Texas Comptroller of Public Accounts

Texas Comptroller of Public Accounts, Glenn Hegar

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Appendix G:

Appraisal District. An independent political subdivision in each county whose appraisers locate and appraise all taxable property within the district’s boundaries and prepare an appraisal roll for the taxing units within the county. Districts are referred to as “county appraisal districts” (CADs).

Appraisal Records. Each year’s listing of all taxable property in the appraisal district. The records show the property identification number, owners’ names, appraised value of each property, the value of any exemptions and other information.

Appraisal Review Board (ARB). An appointed group of appraisal district residents that hears taxing unit challenges and taxpayer protests. The board also orders corrections to the records and approves the appraisal records to create an equal and uniform appraisal roll for the district.

Appraisal Roll. The appraisal records as reviewed and approved by the ARB. A CAD’s appraisal roll lists all properties within its boundaries. A taxing unit’s appraisal roll lists taxable properties and values within the unit’s boundaries.

Appraised Value. The chief appraiser’s estimate of the full market value or productivity value of a property, usually on January 1.

Assessment. The steps a taxing unit takes to impose a legal property tax, including the official act of calculating the taxing unit’s tax base. The general definition of assessment in textbooks sometimes includes appraisal and collection activities as part of assessment, but Texas law does not use this definition.

Chief Appraiser. Administrative head of the appraisal district. The chief appraiser supervises appraisal of all taxable property within the district’s boundaries, administers exemptions, approves applications for special-use appraisal and performs other administrative duties.

Coefficient of Dispersion (COD). A measure of the uniformity of appraisals within a category. The COD expresses numerically the average distance between an individual appraisal ratio in a set and the median for that set of appraisal ratios. For example, a COD of 20 indicates that, on the average, individual appraisal ratios within the set vary from the median ratio by plus or minus 20 percent. To calculate a COD, divide the average absolute deviation by the median ratio.

Effective Tax Rate. The amount of taxes levied in the prior year divided by the current year’s taxable value of property on the appraisal roll for both the prior and current years.

Exemption. An exclusion of all or part of a property’s value from property taxation. Absolute exemption excludes the total value of property. Partial exemption excludes a part of the property’s total value from taxation.

Freeport Property. Goods, wares and merchandise other than oil, gas and petroleum products that leave Texas within 175 days of the date they are brought into or acquired in the state.

Interest and Sinking (I&S) Rate. The portion of a taxing unit’s total property tax rate dedicated to retiring the principal and interest on bonded indebtedness. Also referred to as “debt rate.”

Levy. See Tax Levy.

Maintenance and Operations (M&O) Rate. A portion of a taxing unit’s total tax rate for operating expenses minus the amount spent to retire principal and interest on bonded indebtedness.

Market Value. Tax Code Section 1.04(7) defines market value as: “...the price at which a property would transfer for cash or its equivalent under prevailing market conditions if: (A) exposed for sale in the open market with a reasonable time for the seller to find a purchaser; (B) both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and (C) both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.”

Median. A statistical measure of central tendency. The middle number in a group of numbers ranked from highest to lowest (or vice-versa). If the sequence of numbers has an even number of entries, the median is the average of the two middle numbers.

Multicounty Taxing Unit. A taxing unit with territory in more than one county.

Parcel. Any item of real property, regardless of size, that has a single owner or is held in undivided ownership and for which there is a separate appraisal record.

Permanent University Fund (PUF) Lands. Those lands owned by the Permanent University Fund and subject to county taxation under Article VII, Section 16(a), Texas Constitution.

Personal Property. Tax Code Section 1.04 defines personal property as all property that is not real property.

Price-Related Differential (PRD). A statistical measure of the comparative difference in how CADs appraise high-dollar and low-dollar properties.

Property Categories. The Texas Comptroller’s 16 property categories based on use. These categories are:

Category A. Single-Family Residential.
Includes houses, condominiums and mobile homes located on land owned by the occupant.

Category B. Multifamily Residential.
Residential structures containing two or more dwelling units where individual units are not separately owned. Does include apartments but does not include motels and hotels.

Category C. Vacant Lots.
Unimproved land parcels usually located within or adjacent to cities. There is no minimum or maximum size requirements for land.

Category D. Acreage (Land Only).
Includes agricultural, timberland, recreational land and public access airport; all land receiving special-use appraisal and large vacant tracts owned by commercial, industrial or utility taxpayers.

Category E. Farm and Ranch Improvements.
Includes residences, barns, silos, and garages, other real property improvements located on Category D land, as well as on land separated from a larger farm or ranch tract to receive a residence homestead exemption.

Category F1. Commercial Real Property.
Land and improvements devoted to sales, entertainment or services to the general public. Does not include utility property (see Category J).

Category F2. Industrial Real Property.
Land and improvements devoted to the development, manufacturing, fabrication, processing or storage of a product. Does not include utility property (see Category J).

Category G. Oil, Gas and Minerals.
Includes producing and nonproducing wells, all other minerals and mineral interests and equipment used to bring the oil and gas to the surface. Does not include the surface rights.

Category H. Vehicles.
Includes privately owned automobiles, motorcycles and light trucks not used to produce income.

Category J. Utilities.
All real and tangible personal property of railroads, pipelines, electric, gas companies, telephone companies, water systems, cable TV companies and other utility companies.

Category L1. Commercial Personal Property.
All tangible personal property, including fixtures, equipment and inventory used by a commercial business to produce income.

Category L2. Industrial Personal Property.
All tangible personal property, including fixtures, equipment and inventory used by an industrial business to produce income.

Category M. Other Personal Property.
Taxable personal property not included in other categories. Includes mobile homes on land owned by someone else. Also may include privately owned aircraft, boats, travel trailers, motor homes and mobile homes on rented or leased land.

Category N. Intangible Personal Property.
Includes all taxable intangible property not otherwise classified.

Category O. Real Property Inventory.
Residential real property inventory held for sale and appraised as provided by Tax Code Section 23.12.

Category S. Special Property.
Certain property inventory of businesses that provide items for sale to the public. State law requires these inventory items to be appraised based on the business’ total annual sales in the prior tax year. The four types of Category S properties: Dealer’s Motor Vehicle Inventory, Dealer’s Heavy Equipment Inventory, Dealer’s Vessel and Outboard Motor Inventory and Retail Manufactured Housing Inventory.

Ratio Study. A comparison of appraised values to the market values of the same properties in order to determine the accuracy of appraisals. Market values may be indicated by sales prices or appraisals.

Real Property. Tax Code Section 1.04(2) defines real property as land, improvements, mines or quarries, minerals in place, standing timber and an estate or interest in any real property.

Residence Homestead Appraised Value Limitation (10 Percent Cap). A limitation on a residence homestead’s appraised value to the lesser of either its market value or the sum of the market value of any new improvements and 110 percent of the appraised value for the prior year. The allowance for an annual 10 percent is cumulative – 10 percent times the number of years since the property was last appraised. Tax Code Section 23.23 provides that the limitation only applies to homes that qualified for a residence homestead in the prior year. The limitation expires the next January 1 if neither the owner nor the owner’s spouse or surviving spouse qualifies for the homestead exemption.

Rollback Tax. A penalty imposed on a property owner who stops using property in a way that qualified it for special-use appraisal. The penalty recaptures the tax loss the taxing unit experienced as a result of special appraisal during the prior years. Rollback taxes have no relation to tax rate rollback elections or the rollback tax rate.

Rollback Tax Rate. The rate a taxing unit, excluding school districts, may not exceed without allowing its voters to petition for a reduced rate. A school district exceeding this rate must hold an automatic tax rate rollback election.

School District Number. A six-digit number for a school district, devised by the Texas Education Agency. The first three digits denote the county containing the district; the latter three uniquely identify the school district itself.

Special District. All local taxing units that are not cities, counties, towns or school districts. These units include hospitals, junior colleges, water districts, emergency services districts and more.

Supplemental Records. Additional records prepared after the chief appraiser submits the original appraisal records to the ARB. These records are subject to review by the ARB and are added to the appraisal roll when the ARB approves them.

Taxable Value. A property’s appraised value minus all applicable exemptions and other deductions or limitations.

Taxing Unit. Any political unit of the state that imposes property taxes. Counties, school districts, incorporated municipalities (cities) and towns and special districts may be taxing units.

Tax Levy. Total amount of taxes imposed by a taxing unit on taxable property within its boundaries. Levy may also refer to the amount of tax due on specific property.

Tax Rate. The result of dividing the proposed levy by the taxable value of property. The rate is expressed in dollars and cents per $100 of value. The assessor applies the rate to taxable value to compute a tax due on each property.

Tax Roll. All the information on the appraisal roll plus the taxable value and the levy for each property parcel.

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