23.23 applies is the   ratio of the property's market value as determined by the appraisal   district or appraisal review board, as applicable, to the market   value of the property according to law. The appraisal ratio is not   calculated according to the appraised value of the property as   limited by Section 23.23.          SECTION 2.  The heading to Section 23.23, Tax Code, is   amended to read as follows:          Sec. 23.23.  LIMITATION ON APPRAISED VALUE OF REAL PROPERTY   [RESIDENCE HOMESTEAD].          SECTION 3.  Section 23.23, Tax Code, is amended by amending   Subsections (a), (b), (c), and (e) and adding Subsections (c-1),   (c-2), and (c-3) to read as follows:          (a)  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 real   property [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 that the market value was determined by the   appraisal office; or                (2)  the sum of:                      (A)  five [10] percent of the appraised value of   the property for the preceding tax year;                      (B)  the appraised value of the property for the   preceding tax year; and                      (C)  the market value of all new improvements to   the property.          (b)  When appraising real property [a residence homestead],   the chief appraiser shall:                (1)  appraise the property at its market value; and                (2)  include in the appraisal records both the market   value of the property and the amount computed under Subsection   (a)(2).          (c)  The limitation provided by Subsection (a) takes effect   on January 1 of the tax year following the first tax year in which   the owner owns the property on January 1, or, if the property   qualifies as the [to a] residence homestead of the owner under   Section 11.13 in the tax year in which the owner acquires the   property, the limitation takes effect on January 1 of the tax year   following that [the first] tax year [the owner qualifies the   property for an exemption under Section 11.13]. Except as provided   by Subsection (c-1) or (c-2), the [The] limitation expires on   January 1 of the first tax year following the year in which [that   neither] the owner of the property ceases to own the property.          (c-1)  If property subject to a limitation under this section   qualifies for an exemption under Section 11.13 when the ownership   of the property is transferred to the owner's spouse or surviving   spouse, the limitation expires on January 1 of the first tax year   following the year in which [when the limitation took effect nor]   the owner's spouse or surviving spouse ceases to own the property,   unless the limitation is further continued under this subsection on   the subsequent transfer to a spouse or surviving spouse [qualifies   for an exemption under Section 11.13].          (c-2)  If property subject to a limitation under Subsection   (a), other than a residence homestead, is owned by two or more   persons, the limitation expires on January 1 of the first tax year   following the year in which the ownership of at least a 50 percent   interest in the property is sold or otherwise transferred.          (c-3)  For purposes of applying the limitation provided by   this section in the first tax year after the 2017 tax year in which   the property is appraised for taxation:                (1)  the property is considered to have been appraised   for taxation in the 2017 tax year at a market value equal to the   appraised value of the property for that tax year;                (2)  a person who acquired real property in a tax year   before the 2017 tax year is considered to have acquired the property   on January 1, 2017; and                (3)  a person who qualified the property for an   exemption under Section 11.13 as the person's residence homestead   for any portion of the 2017 tax year is considered to have acquired   the property in the 2017 tax year.          (e)  In this section, "new improvement" means an improvement   to real property [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.          SECTION 4.  Section 42.26(d), Tax Code, 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.   SECTION 5.  Sections 403.302(d) and (i), Government Code,   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:                      (A)  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; or                      (B)  action taken by the district under Subchapter   B or C, Chapter 313, Tax Code, before the expiration of the   subchapter;                (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; and                (13)  the amount by which the market value of real   property [a residence homestead] to which Section 23.23, Tax Code,   applies exceeds the appraised value of that property as calculated   under that section.          (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, 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, Tax Code.  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, 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, Tax Code.          SECTION 6.  This Act applies only to the appraisal for ad   valorem tax purposes of real property for a tax year that begins on   or after the effective date of this Act.          SECTION 7.  This Act takes effect January 1, 2018, but only   if the constitutional amendment proposed by the 85th Legislature,   Regular Session, 2017, to authorize the legislature to limit the   maximum appraised value of real property for ad valorem tax   purposes to 105 percent or less of the appraised value of the   property for the preceding tax year is approved by the voters. If   that amendment is not approved by the voters, this Act has no   effect.