HB1430 - Relating to a limitation on increases in the appraised value of certain commercial real property for ad valorem tax purposes.

  89R1803 RDS-D     By: Metcalf H.B. No. 1430       A BILL TO BE ENTITLED   AN ACT   relating to a limitation on increases in the appraised value of   certain commercial real property for ad valorem tax purposes.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 1.12(d), Tax Code, as effective until   January 1, 2027, is amended to read as follows:          (d)  For purposes of this section, the appraisal ratio of   property to which Section 23.23 , [ or ] 23.231 , or 23.232 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 , [ or ] 23.231 , or 23.232 .          SECTION 2.  Section 1.12(d), Tax Code, as effective January   1, 2027, is amended to read as follows:          (d)  For purposes of this section, the appraisal ratio of   property  [ a homestead ] to which Section 23.23 or 23.232  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 or 23.232 .          SECTION 3.  Section 23.231(c), Tax Code, is amended to read   as follows:          (c)  This section does not apply to:                (1)  a residence homestead that qualifies for an   exemption under Section 11.13; [ or ]                (2)   property to which Section 23.232 applies; or                   (3)   property appraised under Subchapter C, D, E, F, G,   or H.          SECTION 4.  Subchapter B, Chapter 23, Tax Code, is amended by   adding Section 23.232 to read as follows:           Sec.   23.232.     LIMITATION ON APPRAISED VALUE OF CERTAIN   COMMERCIAL REAL PROPERTY. (a) In this section:                 (1)     "Commercial real property" means real property   that is held or used for the production of income.                 (2)     "Disaster recovery program" means a disaster   recovery program funded with community development block grant   disaster recovery money authorized by federal law.                 (3)     "New improvement" means an improvement to   commercial real property 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.           (b)     This section applies only to a parcel of commercial real   property with a market value of $10 million or less for the tax year   in which the limitation provided by Subsection (d) takes effect as   to the property.           (c)     This section does not apply to property appraised under   Subchapter C, D, E, F, G, or H.           (d)     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   parcel of commercial real property 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)     20 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.           (e)     When appraising a parcel of commercial real property,   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   (d)(2).           (f)     The limitation provided by Subsection (d) takes effect   as to a parcel of commercial real property on January 1 of the tax   year following the first tax year in which the owner owns the   property on January 1 and in which the property meets the definition   of commercial real property.   The limitation expires on January 1 of   the tax year following the first tax year in which the owner of the   property ceases to own the property or the property no longer meets   the definition of commercial real property.           (g)     For purposes of Subsection (f), a person who acquired a   parcel of commercial real property before the 2025 tax year is   considered to have acquired the property on January 1, 2025.           (h)     Notwithstanding Subsections (a)(3) and (d) and except   as provided by Subdivision (2) of this subsection, 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 unusable by a casualty   or by wind or water damage. For purposes of appraising the property   under Subsection (d) in the tax year in which the structure would   have constituted a new improvement:                 (1)     the 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 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 (d); 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.           (i)     Notwithstanding Subsection (h)(2), and only to the   extent necessary to satisfy the requirements of a disaster recovery   program, a replacement structure described by that subdivision is   not considered to be a new improvement if to satisfy the   requirements of the disaster recovery program it was necessary   that:                 (1)     the square footage of the replacement structure   exceed that of the replaced structure as that structure existed   before the casualty or damage occurred; or                 (2)     the exterior of the replacement structure be of   higher quality construction and composition than that of the   replaced structure.          SECTION 5.  Sections 25.19(b) and (g), Tax Code, as   effective until January 1, 2027, are amended to read as follows:          (b)  The chief appraiser shall separate real from personal   property and include in the notice for each:                (1)  a list of the taxing units in which the property is   taxable;                (2)  the appraised value of the property in the   preceding year;                (3)  the taxable value of the property in the preceding   year for each taxing unit taxing the property;                (4)  the appraised value of the property for the   current year, the kind and amount of each exemption and partial   exemption, if any, approved for the property for the current year   and for the preceding year, and, if an exemption or partial   exemption that was approved for the preceding year was canceled or   reduced for the current year, the amount of the exemption or partial   exemption canceled or reduced;                (4-a)  a statement of whether the property qualifies   for the circuit breaker limitation on appraised value provided by   Section 23.231 or the limitation on appraised value provided by   Section 23.232 ;                (5)  in italic typeface, the following statement:  "The   Texas Legislature does not set the amount of your local   taxes.  Your property tax burden is decided by your locally elected   officials, and all inquiries concerning your taxes should be   directed to those officials";                (6)  a detailed explanation of the time and procedure   for protesting the value;                (7)  the date and place the appraisal review board will   begin hearing protests;                (8)  an explanation of the availability and purpose of   an informal conference with the appraisal office before a hearing   on a protest; and                (9)  a brief explanation that the governing body of   each taxing unit decides whether or not taxes on the property will   increase and the appraisal district only determines the value of   the property.          (g)  By April 1 or as soon thereafter as practicable if the   property is a single-family residence that qualifies for an   exemption under Section 11.13, or by May 1 or as soon thereafter as   practicable in connection with any other property, the chief   appraiser shall deliver a written notice to the owner of each   property not included in a notice required to be delivered under   Subsection (a), if the property was reappraised in the current tax   year, if the ownership of the property changed during the preceding   year, or if the property owner or the agent of a property owner   authorized under Section 1.111 makes a written request for the   notice.  The chief appraiser shall separate real from personal   property and include in the notice for each property:                (1)  the appraised value of the property in the   preceding year;                (2)  the appraised value of the property for the   current year and the kind of each partial exemption, if any,   approved for the current year;                (2-a)  a statement of whether the property qualifies   for the circuit breaker limitation on appraised value provided by   Section 23.231 or the limitation on appraised value provided by   Section 23.232 ;                (3)  a detailed explanation of the time and procedure   for protesting the [Text truncated for display. 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