- Chief Appraisers Will Send Notices
of Appraised Value in Letter Form
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- Sample Letter of Appraisal
- Heavy Equipment Dealers Report
Leased or Rented Inventory
- ARB Seminars Begin March 7
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- Texans Pass Two Constitutional Amendments
Addressing Local Property Taxation
- Attorney General Issues Opinions on
VIT Escrow Accounts, Other Areas
- 8 of 11 School Districts Succeed in
1999 Tax Rate Rollback Elections
Texans Pass Two Constitutional Amendments
Addressing Local Property Taxation
Two of 16 proposed constitutional amendments passed by Texas voters on the November 2 general election ballot dealt with local property taxes. Two other amendments addressed property related issues.Proposition #4 -
The first property tax amendment provided that charitable organizations no longer be "purely public charity," but "engaged primarily in public charitable functions." This amendment allows charities to conduct auxiliary activities to support those charitable functions. While passed, the second property tax amendment authorized the Texas Legislature to exempt leased motor vehicles that are not held primarily for income production by lessees. No such legislation was authorized during the 1999 legislative session.
The two other amendments that addressed property--related issues dealt with the size of an urban homestead and addressed converting separate property to community property.
Proposed by House Joint Resolution (HJR) 4, Proposition 4 amended Article VIII, Section 2(a), Texas Constitution, to replace the current exemption from property taxes for institutions of "purely public charity" with an exemption for institutions "engaged primarily in public charitable functions." These institutions also may conduct auxiliary activities to support those charitable functions.Proposition #12 -
Property Tax Code Section 11.18 exempts buildings and tangible personal property owned and used exclusively by charitable organizations that meet specific criteria. To qualify for the tax exemption, a charitable organization must engage exclusively in performing one or more of the charitable functions listed in Section 11.18 and must meet other requirements. The property's use by persons who are not charitable organizations does not result in loss of the tax exemption if the use is incidental and limited to activities benefiting the beneficiaries of the charitable organization owning the property.
With the passing of Proposition 4, House Bill (HB) 1978 was enacted to exempt senior citizen centers that provide recreational or social activities and facilities for elderly persons and fit the amended definition in the Texas Constitution. The centers must engage primarily in performing these charitable functions but are allowed to engage in other activities that support or are related to their charitable functions.
Leased vehicles for personal use
The Texas Legislature must pass implementing legislation to enact this constitutional change. No such legislation was passed during the 1999 legislative session.Proposition # 6 -
Proposed by Senate Joint Resolution (SJR) 21, Proposition 12 amended Article VIII, Section 1, of the Constitution to authorize the Legislature to exempt from property taxes motor vehicles leased for personal use. The vehicles are not held primarily for the production of income by the lessee and otherwise would qualify for exemption under general law. The Legislature may limit the ability of political subdivisions to tax leased motor vehicles that the amendment exempts.
The amendment also deleted references in this section of the Texas Constitution to county education districts, which no longer exist.
Property Tax Code Section 11.14 provides that tangible personal property not held or used to produce income is exempt from property taxes. Local taxing units, however, may decide to tax such property by following publication and hearing procedures outlined in Section 11.14(e).
Leased motor vehicles do not meet the current criteria of Section 11.14 since they are owned by companies using them to produce income, even if the vehicles are leased to people who use them for personal use.
This amendment allows the Legislature to exempt leased vehicles not held primarily for the production of income based on their use for non-income producing purposes by the lessee. Vehicles leased for business use or for the production of income by the lessee are taxable.
Urban homestead size
Proposed by SJR 22, Proposition 6 amended the size of an urban homestead as defined in Article XVI, Section 50, of the Constitution. This section protects a homestead from forced sale for payment of debts, except for the purchase or improvement of the homestead, taxes, certain partitions such as in a divorce, refinancing of a lien against the homestead, and home equity loans and reverse mortgages.Proposition #15 -
Passed by Texas voters, Proposition 6 increased the maximum size of an urban homestead to 10 acres from one acre and limits such a homestead to a single lot or contiguous lots. It allows an urban homestead to be used either as a home or as both an urban home and a place of business.
A rural homestead, available for residences only, consists of up to 200 acres in one or more parcels.
Separate to community property
Proposed by HJR 36, Proposition 15 amended Article XVI, Section 15, of the Constitution to allow spouses to agree in writing that all or part of the separate property owned by either or both spouses would become the spouses' community property.
Texas law recognizes separate property - property held individually -- and community property -- property held by both spouses jointly - in marriage. Generally, all property acquired during the marriage is considered community property unless proved to be separate property. Separate property includes property owned by a spouse before the marriage or acquired by the spouse by gift, inheritance, or as money damages recovered from a personal injury case. Property purchased during the marriage with funds coming from separate property is separate property. Income earned from separate property during the marriage, however, generally is considered community property, unless an agreement between spouses makes it separate property. Under Article XVI, Section 15, community property may be converted to separate property if both spouses agree.
Texas law allows written prenuptial and postnuptial agreements signed by both spouses. Such agreements may address property rights, including the conversion of community property to separate property, so long as the agreement is not intended to defraud pre-existing creditors. Agreements are enforceable so long as they are made voluntarily by both spouses, each party received a fair and reasonable disclosure of the property or financial obligations of the other party, and the agreement is not unconscionable under contract law.
Appraisal districts frequently face the question of homeowners requesting certain homestead exemptions on property owned by their spouses and that may not be considered community property.
HB 734, which took effect when Texas voters approved this proposition, prescribes the procedures for converting separate property to community property, just as community property may be converted to separate property. A written agreement signed by both spouses identifies the property being converted and specifies that conversion is occurring. The agreement is enforceable without consideration, meaning that neither spouse has to receive a benefit in return for the contract to be deemed valid. Simply transferring the separate property to the name of the other spouse is not sufficient to convert the property without a separate written agreement.
To be enforceable under HB 734, a conversion agreement has to be made voluntarily and both spouses have to receive a fair and reasonable disclosure of the legal effect of converting the separate property to community property. The implementing legislation contains standardized "boilerplate" language, which, if included in the agreement, creates a rebuttable presumption that the potential effects of the conversion had been disclosed. That language addresses the possibility of exposure to creditors, the loss of management rights, and the loss of property ownership. Conversion from separate property to community property allows spouses to own their property in equal undivided shares.