Bill Text: TX HB273 | 2025-2026 | 89th Legislature | Introduced

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

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2024-11-12 - Filed [HB273 Detail]

Download: Texas-2025-HB273-Introduced.html

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89R1801 RDS-D
By: Metcalf H.B. No. 273

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) 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.
(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 value; and
(4) the date and place the appraisal review board will
begin hearing protests.
SECTION 6. Sections 25.19(b) and (g), Tax Code, as
effective 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 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 limitation on appraised value provided by Section 23.232;
(3) a detailed explanation of the time and procedure
for protesting the value; and
(4) the date and place the appraisal review board will
begin hearing protests.
SECTION 7. Section 41.41(a), Tax Code, as effective until
January 1, 2027, is amended to read as follows:
(a) A property owner is entitled to protest before the
appraisal review board the following actions:
(1) determination of the appraised value of the
owner's property or, in the case of land appraised as provided by
Subchapter C, D, E, or H, Chapter 23, determination of its appraised
or market value;
(2) unequal appraisal of the owner's property;
(3) inclusion of the owner's property on the appraisal
records;
(4) denial to the property owner in whole or in part of
a partial exemption;
(4-a) determination that the owner's property does not
qualify 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) determination that the owner's land does not
qualify for appraisal as provided by Subchapter C, D, E, or H,
Chapter 23;
(6) identification of the taxing units in which the
owner's property is taxable in the case of the appraisal district's
appraisal roll;
(7) determination that the property owner is the owner
of property;
(8) a determination that a change in use of land
appraised under Subchapter C, D, E, or H, Chapter 23, has occurred;
or
(9) any other action of the chief appraiser, appraisal
district, or appraisal review board that applies to and adversely
affects the property owner.
SECTION 8. Section 41.41(a), Tax Code, as effective January
1, 2027, is amended to read as follows:
(a) A property owner is entitled to protest before the
appraisal review board the following actions:
(1) determination of the appraised value of the
owner's property or, in the case of land appraised as provided by
Subchapter C, D, E, or H, Chapter 23, determination of its appraised
or market value;
(2) unequal appraisal of the owner's property;
(3) inclusion of the owner's property on the appraisal
records;
(4) denial to the property owner in whole or in part of
a partial exemption;
(4-a) determination that the owner's property does not
qualify for the limitation on appraised value provided by Section
23.232;
(5) determination that the owner's land does not
qualify for appraisal as provided by Subchapter C, D, E, or H,
Chapter 23;
(6) identification of the taxing units in which the
owner's property is taxable in the case of the appraisal district's
appraisal roll;
(7) determination that the property owner is the owner
of property;
(8) a determination that a change in use of land
appraised under Subchapter C, D, E, or H, Chapter 23, has occurred;
or
(9) any other action of the chief appraiser, appraisal
district, or appraisal review board that applies to and adversely
affects the property owner.
SECTION 9. 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 the limitation on appraised value imposed by Section 23.23, [or]
23.231, or 23.232.
SECTION 10. 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 the limitation on appraised value
imposed by Section 23.23 or 23.232.
SECTION 11. Sections 403.302(d) and (i), Government Code,
as effective until January 1, 2027, 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 property
to which Section 23.23, [or] 23.231, or 23.232, Tax Code, applies
exceeds the appraised value of that property as calculated under
Section 23.23, [or] 23.231, or 23.232, Tax Code, as applicable; 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 to which Section 23.23, [or] 23.231, or
23.232, 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, [or] 23.231, or 23.232, Tax
Code, as applicable. 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 to which Section 23.23,
[or] 23.231, or 23.232, 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, [or]
23.231, or 23.232, Tax Code, as applicable.
SECTION 12. Sections 403.302(d) and (i), Government Code,
as effective January 1, 2027, 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 property
[a residence homestead] to which Section 23.23 or 23.232, Tax Code,
applies exceeds the appraised value of that property as calculated
under Section 23.23 or 23.232, Tax Code, as applicable [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 or 23.232, 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 or 23.232, Tax Code, as
applicable. 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 or 23.232, 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 or 23.232,
Tax Code, as applicable.
SECTION 13. This Act applies only to the appraisal of
commercial real property for ad valorem tax purposes for a tax year
that begins on or after the effective date of this Act.
SECTION 14. This Act takes effect January 1, 2026, but only
if the constitutional amendment proposed by the 89th Legislature,
Regular Session, 2025, to authorize the legislature to limit the
maximum appraised value of certain commercial real property for ad
valorem tax purposes is approved by the voters. If that amendment
is not approved by the voters, this Act has no effect.