HB3823 - Relating to the determination of the appraised value of a residence homestead for ad valorem tax purposes.

  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.