By: Vasut	H.B. No. 109

	A BILL TO BE ENTITLED
	AN ACT
	relating to a limitation on increases in the appraised value of 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, 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)  3.5 [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 2021 tax year in which
	the property is appraised for taxation:
	(1)  the property is considered to have been appraised
	for taxation in the 2021 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 2021 tax year is considered to have acquired the property
	on January 1, 2021; 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 2021 tax year is considered to have acquired
	the property in the 2021 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
	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;
	(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;
	(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; and
	(14)  the total dollar amount of any exemptions granted
	under Section 11.35, Tax Code.
	(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, 2022, but only
	if the constitutional amendment proposed by the 87th Legislature,
	2nd Called Session, 2021, to authorize the legislature to limit the
	maximum appraised value of real property for ad valorem tax
	purposes to 103.5 percent or more 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.