SB477 - Relating to the limitation on increases in the appraised value of a residence homestead for ad valorem tax purposes.

  89R628 MLH-D     By: Middleton S.B. No. 477       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), and (c-2) to read as follows:          (a)   The [ 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 is equal to [ an amount not to   exceed the lesser of:                [ (1) ]  the market value of the property for the first   [ most recent ] tax year that the owner qualified the property for an   exemption under Section 11.13 [ 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 qualified the property for an exemption under Section   11.13 and the owner acquired the property as a bona fide purchaser   for value, the appraised value of the property is equal to the   purchase price of the property paid by the owner.           (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, the appraised value of the property as shown on   the 2025 appraisal roll is considered to be:                 (1)     the market value of the property for the first tax   year that the owner qualified the property for an exemption under   Section 11.13 for purposes of Subsection (a); and                 (2)     the purchase price of the property paid by the   owner for purposes of Subsection (a-1).           (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-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.          (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)   or (a-1), as applicable [ (a)(2) ].          (c)  The limitation provided by Subsection (a) or (a-1) 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) or (a-1) 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 is the market value of the property for the first year that   the owner qualified the property for a homestead exemption or, if   the owner purchased the property, the purchase price of the   property is approved by the voters. If that amendment is not   approved by the voters, this Act has no effect.