HB963 - Relating to the limitation on increases in the appraised value of a residence homestead for ad valorem tax purposes.

      By: Toth H.B. No. 963       A BILL TO BE ENTITLED   AN ACT   relating to the limitation on increases in 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), (b), and (c) and adding Subsections (a-1), (a-2),   (a-3), (a-4), (a-5), (a-6), (a-7), (a-8), and (c-2) to read as   follows:          (a)   The appraised value of a residence homestead for the   first tax year that the owner qualifies the property for an   exemption under Section 11.13 is equal to the market value of the   property.   Notwithstanding Section 23.01, the appraised value of   the property for each subsequent tax year until the tax year in   which the limitation provided by this subsection expires is equal   to the appraised value of the property for the preceding tax year as   adjusted by the chief appraiser for the current tax year to reflect   any positive change from the preceding tax year in the purchasing   power of the dollar for consumers in this state [ 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 that the market value was determined by the   appraisal office; or                [ (2)  the sum of:                      [ (A)     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 ].           (a-1)     Notwithstanding Subsection (a), if the owner of real   property qualifies the property for an exemption under Section   11.13 and the owner acquired the property as a bona fide purchaser   for value, the purchase price of the property paid by the property   owner is considered to be the market value of the property for the   first tax year that the owner qualifies the property for the   exemption.           (a-2)     If the first tax year the property owner qualified the   property for an exemption under Section 11.13 was a tax year before   the 2026 tax year:                 (1)     the property owner is considered to have qualified   the property for the exemption for the first time in the 2025 tax   year; and                 (2)     the appraised value of the property as shown on the   2025 appraisal roll is considered to be the market value of the   property for that tax year for purposes of Subsection (a).           (a-3)     Subsection (a-1) does not apply to a residence   homestead if:                 (1)  the purchase was made:                       (A)  pursuant to a court order;                       (B)  from a trustee in bankruptcy;                       (C)     by one co-owner from one or more other   co-owners;                       (D)     from a spouse or a person or persons within   the first or second degree of lineal consanguinity of one or more of   the purchasers; or                       (E)  from a governmental entity; or                 (2)     the chief appraiser determines that the applicant   was not a bona fide purchaser for value under criteria established   by rules adopted by the comptroller for that purpose.           (a-4)     To receive a limitation on appraised value under   Subsection (a) computed in accordance with Subsection (a-1), an   owner of the property must apply for the limitation. To apply for   the limitation, the owner must file an application with the chief   appraiser for each appraisal district in which the property subject   to the claimed limitation is located. The application must be filed   not later than the latest date on which the owner may file an   application for an exemption under Section 11.13 on the property   for the year under Section 11.43. The comptroller by rule shall   prescribe the form for the application to ensure that the applicant   provides the information necessary to determine the applicant's   eligibility for the limitation, including the purchase price of the   property paid by the applicant.           (a-5)     An application filed with a chief appraiser under   Subsection (a-4) is confidential and not open to public inspection.   The application and the information it contains may not be   disclosed to another person other than an employee of the appraisal   district who appraises property, except as provided by Subsection   (a-6).           (a-6)     Information that is confidential under Subsection   (a-5) may be disclosed:                   (1)     in a judicial or administrative proceeding under a   lawful subpoena;                   (2)     to a purchaser, grantee, seller, or grantor named   in the application or in the deed to which the application applies   or to a representative of the purchaser, grantee, seller, or   grantor under a written authorization signed by the purchaser,   grantee, seller, or grantor;                 (3)     to the comptroller or to an assessor for a taxing   unit in which the property described in the application is located;                 (4)     in a judicial or administrative proceeding related   to real property taxation:                       (A)     to which the purchaser, grantee, seller, or   grantor is a party;                       (B)     to which an owner of the property described   in the application is a party; or                       (C)     by the appraisal district for the purpose of   establishing a value of the property or of providing evidence of   comparable sales to appraise another property;                 (5)     for statistical purposes if the information is   provided in a form that does not identify a specific property or   specific purchaser, grantee, seller, or grantor;                 (6)     if and to the extent that the information is   required to be included in a public document or record that the   appraisal office is required to prepare or maintain; or                 (7)     to a taxing unit or its legal representative that   is engaged in the collection of delinquent taxes on the property   described in the application.           (a-7)     Information that is disclosed under Subsection (a-6)   does not lose its confidential character.           (a-8)     For each tax year, using the index that the   comptroller considers to most accurately report changes in the   purchasing power of the dollar for consumers in this state, the   comptroller shall determine and publicize the percentage by which   the appraised value of residence homesteads may be increased under   Subsection (a). Each chief appraiser shall use the percentage   determined by the comptroller under this subsection to determine   the appraised value under Subsection (a) of residence homesteads   appraised by that chief appraiser.          (b)  When appraising 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)   [ (a)(2) ].          (c)  The limitation provided by Subsection (a) takes effect   as to a residence homestead on January 1 of the first tax year   [ following the first tax year ] the owner qualifies the property for   an exemption under Section 11.13. The limitation expires on   January 1 of the first tax year that neither the owner of the   property when the limitation took effect nor the owner's spouse or   surviving spouse qualifies for an exemption under Section 11.13.           (c-2)     Notwithstanding Subsection (c), a limitation   established under Subsection (a) does not expire if a change in   ownership of the property occurs by inheritance or under a will as   long as the person who acquires the property qualifies for an   exemption under Section 11.13.          SECTION 2.  Sections 23.23(e), (f), and (g), Tax Code, are   repealed.          SECTION 3.  This Act applies only to ad valorem taxes imposed   for a tax year beginning on or after the effective date of this Act.          SECTION 4.  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 provide that   the appraised value of a residence homestead for ad valorem tax   purposes for the first tax year that the owner of the property   qualifies the property for a residence homestead exemption is the   market value of the property and that, if the owner purchased the   property, the purchase price of the property is considered to be the   market value of the property for that tax year and to limit   increases in the appraised value of the homestead for subsequent   tax years based on the inflation rate is approved by the voters. If   that amendment is not approved by the voters, this Act has no   effect.