Property Taxes in Disaster Areas and During Droughts
Tax Code Section 6.053 requires a chief appraiser to comply with any request by a federal, state, or local government emergency management authority to provide information and assistance pertinent to disaster mitigation or recovery, including assisting in the estimation of damage from an actual or potential disaster event.
When requested by a local taxing unit, an appraisal district is required to complete a reappraisal as soon as practicable of all property damaged in a disaster if the area is declared a disaster area by the Governor under Tax Code Section 23.02. The appraisal record must include:
- the date of the disaster;
- the appraised value of the property after the disaster; and
- an indication of the taxing units to which the reappraisal applies if the reappraisal was not authorized by all taxing units in which the property is located.
The local taxing unit requesting the reappraisal must pay all the costs involved. If more than one taxing unit requests the reappraisal, all requesting taxing units share the costs based on the proportion of taxes imposed in the affected locality in the preceding year.
For reappraised property, the taxes are prorated for the year the disaster occurred. The local taxing unit assesses taxes prior to the date the disaster occurred based on the market value as of Jan. 1. Beginning on the date of the disaster and for the remainder of the year, the taxing unit applies its tax rate to the reappraised market value of the property.
Tax Code Section 11.135 provides that a property owner may continue to receive the homestead exemption on the structure, land, and improvements when the residential structure is rendered uninhabitable or unusable by a casualty or by wind or water damage while the owner constructs a replacement structure on the land.
The owner may not establish a different principal residence for which the owner receives a homestead exemption during that period and the owner must intend to return and occupy the structure as the owner's principal residence.
To continue receiving the exemption, the owner must begin active construction of the replacement qualified residential structure or other physical preparation of the construction site. The active construction or other physical preparation must begin no later than one year after the owner ceases to occupy the former residential structure. Comptroller Rule 9.416 requires a property owner to notify an appraisal office within 30 days after the date that the eligibility for continuation ends. The continuation cannot be for more than two years.
If the owner sells the property prior to completing the replacement qualified structure, the property owner is subject to additional taxes and interest.
If a residence homestead is rendered uninhabitable or unusable by a casualty or by wind or water damage, the replacement structure owned by an individual who is age 65 or older or disabled may continue to receive the limitations on property taxes allowed by Tax Code Sections 11.26 and 11.261.
However, the replacement structure will be subject to an increase in tax if:
- the square footage of the replacement structure exceeds that of the replaced structure as that structure existed before the casualty or damage occurred; or
- the exterior of the replacement structure is of higher quality construction and composition than that of the replaced structure.
Tax Code Section 23.23 provides for the limitation on the appraised value of residence homesteads to 110 percent of the appraised value for the preceding tax year plus the market value of all new improvements to the property. If an improvement is a replacement structure for a structure that was rendered uninhabitable or unusable by a casualty or by wind or water damage, then the structure is not considered a new improvement.
If the replacement structure exceeds the square footage of the original structure or the exterior of the replacement structure is of higher construction quality and composition than the original structure, then the replacement structure is considered a new improvement and is taxed accordingly. A replacement structure is not considered a new improvement to the extent necessary to satisfy square footage or the quality and composition of the exterior requirements of a disaster recovery program administered by the General Land Office that is federally funded.
Tax Code Section 23.522 provides that the eligibility of land for open space appraisal does not end because the land ceases to be devoted principally to agricultural use to the degree of intensity generally accepted in the area if:
- a drought declared by the Governor creates an agricultural necessity to extend the normal time the land remains out of agricultural production; and
- the owner intends to resume the use the land in the manner and to the degree of intensity at the end of the declared drought.
Tax Code Section 23.129 allows chief appraisers and tax assessor-collectors to waive certain penalties for failing to file or timely file a declaration or tax statement for motor vehicles, dealer's heavy equipment or retail manufactured housing inventory. A chief appraiser or collector may waive a penalty only if the taxpayer's failure to file or timely file the declaration or statement was a result of a disaster or an event beyond the taxpayer's control destroyed the taxpayer's property or records. The taxpayer must file a written application for the waiver not later than the 30th day after the date the declaration or statement was required to be filed and the taxpayer must otherwise be in compliance with Tax Code Chapter 23.
Under Tax Code Section 26.08, if a school district adopts a tax rate that exceeds the rollback tax rate, the registered voters of the district determine whether to approve the adopted tax rate at an election. When a school district needs to increase expenditures because of a disaster (including a tornado, hurricane, flood, or other calamity) and the Governor has requested federal disaster assistance for the school district's area, an election is not required to approve the tax rate for the tax year after the disaster. This does not include a drought.
Tax Code Section 31.032 allows homeowners and some small businesses whose property is damaged in a disaster and are located in a designated disaster area to pay their taxes in four installments. For small businesses, this includes real and personal property that is owned or leased by a business entity that has gross receipts under a threshold adjusted by the Comptroller's office.
The installment payments apply to taxes imposed on the property by all taxing units on the tax bill before the first anniversary of the disaster. The property owner must pay at least one-fourth of the taxes before the Feb. 1 delinquency date and provide notice that the person will be paying the remaining taxes in installments. The remaining payments are due before April 1, June 1 and Aug. 1, without any penalty or interest. If the delinquency date is not Feb. 1, then other deadlines apply. If an installment payment is missed, the owner faces a 6 percent penalty and also must pay interest at 1 percent for each month of delinquency.
Pursuant to Tax Code Section 31.032(h), for the 2009 tax year, the limit on gross receipts under Tax Code Section 31.032(a)(1)(A)(ii) is $5 million. For each subsequent tax year, the Comptroller's office is required to adjust the limit to reflect inflation by using the index that the Comptroller's office considers to most accurately report changes in the purchasing power of the dollar for consumers in this state and to publicize the adjusted limit. Each collector must use the adjusted limit as calculated by the Comptroller's office under this subsection to determine whether property is owned or leased by a business entity described by Tax Code Section 31.032(a)(1)(A)(ii).
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