Changes in Property Tax Exemptions
New Laws Address Certain Properties and Applications
Comptroller's Report Moving Manufactured Homes Property in Overlapping Appraisal Districts Appraisal Review Board Seminars Oil and Natural Gas
More than one-fourth of the property tax laws passed by the 78th Texas Legislature addressed property tax exemptions that property owners may receive, beginning in tax year 2004. These new laws address certain properties and exemption applications. While implementing these new exemptions generally will be without complication, there are some issues that may require legal opinions.
House Bill (H.B.) 1223 amended Tax Code Section 11.13(l) to provide a time period during which a qualified homeowner temporarily might not occupy a homestead and still receive homestead exemptions. If the homeowner does not establish a different principal residence, intends to return and occupy the residence and is temporarily absent for a period of less than two years, then the homeowner will not lose the homestead exemptions. This amendment excludes homeowners in military service or in a facility providing services related to health, infirmity or aging from the two-year provision because they may be gone for longer than two years.
The Texas Attorney General’s office has received a request about the implementation date for this provision in H.B. 1223. The opinion request asks if the term “temporary” applies to granting exemptions for the tax year beginning January 1, 2004, or may it apply to exemptions existing on January 1, 2003.
H.B. 217 amended Section 11.13(c) so that a homeowner does not have to meet the definition of disabled on the date of January 1 of the tax year but may qualify as disabled any time during the tax year. The exemption applies to the entire tax year, as if the person was disabled on January 1.
H.B. 217 also extended the Section 11.26 school tax limitation, also called tax ceiling, to disabled homeowners and gave them the right to transfer to another homestead the same tax ceiling benefit. It provides for a surviving spouse age 55 or older to retain the school tax ceiling and to transfer the benefit of that ceiling to a different qualified homestead. This gives disabled homeowners and their surviving spouses age 55 or older the same rights available to homeowners age 65 or older.
If an owner qualified as disabled prior to January 1, 2003, then the owner’s 2003 homestead taxes will remain at that level for future tax years. Disabled homeowners may transfer the same percentage of taxes paid to another qualified homestead. To transfer the limitation, an owner must have qualified the former home for a disabled school exemption for a tax year beginning on or after January 1, 2003. See the November 2003 STATEMENT for more about this school limitation and transfer.
H.B. 136 added Section 11.261 to allow a county, city or junior college district to offer a tax limitation on homesteads of taxpayers disabled or 65 years of age or older. The taxing unit’s governing body may adopt the limitation, or citizens in the taxing unit by petition and election may adopt the limitation. Once adopted, Section 11.261 provides for the tax ceiling for disabled and age 65 or older homeowners and their right to transfer to another homestead in that taxing unit the same benefit of that tax ceiling. H.B. 136 also provides for surviving spouses age 55 or older to retain the tax ceiling and to transfer the benefit of that ceiling to a different qualified homestead in that taxing unit. Homeowners may transfer the same percentage of taxes paid to a subsequent qualified homestead if the new homestead is in that same taxing unit. More about this new limitation and transfer was also in the November 2003 STATEMENT .
H.B. 2147 amended Section 11.431(a) by changing the deadline for filing of late homestead exemption applications to be no later than one year after the delinquency date for the tax year. The original language established a deadline based on when taxes were paid or became delinquent, whichever was earlier.
Senate Bill (S.B.) 521 amended Section 11.432 to require the owner of a manufactured home to provide a copy of a statement of ownership and location from the Texas Department of Housing and Community Affairs to the appraisal district when the owner applies for a homestead exemption. For owners of manufactured homes that have documents of title, those titles are considered by law to be statements of ownership and location. An owner, however, may exchange the title for a statement of ownership and location.
A statement of ownership and location indicates whether the owner has elected to treat the home as real or as personal property. The land on which a manufactured home is located qualifies for the homestead exemption if the owner has elected to treat the home as real property and filed a certified copy of the statement of ownership and location in the county property records. The appraisal district then lists the home and land together as one account.
S.B. 510 repealed the tax on travel trailers by amending Section 11.14(a) to exempt personal property not held for the production of income. The only exception is “a structure that a person owns which is substantially affixed to real estate and is used or occupied as a residential dwelling.”
The law provided that it “applies to taxes imposed for 2002 and thereafter” and any determination of 2002 tax refunds and taxing travel trailers for 2002 and 2003 must be made locally or through an attorney general’s opinion.
H.B. 2416 allows a total exemption of incomplete improvements to land or buildings during the property’s development stage for certain organizations, including Section 11.18, charitable organizations; Section 11.184, primarily charitable organizations; Section 11.19, youth development associations; Section 11.20, religious organizations; Section 11.21, private schools; Section 11.23, miscellaneous organizations; and Section 11.30, non-profit water or wastewater service corporations.
Such property may now be exempt for a period of five years, rather than three years, in the same manner as incomplete improvements have been exempted in the past. On January 1, 2006, the time period for exempting incomplete improvements reverts back to three years.
H.B. 3546 revised the law concerning community housing development organizations. Low and moderate-income housing may not be granted an exemption under Section 11.182 after January 1, 2004, unless the housing received the exemption in 2003. Basically, Section 11.182 has a “grandfather” clause for current exemptions.
New Sections 11.1825 and 11.1826 apply to all new construction and exemption applications for community housing projects for 2004 and future tax years. Except for counties with populations of 1.4 million or more, the qualifying property will receive a 50 percent exemption. In the larger counties, each taxing unit’s governing body by official action must determine whether to permit the exemption and at what percentage amount. In these larger counties, the property owner must submit a written request to the governing body.
Effective January 1, 2004, H.B. 1278 granted exemptions for property owned by a religious organization and leased for use as a school under Section 11.21.
H.B. 1278 also exempted a religious organization’s land if the land is held for expanding or constructing a place of worship, so long as the land produces no revenue during the holding period. The land exemption has a limit of six years for contiguous property and three years for non-contiguous property.
H.B. 1278 addressed selling land that was held for expansion or future construction. It added Section 11.201 to require a rollback tax if land (or a part of it) receiving an exemption for expansion by a religious organization is sold or otherwise transferred to another person. The rollback tax is imposed for the five years preceding the year of the sale, plus 7 percent interest, for each year the land received the exemption.
Effective January 1, 2004, H.B. 2383 added an exemption for public property owned by the state or a taxing unit and leased to a religious organization. The property receives the religious organization exemption if the property is used as a place of regular religious worship and meets the other requirements of Section 11.20. The religious organization applies and takes other action relating to the exemption as if the organization owned the property. Other actions would include providing additional information to the appraisal district at the district’s request, notifying the appraisal district in writing if entitlement to the exemption ends and completing a new application sent by the appraisal district.
Leased motor vehicles
S.B. 658 continued exempting motor vehicles leased for personal use by repealing Section 11.252(g) that would have terminated this exemption on December 31, 2003.
County fair associations
H.B. 179 changed the application process for county fair associations organized to hold agricultural fairs and encourage agricultural pursuits. The associations must only apply once, rather than annually.Questions
Through Comptroller rules, the Comptroller’s Property Tax Division (PTD) has revised the model exemption application forms. Published in the December 19th Texas Register as proposed, the PTD received written comments. The Comptroller will adopt the final rules and mail the rules and forms to county appraisal districts. These rules included: Rule 9.415, Applications for Property Tax Exemptions; Rule 9.417, Property Tax Exemption for Organizations Engaged Primarily in Charitable Activities; and Rule 9.419, Procedures for Determining Property Tax Exemption for Motor Vehicles Leased for Personal Use.
For questions about these new laws or exemption application forms, contact PTD’s Technical Assistance at firstname.lastname@example.org or call 1-800-252-9121. In Austin, call 512/305-9999. The application forms are available on the Comptroller’s Property Tax Forms Web page at www.window.state.tx.us/taxinfo/taxforms/02-forms.html#Exempt .