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Title 1. Property Tax Code
Subtitle C. Taxable Property and Exemptions

Chapter 11. Taxable Property and Exemptions
Subchapter B. Exemptions

Sec. 11.11. Public Property.
Sec. 11.111. Public Property Used to Provide Transitional Housing for Indigent Persons.
Sec. 11.12. Federal Exemptions.
Sec. 11.13. Residence Homestead.
Sec. 11.14. Tangible Personal Property Not Producing Income.
Sec. 11.142. Travel Trailers.
Sec. 11.145. Income Producing Tangible Personal Property Having Value Less than $500.
Sec. 11.146. Mineral Interest Having Value of Less than $500.
Sec. 11.15. Family Supplies.
Sec. 11.16. Farm Products.
Sec. 11.161. Implements of Husbandry.
Sec. 11.17. Cemeteries.
Sec. 11.18. Charitable Organizations.
Sec. 11.1801. Charity Care and Community Benefits Requirements for Charitable Hospital.
Sec. 11.181. Charitable Organizations Improving Property for Low-Income Housing.
Sec. 11.182. Community Housing Development Organizations Improving Property for Low-Income and Moderate-Income Housing.
Sec. 11.183. Association Providing Assistance to Ambulatory Health Care Centers.
Sec. 11.184. Organizations Engaged Primarily in Performing Charitable Functions.
Sec. 11.185. Colonia Model Subdivision Program.
Sec. 11.19. Youth Spiritual, Mental, and Physical Development Associations.
Sec. 11.20. Religious Organizations.
Sec. 11.21. Schools.
Sec. 11.22. Disabled Veterans.
Sec. 11.23. Miscellaneous Exemptions.
Sec. 11.24. Historic Sites.
Sec. 11.25. Marine Cargo Containers Used Exclusively in International Commerce.
Sec. 11.251. Tangible Personal Property Exempt.
Sec. 11.252. Motor Vehicles Leased for Personal Use.
Sec. 11.26. Limitation of School Tax on Homesteads of Elderly.
Sec. 11.27. Solar and Wind-Powered Energy Devices.
Sec. 11.271. Offshore Drilling Equipment Not in Use.
Sec. 11.28. Property Exempted from City Taxation by Agreement.
Sec. 11.29. Intracoastal Waterway Dredge Disposal Site.
Sec. 11.30. Nonprofit Water Supply or Wastewater Service Corporation.
Sec. 11.31. Pollution Control Property.
Sec. 11.32. Certain Water Conservation Initiatives.
Sec. 11.33. Raw Cocoa and Green Coffee Held in Harris County.

[Sections 11.34 to 11.40 reserved for expansion]

Sec. 11.23. Miscellaneous Exemptions.

(a) Veteran's Organizations. A nonprofit organization that is composed primarily of members or former members of the armed forces of the United States or its allies and that is chartered or incorporated by the United States Congress is entitled to an exemption from taxation of each of the buildings (including the land that is reasonably necessary for use of, access to, and ornamentation of the buildings) and other property owned and primarily used by that organization if the property is not used to produce revenue or held for gain. Occasional renting of the post or chapter property for other nonprofit activities does not result in loss of the exemption provided by this subsection if the rental proceeds are used solely for the maintenance and improvement of the property. For purposes of this subsection, an organization is a nonprofit organization if it is organized and operated in a way that does not result in the accrual of distributable profits, realization of private gain from payment of compensation in excess of a reasonable allowance for salary or other compensation for services rendered, or realization of any other form of private gain.

(b) Federation of Women's Clubs. The Texas Federation of Women's Clubs is entitled to an exemption from taxation of the tangible property it owns if the property is not held for gain.

(c) Nature Conservancy of Texas. The Nature Conservancy of Texas, Incorporated, is entitled to an exemption from taxation of the tangible property it owns if the property is not held for gain, as long as the organization is a nonprofit corporation as defined by the Texas Non-Profit Corporation Act.

(d) Congress of Parents and Teachers. The Texas Congress of Parents and Teachers is entitled to an exemption from taxation for state and county purposes of the buildings (including the land that is reasonably necessary for use of, access to, and ornamentation of the buildings) it owns and uses as its state headquarters.

(e) Private Enterprise Demonstration Associations. An association that engages exclusively in conducting nonprofit educational programs designed to demonstrate the American private enterprise system to children and young people and that operates under a state or national organization that is organized and operated for the same purpose is entitled to an exemption from taxation of the tangible property that it owns and uses exclusively if it is reasonably necessary for the association's operation.

(f) Bison, Buffalo, and Cattalo. A person is entitled to an exemption from taxation of the bison, buffalo, and cattalo he owns that are not held for gain and that are used in experimental breeding with cattle for the purpose of producing an improved strain of meat animal or kept in parks to preserve the species.

(g) Theater Schools. A corporation that is organized to promote the teaching and study of the dramatic arts is entitled to an exemption from taxation of the property it owns and uses in the operation of a school for the dramatic arts if:

(1) the corporation is organized as a nonprofit corporation as defined by the Texas Non-Profit Corporation Act;

(2) the corporation is not self-sustaining in any fiscal year from income other than gifts, grants, or donations;

(3) the corporation is exempt from federal income taxes;

(4) the school maintains a theater-school program with regular classes for at least four grades, formal textbooks and curriculum, an enrollment of 150 or more students during each of at least two semesters every calendar year, and a faculty substantially all of whom hold degrees in theater arts from an accredited school of higher education;

(5) the school offers apprenticeship or other practical training in theater management and operation for college students or offers similar training for playwrights, actors, and production personnel; and

(6) more than one-half of each season's theatrical productions for which admission is charged have significant literary merit of the character that contributes to the educational programs of secondary schools and schools of higher education.

(h) County Fair Associations. A county fair association organized to hold agricultural fairs and encourage agricultural pursuits is entitled to an exemption from taxation of the land and buildings that it owns and uses to hold agricultural fairs. An association that holds a license issued after January 1, 2001, under the Texas Racing Act (Article 179e, Vernon's Texas Civil Statutes) to conduct a horse race meeting or a greyhound race meeting with pari-mutuel wagering is not entitled to an exemption under this subsection. Land or a building used to conduct a horse race meeting or a greyhound race meeting with pari-mutuel wagering under a license issued after January 1, 2001, under that Act may not be exempted under this subsection. To qualify for an exemption under this subsection, a county fair association must:

(1) be a nonprofit corporation as defined by the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes);

(2) be exempt from federal income taxes as an organization described by Section 501(c)(3), (4), or (5), Internal Revenue Code of 1986, as amended;

(3) qualify for an exemption from the franchise tax under Section 171.060; and

(4) meet the requirements of a charitable organization provided by Sections 11.18(e) and (f), for which purpose the functions for which the association is organized are considered to be charitable functions.

(i) Community Service Clubs. An association that qualifies as a community service club is entitled to an exemption from taxation of the tangible property the club owns that qualifies under Article VIII, Section 2, of the constitution and that is not used for profit or held for gain. To qualify as a community service club for the purposes of this subsection, an association must:

(1) be organized to promote and must engage primarily in promoting:

(A) the religious, educational, and physical development of boys, girls, young men, or young women;

(B) the development of the concepts of patriotism and love of country; and

(C) the development of interest in community, national, and international affairs;

(2) be affiliated with a state or national organization of similar purpose;

(3) be open to membership without regard to race, religion, or national origin; and

(4) be operated in a way that does not result in accrual of distributable profits, realization of private gain resulting from payment of compensation in excess of a reasonable allowance for salary or other compensation for services rendered, or realization of any other form of private gain.

(j) Medical Center Development. All real and personal property owned by a nonprofit corporation, as defined in the Texas Non-Profit Corporation Act, and held for use in the development of a medical center area or areas in which the nonprofit corporation has donated land for a state medical, dental, or nursing school, and for other hospital, medical, and educational uses and uses reasonably related thereto, during the time remaining property is held for the development to completion of the medical center and not leased or otherwise used with a view to profit, is exempt from all ad valorem taxation as though the property were, during that time, owned and held by the state for health and educational purposes.

(k) Scientific Research Corporations. A nonprofit corporation as defined in the Texas Non-Profit Corporation Act is entitled to an exemption from taxation of the property it owns and uses in scientific research and educational activities for the benefit of one or more colleges and universities. Use of property exempted by this subsection for purposes other than scientific research and education does not result in loss of the exemption if those other functions are incidental to use of the property for scientific research and education activities and benefit the scientific research corporation and the colleges or universities that it supports.

(l) Incomplete improvements. A person described by Subsection (a)-(e), (g), or (i)-(k) is entitled to an exemption from taxation of the real property owned by the person consisting of an incomplete improvement that is under active construction or other physical preparation and that is designed and intended to be used by the person for a purpose described by that subsection when complete and the land on which the incomplete improvement is located that will be reasonably necessary for the person's use of the improvement for that purpose. A property may not be exempted under this subsection for more than three years. For purposes of this subsection, an incomplete improvement is under physical preparation if the person has:

(1) engaged in architectural or engineering work, soil testing, land clearing activities, or site improvement work necessary for the construction of the improvement; or

(2) conducted an environmental or land use study relating to the construction of the improvement.

Amended by 1981 Tex. Laws (1st C.S.), p. 130, ch. 13, Sec. 37; amended by 1987 Tex. Laws, ch. 430, Sec. 2 and ch. 640, Sec. 5; amended by 1991 Tex. Laws, p. 773, ch. 162, Sec. 1; amended by 1997 Tex. Laws, p. 2966, ch. 954, Sec. 2; amended by 1999 Tex. Laws, p. 598, ch. 138, Sec. 5; amended by HB 824, 77th Tex. Leg., 2001, effective January 1, 2002.

Cross References:

Exemption application forms, see Rule Sec. 9.415.
Annual application required, see Sec. 11.43(b).
Annual application not required for medical center development, see Sec. 11.43(c).
Definition of bison and buffalo, see Sec. 151.001, Agriculture Code.
Immediate qualification for property acquired by nonprofit corporation after January 1, see Sec. 11.42(c).
No application required for bison, buffalo, and cattalo, see Sec. 11.16 and Sec. 11.43(a).
Prorating taxes for exemption loss after January 1, see Sec. 26.10.
Purely public charity, sec. art. VIII, Sec. 2, Tex. Const.

Notes:

Burden is on taxpayer under this section to show it meets both statutory and constitutional requirements. Exclusive use, like primary use, is a question of fact. Dallas County Appraisal District v. Institute for Aerobics Research, 766 S.W.2d 318 (Tex. App.-Dallas 1989, writ denied).

Section 11.23(c) is unconstitutional. Section 11.23(c), the property tax exemption for the Nature Conservancy of Texas, Incorporated, is not a general law authorized by Article VIII, Section 2, of the Texas Constitution, and is a special law in violation of Article III. The Nature Conservancy does not meet the requirements of a purely public charity. Op. Tex. Att'y Gen. No. DM-432 (1997).

To qualify for exemption as a biomedical research corporation, an applicant must meet both the requirements of the Texas Constitution's three-part test and Section 11.23(h). Op. Tex. Att'y Gen. No. JM-682 (1987). (Note: The biomedical research corporation exemption has been moved from Sec. 11.23(h) to Sec. 11.18, Tax Code).

The attorney general has ruled Sec. 11.23(a) unconstitutional. Op. Tex. Att'y Gen. No. MW-436 (1982). If an institution can qualify as an institution of purely public charity or under some other provision of the Texas Constitution, and it also qualifies under this section, then the exemption may be granted.

Section 11.23(j) replaced art. 7150, Sec. 28, V.T.C.S. (now repealed). Article 7150, Sec. 28 was ruled constitutional for land held for donation to medical organizations. However, whether a particular foundation's property qualifies for the exemption depends upon whether the foundation is a public charity. The ultimate use for purely charitable purposes must be certain, with evidence readily available, and not based merely on intentions and plans. Op. Tex. Att'y Gen. No. H-315 (1974).

Sec. 11.24. Historic Sites.

The governing body of a taxing unit by official action of the body adopted in the manner required by law for official actions may exempt from taxation part or all of the assessed value of a structure or archeological site and the land necessary for access to and use of the structure or archeological site, if the structure or archeological site is:

(1) designated as a Recorded Texas Historic Landmark under Chapter 442, Government Code, or a state archeological landmark under Chapter 191, Natural Resources Code, by the Texas Historical Commission; or

(2) designated as a historically or archeologically significant site in need of tax relief to encourage its preservation pursuant to an ordinance or other law adopted by the governing body of the unit.

Amended by 1995 Tex. Laws, p. 917, ch. 109, Sec. 21.

Cross References:

Exemption application form, see Rule Sec. 9.415.
Annual application required, see Sec. 11.43(b).
Constitutional authorization, see art. VIII, Sec. 1-f, Tex. Const.
Historical preservation societies, charitable exemption, see Sec. 11.18.

Notes:

Where the trial record showed no evidence that a historic building was designated a landmark by the Texas Historical Commission or the city, that the city had designated it a historic site in need of tax relief, or that the city or school district had adopted an exemption, the building could not qualify under this section. City of Dallas v. Women's' Auxiliary, 620 S.W.2d 695 (Tex. App.-Dallas 1981, writ ref'd n.r.e.).

A taxing unit may exempt a specific percentage of property value or a fixed dollar amount of value from an historically significant structure. A taxing unit may not freeze the taxes paid on the historic site as of the date the exemption is granted. The taxing unit is allowed to exempt value - either a percentage of the property value or a fixed dollar amount. Tex. Att'y Gen. LO-97-039 (1997).

Sec. 11.25. Marine Cargo Containers Used Exclusively in International Commerce.

(a) A person is entitled to an exemption from taxation of a marine cargo container and the equipment related to the container that the person owns if:

(1) the person is:

(A) a citizen of a foreign country; or

(B) an entity organized under the laws of a foreign country; and

(2) the container is:

(A) based, registered, and subject to taxation in a foreign country; and

(B) used exclusively in international commerce.

(b) In this section, "marine cargo container":

(1) means a container that may be:

(A) used to transport goods by ship;

(B) readily handled;

(C) transferred from one mode of transport to another without reloading; and

(D) used repeatedly; and

(2) includes a container that is fully or partially enclosed so as to serve as a compartment for goods, has an open top suitable for loading goods into the container, or consists of a flat rack suitable for securing goods onto the container.

Added by 1997 Tex. Laws, p. 2389, ch. 726, Sec. 1.

Cross References:

No application required, see Sec. 11.43(a).

Sec. 11.251. Tangible Personal Property Exempt.

(a) In this section, "freeport goods" means property that under Article VIII, Section 1-j, of the Texas Constitution is not taxable.

(b) A person is entitled to an exemption from taxation of the appraised value of that portion of the person's inventory or property consisting of freeport goods.

(c) The exemption provided by Subsection (b) is subtracted from the market value of the inventory or property determined under Section 23.12 to determine the taxable value of the inventory or property.

(d) Except as provided by Subsections (f) and (g), the chief appraiser shall determine the appraised value of freeport goods under this subsection. The chief appraiser shall determine the percentage of the market value of inventory or property owned by the property owner in the preceding calendar year that was contributed by freeport goods. The chief appraiser shall apply that percentage to the market value of the property owner's inventory or property for the current year to determine the appraised value of freeport goods for the current year.

(e) In determining the market value of freeport goods that in the preceding year were assembled, manufactured, repaired, maintained, processed, or fabricated in this state or used by the person who acquired or imported the property in the repair or maintenance of aircraft operated by a certificated air carrier, the chief appraiser shall exclude the cost of equipment, machinery, or materials that entered into and became component parts of the freeport goods but were not themselves freeport goods or that were not transported outside the state before the expiration of 175 days after they were brought into this state by the property owner or acquired by the property owner in this state. For component parts held in bulk, the chief appraiser may use the average length of time a component part was held in this state by the property owner during the preceding year in determining whether the component parts were transported out of this state before the expiration of 175 days.

(f) If the property owner was not engaged in transporting freeport goods out of this state for the entire preceding year, the chief appraiser shall calculate the percentage of cost described in Subsection (d) for the portion of the year in which the property owner was engaged in transporting freeport goods out of this state.

(g) If the property owner or the chief appraiser demonstrates that the method provided by Subsection (d) significantly understates or overstates the market value of the property qualified for an exemption under Subsection (b) in the current year, the chief appraiser shall determine the market value of the freeport goods to be exempt by determining, according to the property owner's records and any other available information, the market value of those freeport goods owned by the property owner on January 1 of the current year, excluding the cost of equipment, machinery, or materials that entered into and became component parts of the freeport goods but were not themselves freeport goods or that were not transported outside the state before the expiration of 175 days after they were brought into this state by the property owner or acquired by the property owner in this state.

(h) The chief appraiser by written notice delivered to a property owner who claims an exemption under this section may require the property owner or a person designated in writing by the importer of record to provide copies of inventory or property records in order to determine the amount and value of freeport goods. If the property owner or designated person fails to deliver the information requested in the notice before the 31st day after the date the notice is delivered to the property owner or before the date the appraisal review board approves the appraisal records under Section 41.12, whichever is later, the property owner forfeits the right to claim or receive the exemption for that year. If the property owner or designated person delivers the information requested in the notice before the date the appraisal review board approves the appraisal records but not before the 31st day after the date the notice is delivered to the property owner and the exemption is allowed, the property owner is liable to each taxing unit for a penalty in an amount equal to 10 percent of the difference between the amount of tax imposed by the taxing unit on the inventory or property and the amount that would otherwise have been imposed. The chief appraiser shall make an entry on the appraisal records for the inventory or property indicating the property owner's liability for the penalty and shall deliver a written notice of imposition of the penalty, explaining the reason for its imposition, to the property owner. The assessor for a taxing unit that taxes the inventory or property shall add the amount of the penalty to the property owner's tax bill, and the tax collector for the unit shall collect the penalty at the time and in the manner the collector collects the tax. The amount of the penalty constitutes a lien against the inventory or property against which the penalty is imposed, as if it were a tax, and accrues penalty and interest in the same manner as a delinquent tax.

(i) The exemption provided by Subsection (b) does not apply to a taxing unit that takes action to tax the property under Article VIII, Section 1-j, Subsection (b), of the Texas Constitution.

(j) Petroleum products as set forth in Article VIII, Section 1-j, of the Texas Constitution shall mean liquid and gaseous materials that are the immediate derivatives of the refining of oil or natural gas.

(k) Property that meets the requirements of Article VIII, Sections 1-j(a)(1) and (2), of the Texas Constitution and that is transported outside of this state not later than 175 days after the date the person who owns it on January 1 acquired it or imported it into this state is freeport goods regardless of whether the person who owns it on January 1 is the person who transports it outside of this state.

Added by 1989 Tex. Laws, p. 1749, ch. 534, Sec. 1; amended by 1991 Tex. Laws, p. 1770, ch. 504, Sec. 1; amended by 1993 Tex. Laws, p. 3053, ch. 779, Sec. 1; amended by SB 862, 77th Tex. Leg., 2001, effective September 1, 2001.

Cross References:

Annual application required, see Sec. 11.43(b).
Constitutional authorization, see art. VIII, Sec. 1-j, Tex. Const.
Definition of petroleum products, see Rule Sec. 9.4201.
Exemption for cotton stored in warehouse, see Sec. 11.437.
Freeport application form, see Rule Sec. 9.415.
Late application allowed, see Sec. 11.439.
Personal property held at Texas locations temporarily, see art. VIII, Sec. 1-n, Tex. Const.
Rendition of freeport property, see Sec. 22.01.

Notes:

The import-export clause of the U. S. Constitution and its related legal test of stream of export exempts goods from taxation once exportation has commenced as a part of transportation in a continuous route or journey. Seaboard states are prohibited from taxing goods merely flowing through their ports from other states. Goods are placed into the stream of export when they were shipped from the vendors to the export shipper for a pre-determined foreign destination. The inspection of the goods, approval for import, and packing the goods were necessary for the safe and efficient movement of these goods and merely facilitated their export. Taxing the goods violated the United States import-export clause. Virginia Indonesia Company v. Harris County Appraisal District, 910 S.W. 2d 905 (Tex. 1995).

The freeport provision is not self executing, and the legislature is authorized to prescribe forfeiture provisions. The filing requirements of Section 11.251, while different from other exemption provisions, are not unreasonable or arbitrary. The request for additional information provided in Section 11.45 does apply to the freeport exemption. The 30-day deadline in Section 11.251 is not unconstitutional. Motorola, Inc. v. Tarrant County Appraisal District, 980 S.W.2d 899 (Tex. App. - Fort Worth 1998).

The application of the freeport exemption does not require the person who acquired or imported the property into this state to own the property continuously until it is transported out of the state. The Legislature repealed the continuous ownership of the goods in 1991 by adopting Section 11.251(k). Op. Tex. Att'y Gen. No. DM-463 (1997).

Sec. 11.252. Motor Vehicles Leased for Personal Use.

(a) The owner of a motor vehicle that is subject to a lease is entitled to an exemption from taxation of the vehicle if:

(1) the lessee does not hold the vehicle for the production of income; and

(2) the vehicle is used primarily for activities that do not involve the production of income.

(b) For purposes of this section, a motor vehicle is presumed to be used primarily for activities that do not involve the production of income if 50 percent or more of the miles the motor vehicle is driven in a year are for non-income producing purposes.

(c) The comptroller by rule shall establish exemption application requirements and appropriate procedures to determine whether a motor vehicle subject to a lease qualifies for an exemption under Subsection (a).

(d) In connection with the requirements and procedures under Subsection (c), the comptroller by rule shall adopt a form to be completed by the lessee of a motor vehicle for which the owner of the vehicle may apply for an exemption under Subsection (a). The form shall require the lessee to provide the lessee's name, address, and driver's license or personal identification certificate number and to certify under oath that the lessee does not hold the vehicle for the production of income and that the vehicle is used primarily for activities that do not involve the production of income. The comptroller shall include on the form a notice of the penalties prescribed by Section 37.10, Penal Code, for making a false statement on the form.

(e) The owner of a motor vehicle that is subject to a lease shall maintain the form completed by the lessee of the vehicle and make the form available for inspection and copying by the chief appraiser of the applicable appraisal district at all reasonable times. If the owner does not maintain a completed form relating to the vehicle, the owner:

(1) must render the vehicle for taxation in the applicable rendition statement or property report filed by the owner under Chapter 22; and

(2) may not file an application for an exemption under Subsection (a) for the vehicle.

(f) The governing body of a municipality by ordinance adopted before January 1, 2002, may provide for the taxation of leased motor vehicles otherwise exempted under Subsection (a). If the governing body of a municipality provides for the taxation of leased motor vehicles under this subsection, the exemption provided by Subsection (a) does not apply to that municipality.

(g) If not continued in effect by the legislature, this section expires December 31, 2003.

(h) In this section:

(1) "Lease" has the meaning assigned by Section 152.001(6).

(2) "Motor vehicle" means a passenger car or truck with a shipping weight of not more than 9,000 pounds.

(i) In addition to the requirements of Subsections (c) and (d), the comptroller by rule shall prescribe a property report form to be completed by the lessor describing the leased motor vehicles that the lessor owns. The property report form shall require the lessor to list each leased vehicle the lessor owns on January 1, to provide the year, make, model, and vehicle identification number of each leased vehicle, and to provide the name of the lessee, the address at which the vehicle is kept, and an indication of whether the lessee has designated the vehicle as not held for the production and not used for the production of income.

(j) The lessor shall provide the chief appraiser with the completed property report form adopted by the comptroller in the manner provided by Subchapter B, Chapter 22.

Added by SB 248, 77th Tex. Leg., 2001, effective January 1, 2002.

Cross References:

Constitutional authorization, see art. VIII, Sec. 1(d) & (e), Tex. Const.
Exemption application and rendition forms, see Rule Sec. 9.419.
Rendition of inventory, see Sec. 22.01.

Notes:

SB 248, 77th Tex. Leg., 2001, applies only to ad valorem taxes imposed on a motor vehicle that is subject to a lease entered into on or after January 2, 2001.

Sec. 11.26. Limitation of School Tax on Homesteads of Elderly.

(a) The tax officials shall appraise the property to which this section applies and calculate taxes as on other property, but if the tax so calculated exceeds the limitation imposed by this section, the tax imposed is the amount of the tax as limited by this section, except as otherwise provided by this section. A school district may not increase the total annual amount of ad valorem tax it imposes on the residence homestead of an individual 65 years or older above the amount of the tax it imposed in the first tax year in which the individual qualified that residence homestead for the exemption provided by Section 11.13(c) for an individual 65 years of age or older. If the individual qualified that residence homestead for the exemption after the beginning of that first year and the residence homestead remains eligible for the exemption for the next year and if the school district taxes imposed on the residence homestead in the next year are less than the amount of taxes imposed in that first year, a school district may not subsequently increase the total annual amount of ad valorem taxes it imposes on the residence homestead above the amount it imposed in the year immediately following the first year for which the individual qualified that residence homestead for the exemption, except as provided by Subsection (b). If the first tax year the individual qualified the residence homestead for the exemption provided by Section 11.13(c) was a tax year before the 1997 tax year, the amount of the limitation provided by this section is the amount of tax the school district imposed for the 1996 tax year less an amount equal to the amount determined by multiplying $10,000 times the tax rate of the school district for the 1997 tax year, plus any 1997 tax attributable to improvements made in 1996, other than improvements made to comply with governmental regulations or repairs.

(b) If an individual makes improvements to the individual's residence homestead, other than improvements required to comply with governmental requirements or repairs, the school district may increase the tax on the homestead in the first year the value of the homestead is increased on the appraisal roll because of the enhancement of value by the improvements. The amount of the tax increase is determined by applying the current tax rate to the difference in the assessed value of the homestead with the improvements and the assessed value it would have had without the improvements. A limitation imposed by this section then applies to the increased amount of tax until more improvements, if any, are made.

(c) The limitation on tax increases required by this section expires if on January 1:

(1) none of the owners of the structure who qualify for the exemption and who owned the structure when the limitation first took effect is using the structure as a residence homestead; or

(2) none of the owners of the structure qualifies for the ex-emption.

(d) If the appraisal roll provides for taxation of appraised value for a prior year because a residence homestead exemption for persons 65 years or older was erroneously allowed, the tax assessor shall add, as back taxes due as provided by Subsection (d) of Section 26.09 of this code, the positive difference if any between the tax that should have been imposed for that year and the tax that was imposed because of the provisions of this section.

(e) For each school district in an appraisal district, the chief appraiser shall determine the portion of the appraised value of residence homesteads of the elderly on which school district taxes are not imposed in a tax year because of the limitation on tax increases imposed by this section. That portion is calculated by determining the taxable value that, if multiplied by the tax rate adopted by the school district for the tax year, would produce an amount equal to the amount of tax that would have been imposed by the school district on residence homesteads of the elderly if the limitation on tax increases imposed by this section were not in effect, but that was not imposed because of that limitation. The chief appraiser shall determine that taxable value and certify it to the comptroller as soon as practicable for each tax year.

(f) The limitation on tax increases required by this section does not expire because the owner of an interest in the structure conveys the interest to a qualifying trust as defined by Section 11.13(j) if the owner or the owner's spouse is a trustor of the trust and is entitled to occupy the structure.

(g) Except as provided by Subsection (b), if an individual who receives a limitation on tax increases imposed by this section, including a surviving spouse who receives a limitation under Subsection(i), subsequently qualifies a different residence homestead for an exemption under Section 11.13, a school district may not impose ad valorem taxes on the subsequently qualified homestead in a year in an amount that exceeds the amount of taxes the school district would have imposed on the subsequently qualified homestead in the first year in which the individual receives that exemption for the subsequently qualified homestead had the limitation on tax increases imposed by this section not been in effect, multiplied by a fraction the numerator of which is the total amount of school district taxes imposed on the former homestead in the last year in which the individual received that exemption for the former homestead and the denominator of which is the total amount of school district taxes that would have been imposed on the former homestead in the last year in which the individual received that exemption for the former homestead had the limitation on tax increases imposed by this section not been in effect.

(h) An individual who receives a limitation on tax increases under this section, including a surviving spouse who receives a limitation under Subsection(i), and who subsequently qualifies a different residence homestead for an exemption under Section 11.13, or an agent of the individual, is entitled to receive from the chief appraiser of the appraisal district in which the former homestead was located a written certificate providing the information necessary to determine whether the individual may qualify for a limitation on the subsequently qualified homestead under Subsection (g) and to calculate the amount of taxes the school district may impose on the subsequently qualified homestead.

(i) If an individual who qualifies for the exemption provided by Section 11.13(c) for an individual 65 years of age or older dies, the surviving spouse of the individual is entitled to the limitation applicable to the residence homestead of the individual if:

(1) the surviving spouse is 55 years of age or older when the individual dies; and

(2) the residence homestead of the individual:

(A) is the residence homestead of the surviving spouse on the date that the individual dies; and

(B) remains the residence homestead of the surviving spouse.

(j) If an individual who qualifies for an exemption provided by Section 11.13(c) for an individual 65 years of age or older dies in the first year in which the individual qualified for the exemption and the individual first qualified for the exemption after the beginning of that year, except as provided by Subsection (k), the amount to which the surviving spouse's school district taxes are limited under Subsection (i) is the amount of school district taxes imposed on the residence homestead in that year determined as if the individual qualifying for the exemption had lived for the entire year.

(k) If in the first tax year after the year in which an individual dies in the circumstances described by Subsection (j) the amount of school district taxes imposed on the residence homestead of the surviving spouse is less than the amount of school district taxes imposed in the preceding year as limited by Subsection (j), in a subsequent tax year the surviving spouse's school district taxes on that residence homestead are limited to the amount of taxes imposed by the district in that first tax year after the year in which the individual dies.

(l) For purposes of the limitation on tax increases provided by Subsection (g), the governing body of a school district in a county with a population of fewer than 75,000 in a manner provided by law for official action by the governing body may elect to apply the limitation provided by Subsection (g) to the residence homestead of an individual as if that subsection were in effect on January 1, 1993. The governing body must make the election before January 1, 1999. The election applies only to taxes imposed in a tax year that begins after the tax year in which the election is made.

Amended by 1981 Tex. Laws (1st C.S.) p. 130, ch. 13, Sec. 38; amended by 1984 Tex. Laws (2nd C.S.), p. 341, ch. 28, art. II, Sec. 16; amended by 1991 Tex. Laws (2nd C.S.), p. 28, ch. 6, Sec. 10; amended by 1993 Tex. Laws, p. 3365, ch. 854, Sec. 2; amended by 1997 Tex. Laws, p. 2067, ch. 592, Sec. 2.02; p. 3901, ch. 1039, Secs. 11 and 14; and, p. 4030, ch. 1059, Sec. 3; amended by 1999 Tex. Laws, p. 358, ch. 62, Sec. 16.01; amended by 1999 Tex. Laws, p. 5097, ch. 1481, Sec. 2; amended by HB 2812, 77th Tex. Leg., 2001, effective September 1, 2001; amended by HB 506, 77th Tex. Leg., 2001, effective January 1, 2002.

Cross References:

Constitutional authorization, see art. VIII, Sec. 1-b(d), Tex. Const.
Residential homestead exemption, see Sec. 11.13.
Prorating over-65 homeowner's taxes, see Secs. 26.10 and 26.112.
Abatement of delinquent tax suit, see Sec. 33.06.

Notes:

HB 506, 77th Tex. Leg., 2001, effective January 1, 2002, is intended to clarify existing law in effect before the effective date of this bill. For purposes of calculating the tax imposed on the residence homestead of a surviving spouse for a tax year that begins on or after January 1, 2002, the governing body of a school district shall apply the limitation on tax increases provided by Section 11.26(g) to the residence homestead as if the change in law made were in effect on August 28, 1997.

HB 4, 75th Tex. Leg., 1997, amends Section 11.26 effective on the date that the constitutional amendment proposed by HJR 4, 75th Tex. Leg., 1997, takes effect, and applies to each tax year that begins on or after January 1, 1997. Texas voters approved the constitutional amendment August 9, 1997.

SB 351, 72nd Leg., 1991, added Sec. 20.09, Ed. Code, providing that a school district may not exceed the tax limitation of a homestead qualified under art. VIII, Sec. 1-b(d), Tex. Const., when the school district taxes are added to the county education district taxes imposed on the homestead. A district may exceed the homestead limitation if the additional tax is necessary for the payment of principal and interest on certain authorized debt.

HJR 48, 70th Leg., 1987, passed November 3, 1987, and grants that the over-65 school freeze transfers to any surviving spouse that is 55 years of age or older at the time of the property owner's death. Sec. 11.26 is not specifically amended by this constitutional change.

Where a residence homestead was the separate property of the under-65 husband, the over-65 wife could not qualify it for the over-65 exemption, even though the property was her homestead for other constitutional purposes. Under the statute, the qualified person must be an owner of the residence. Ripley v. Stephens, 686 S.W.2d 757 (Tex. App.-Austin 1985, writ ref'd n.r.e.).

The constitutional amendment authorizing extension of the tax ceiling to over-65 surviving spouses applies only to spouses whose husband or wife died after the constitutional amendment took effect. Op. Tex. Att'y Gen. No. JM-991 (1988).

The constitution authorizes a tax ceiling for school district taxes only. Op. Tex. Att'y Gen. No. MW-265 (1980).