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. Repealed in 2003.
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: Property Previously Exempt.
Sec. 11.1825. Organizations Constructing or Rehabilitating Low-Income Housing: Property Not Previously Exempt.
Sec. 11.1826. Monitoring of Compliance With Low-Income and Moderate-Income Housing Exemptions.
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. 11.201. Additional Tax on Sale of Certain Religious Organization Property.
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 or Disabled.
Sec. 11.261. Limitation of County, Municipal, or Junior College District Tax on Homesteads of Disabled and 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]
(a) Except as provided by Subsections (b) and (c) of this section, property owned by this state or a political subdivision of this state is exempt from taxation if the property is used for public purposes.
(b) Land owned by the Permanent University Fund is taxable for county purposes. Any notice required by Section 25.19 of this code shall be sent to the comptroller, and the comptroller shall appear in behalf of the state in any protest or appeal relating to taxation of Permanent University Fund land.
(c) Agricultural or grazing land owned by a county for the benefit of public schools under Article VII, Section 6, of the Texas Constitution is taxable for all purposes. The county shall pay the taxes on the land from the revenue derived from the land. If revenue from the land is insufficient to pay the taxes, the county shall pay the balance from the county general fund.
(d) Property owned by the state that is not used for public purposes is taxable. Property owned by a state agency or institution is not used for public purposes if the property is rented or leased for compensation to a private business enterprise to be used by it for a purpose not related to the performance of the duties and functions of the state agency or institution or used to provide private residential housing for compensation to members of the public other than students and employees of the state agency or institution owning the property, unless the residential use is secondary to its use by an educational institution primarily for instructional purposes. Any notice required by Section 25.19 of this code shall be sent to the agency or institution that owns the property, and it shall appear in behalf of the state in any protest or appeal related to taxation of the property.
(e) It is provided, however, that property that is held or dedicated for the support, maintenance, or benefit of an institution of higher education as defined in Chapter 61, Texas Education Code, but is not rented or leased for compensation to a private business enterprise to be used by it for a purpose not related to the performance of the duties and functions of the state or institution or is not rented or leased to provide private residential housing to members of the public other than students and employees of the state or institution is not taxable. All oil, gas, and other mineral interests owned by an institution of higher education are exempt from all ad valorem taxes. Property bequeathed to an institution is exempt from the assessment of ad valorem taxes from the date of the decedent's death, unless:
(1) the property is leased for compensation to a private business enterprise as provided in this subsection; or
(2) the transfer of the property to an institution is contested in a probate court. In this case, ad valorem taxes shall be assessed to the estate of the decedent until the final determination of the disposition of the property is made. The property is exempt from the assessment of ad valorem taxes upon vesting of the property in the institution.
(f) Property of a higher education development foundation or an alumni association that is located on land owned by the state for the support, maintenance, or benefit of an institution of higher education as defined in Chapter 61, Education Code, is exempt from taxation if:
(1) the foundation or organization meets the requirements of Sections 11.18(e) and (f) and is organized exclusively to operate programs or perform other activities for the benefit of institutions of higher education; and
(2) the property is used exclusively in those programs or activities.
(g) For purposes of this section, an improvement is owned by the state and is used for public purposes if it is:
(1) located on land owned by the Texas Department of Corrections;
(2) leased and used by the department; and
(3) subject to a lease-purchase agreement providing that legal title to the improvement passes to the department at the end of the lease period.
(h) For purposes of this section, tangible personal property is owned by this state or a political subdivision of this state if it is subject to a lease-purchase agreement providing that the state or political subdivision, as applicable, is entitled to compel delivery of the legal title to the property to the state or political subdivision, as applicable, at the end of the lease term. The property ceases to be owned by the state or political subdivision, as applicable, if, not later than the 30th day after the date the lease terminates, the state or political subdivision, as applicable, does not exercise its right to acquire legal title to the property.
(i) A corporation organized under the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes) that engages exclusively in providing chilled water and steam to an eligible institution, as defined by Section 301.031, Health and Safety Code, is entitled to an exemption from taxation of the property the corporation owns as though the property of the corporation were owned by this state and used for health or educational purposes.
Amended by 1981 Tex. Laws (1st C.S.), p. 127, ch. 13, Sec. 30; amended by 1983 Tex. Laws, p. 4821, ch. 851, Sec. 5; amended by 1983 Tex. Laws, p. 5419, ch. 1007, Sec. 1; amended by 1989 Tex. Laws, p. 3595, ch. 796, Sec. 14, and p. 4119, ch. 1021, Sec. 1; amended by 1989 Tex. Laws (6th C.S.), p. 90, ch. 12, Sec. 2; amended by 1991 Tex. Laws (2nd C.S.), p. 28, ch. 6, Sec. 9; amended by 1997 Tex. Laws, p. 2715, ch. 843, Sec. 1; amended by 2001 Tex. Laws, p. 629, ch. 362, Sec. 1.
Public property for public purposes, see art. VIII, Sec. 2 & art. IX, Sec. 9, Tex. Const.
County taxation of university lands, see art. VII, Sec. 16, Tex. Const.
Taxation of school lands, see art. VII, Sec. 6b, Tex. Const.
No application required, see Sec. 11.43(a).
Exemption effective immediately on qualification, see Sec. 11.42(b).
Proration of taxes where property is acquired by a governmental body, see Sec. 26.11.
Administration of exemptions generally, see Secs. 11.41 - 11.47.
Economic development corporation exemption, see Sec. 32, Art. 5190.6, V.A.C.S.
Housing finance corporation exemption, see Sec. 394.905, Local Government Code.
Article XI, Sec. 9, Tex. Const., applies only to property exclusively owned by a public entity, free of any kind of legal or equitable ownership. Satterlee v. Gulf Coast Waste Disposal Authority, 576 S.W.2d 773 (Tex. 1978).
Article VIII, Sec. 1, Tex. Const., requires taxation of "all property . . . whether owned by natural persons or corporations, other than municipal." Under a statute exempting all property owned by the state or a political subdivision regardless of use, city property leased to a private business is exempt from taxation. City of Beaumont v. Fertitta, 415 S.W.2d 902 (Tex. 1967).
Article VIII, Sec. 2, Tex. Const., which permits the legislature to exempt "public property used for public purposes," allows an exemption only for publicly owned property. Leander Independent School District v. Cedar Park Water Supply Corp., 479 S.W.2d 908 (Tex. 1972).
Article IX, Sec. 9, Tex. Const., which exempts ". . . property devoted to the use and benefit of the public," exempts publicly owned property used for public purposes. Lower Colorado River Authority v. Chemical Bank & Trust Co., 190 S.W.2d 48 (Tex. 1945).
Rural electrification lines owned by a home rule city outside its limits and within the boundaries of an independent school district were exempt from ad valorem taxation as public property used for public purposes. The test for "public purpose" is whether it is used primarily for health, comfort and welfare of the public. Incidental use of the property to generate revenue is permissible if the proceeds are used for the benefit of the public. A & M Consolidated Independent School District v. City of Bryan, 184 S.W.2d 914 (Tex. 1945).
Based on the trial court's actions following the 2001 remand of the property owner's claims (see 52 S.W.2d 795), the taxpayer reasserted a claim of exemption under Article XI, Section 9 of the Texas Constitution. The Court granted the appraisal district's jurisdictional plea based on the taxpayer's failure to exhaust its administrative remedies through protest. The claimed exemption was not automatic or self-operative due to the provisions of Sections 23.13 and 25.07 concerning taxable leaseholds and possessory interests. The taxpayer was not the owner of the land and improvement for which a public property exemption applied. Therefore, the taxpayer was required to conform to the Tax Code administrative requirements. Wackenhut Corrections Corp. v. Bexar Appraisal District, 100 S.W.3d 289 (Tex. App.-San Antonio 2002, no pet.).
State-owned property leased for private commercial use was not a public purpose for which an exemption applied. The lease was therefore subsumed by the fee estate and must be appraised accordingly. Land accounts in dispute would be tax exempt due to their ownership by The University of Texas and the State of Texas, but lost exempt status because of private commercial use, resulting in an appraisal at market value of the fee simple estate. Gables Realty Limited Partnership v. Travis Central Appraisal District, 81 S.W.3d 869 (Tex. App.-Austin 2002, pet. denied).
Section 25.25(d) does not provide for the appeal of the denial of an exemption. Taxpayer failed to timely file a protest under Chapter 41. Bexar Appraisal District v. Wackenhut Corrections Corporation, 52 S.W.3d 795 (Tex. App.-San Antonio 2001, no pet.).
Use of public property for public purposes must be exclusive for exemption as public property. A separate non-profit foundation that held legal title to a building and parking lot was affiliated with a public university that used 80 percent of the building and 33 percent of the parking lot. The foundation was denied the exemption because the foundation was not a public entity and because there was no existing written agreement between the foundation and the university allowing transfer of title to the university. Hays County Appraisal District v. Southwest Texas State University, 973 S.W.2d 419 (Tex. App.-Austin 1998).
The public property used for public purpose exemption is not lost when a county does not participate in the appraisal proceedings. Three counties did not lose their tax exemption when the counties did not challenge the property tax appraisal of a juvenile detention facility. While Tax Code Section 42.09 is the exclusive procedure for appealing a property tax appraisal, it does not bar the exemption granted political subdivisions by Article XI, Section 9, Texas Constitution. Sweetwater ISD v. ReCor, Inc., 955 S.W.2d 703 (Tex. App.-- Eastland 1997).
The burden of taxation falls on the owner of equitable title. The Texas Department of Corrections (TDC) held equitable title to improvements built and owned by a private corporation, but to which TDC would acquire full legal title when its "lease" payments were made. This property, used as a prison, was exempt as public property used for a public purpose. Texas Department of Corrections v. Anderson County Appraisal District, 834 S.W.2d 130 (Tex. App.-Tyler 1992, writ denied).
Acts taken by a political subdivision to maintain its own existence are acts for a public purpose. Property held by a political subdivision solely for resale is exempt from property taxation. Klein Independent School District v. Harris County Appraisal Review Board, et. al., 843 S.W.2d 201 (Tex. App.-Texarkana 1992, no writ).
A medical office building owned by a hospital district and partially leased to private doctors conducting their own practices was not exclusively used for the use and benefit of the public and not entitled to tax exempt status under this section. Enactment of this section repealed hospital exemption set out in art. 4437e, Sec. 16, VTCS. Grand Prairie Hospital Authority v. Dallas CAD, 730 S.W.2d 849 (Tex. App.-Dallas 1987, writ ref'd n.r.e.).
Property owned by a hospital authority with a portion leased to private doctors for their own commercial enterprise was not used exclusively for the use and benefit of the public and was not exempt as public property. A hospital authority must exhaust its procedural administrative remedies under the Tax Code before seeking judicial review. Grand Prairie Hospital Authority v. Tarrant Appraisal District, 707 S.W.2d 281 (Tex. App.-Fort Worth 1986, writ ref'd n.r.e.).
Foreclosed property held by the Veterans' Land Board, under mortgages issued from its funds, is exempt from property taxation. Holding such property for resale to replenish its funds is a public purpose. Op. Tex. Att'y Gen. No. GA-0026 (2003).
A building owned and operated by a hospital authority, but leased in part to a private business for operation as a "long-term care hospital," must satisfy the exclusive public use requirement to qualify for property tax exemption under Texas Constitution Article VIII, Section 2. To satisfy the exclusive public use requirement, the leased space must be used exclusively "for the health, comfort, and welfare of the public" served by the authority's hospital. Whether the proposed use of the leased space as a privately operated long-term care hospital satisfies the exclusive public use requirement necessitates investigation and resolution of facts. If the leased space is not used exclusively for public purposes, the authority would be liable under the law for taxes against the building. Op. Tex. Att'y Gen. No. JC-0571 (2002).
A building owned by Karnes County Hospital District but leased to physicians for their private medical practice is not exempt from property taxes. Private commercial use of publicly owned property destroys its tax-exempt status. Op. Tex. Att'y Gen. No. JC-311 (2000).
Whether the Karnes County Correctional Center is exempt as provided by Section 11.11 was a question of fact to be determined. It must be determined if the correctional center is publicly owned and used for a public purpose. Letter Op. Tex. Att'y Gen. No. DM-98-028 (1998).
State-owned land used for public purposes and exempt under Tax Code Section 11.11 is not subject to the agricultural use rollback tax in Tax Code Section 23.55. Opinion No. JM-949 (1988) held that acquisition alone does not trigger the rollback tax provisions. The rollback tax process is triggered when a change of use occurs from an agricultural use to a nonagricultural use. No Texas courts have addressed directly the rollback tax provision with regard to the state acquiring and changing a qualified land's use. The opinion disagreed with the State Property Tax Board's position in its 1990 rule for the Manual for the Appraisal of Agricultural Land that governmental acquisition and change of use of qualified agricultural land triggered the rollback provisions. Op. Tex. Att'y Gen. No. DM-448 (1997).
Airport property leased by the state to a private entity may be exempt from property taxes if the use is in direct support of the state's operation of the airport. A particular leased facility would be exempt from property taxes depending on the fact questions of the lease. Op. Tex. Att'y Gen. No. DM-436 (1997).
University-owned property will meet the public purpose test only if it is used for education purposes. State institutions of higher education have authority to undertake a wide variety of activities that are not strictly educational but that support the education mission of the university. University property operated not for education purposes but as an amusement park to generate income is not property used for a public purpose. However, the courts might find for a public purpose if continuing the operation of the amusement park for a short term was necessary while phasing in education activities. Op. Tex. Att'y Gen. No. DM-429 (1996).
A court must examine a specific contract's facts to determine if a jail facility that a county leases under a lease-purchase agreement from a private entity is subject to property taxes. A court likely would consider whether the county held equitable title to the jail facility and whether the county may compel the lessor to convey the property's legal title if the county meets all contract conditions. Op. Tex. Att'y Gen. No. DM-383 (1996).
The Rotary House, "a patient housing center," providing temporary accommodations for M.D. Anderson Cancer Center patients, their families and guests of the University of Texas, is public property used for a public purpose. Op. Tex. Att'y Gen. No. DM-272 (1993).
Contraband seized by peace officers pursuant to Chapter 59 of the Code of Criminal Procedure is exempt from taxation as public property. The property serves a public purpose because it can be used by law enforcement agencies for official purposes, or sold, with proceeds either deposited in the state treasury's general revenue fund or used for law enforcement purposes. Op. Tex. Att'y Gen. No. DM-187 (1992).
Contraband seized by peace officers pursuant to Chapter 59 of the Code of Criminal Procedure becomes tax-exempt from the time the state acquires title. Tax-exempt status applies as long as the property is owned by the state and used for public purposes. Id.
As a matter of law, the holdings in the cases of Grand Prairie Hosp. Auth. v. Tarrant Appraisal Dist. and Grand Prairie Hosp. Auth. v. Dallas County Appraisal Dist. do not prescribe that the LCRA's mineral interests are subject to taxation. If the LCRA holds its working interests in oil and gas wells exclusively for the public's benefit and use, the interests are exempt from ad valorem taxation. Op. Tex. Att'y Gen. No. DM-78 (1992).
A municipal airport hangar used to support the safe and efficient operation of the airport is exempt from taxation under Sections 11.11 and 25.05. However, when most of the aircraft stored and serviced at the hangar will be brought there solely for purposes of maintenance and storage and will not be used for transportation to and from the airport, the property is not exempt because it is not used exclusively for the benefit of the public. Public property used by private entities is tax-exempt if the private use is a public purpose or is in direct support of a public purpose. Property owned by a public entity and leased purely for private commercial use is not exempt. If a city owns buildings purely for the purpose of leasing them to private commercial interests, the buildings are not exempt. Putting the property to a constructive use pending its sale and depositing the proceeds to the credit of the public fund used to purchase the property does not deprive the property of its public purpose. Temporary rental of property owned by a city does not remove a tax exemption if the purpose for which the property was originally acquired was a public purpose and the city did not abandon this purpose when it leased the property for private use. Section 11.11(e), Tax Code, governs residences leased by a junior college to employees or students of the institution for private residential housing to non-students or persons not employed by the institution are not tax-exempt. Op. Tex. Att'y Gen. No. DM-188 (1992).
Property owned by a trust and used exclusively for the benefit of a state university was exempt from ad valorem taxation under Sec. 11.11(e). Op. Tex. Att'y Gen. No. JM-551 (1986).
A city is not exempt from ad valorem taxation on city-owned land surrounding an airport where such land is leased for commercial and agricultural purposes. Op. Tex. Att'y Gen. No. JM-464 (1986).
The fact that a hospital district receives remuneration for leasing a building owned by that district will not deprive that district of tax-exempt status on such property. Op. Tex. Att'y Gen. No. JM-405 (1985).
Concession rights in state parks were possessory interests taxable to the interest holder under Sec. 25.07 and not exempt under Sec. 11.11. Op. Tex. Att'y Gen. No. JM-59 (1983).
Offices in a hospital district's office building are taxable if sold under a condominium arrangement. Op. Tex. Att'y Gen. No. MW-430 (1981).
Housing provided by the state for its employees was used as a form of compensation and therefore used for public purposes. Op. Tex. Att'y Gen. No. MW-391 (1981).
(a) The governing body of a taxing unit by ordinance or order may exempt from ad valorem taxation residential property owned by the United States or an agency of the United States and used to provide transitional housing for the indigent under a program operated or directed by the United States Department of Housing and Urban Development.
(b) For purposes of this section, transitional housing for indigent individuals is housing provided at no cost or nominal cost to an indigent individual or family during a temporary period in which the individual or a member of the family participates in a job training program, job placement program, or other program intended to assist the individual or family to become self-sufficient.
(c) The exemption provided by this section applies even if the United States or its agency leases the property to a nonprofit organization in return for the organization's assistance in operating the program to provide transitional housing, as long as the lease does not require the nonprofit organization to pay more than a nominal amount to lease the property.
Added by 1991 Tex. Laws, p. 2710, ch. 762, Sec. 13.
Annual application required, see Sec. 11.43(b).
Exemption application form, see Rule Sec. 9.415.
Property exempt from ad valorem taxation by federal law is exempt from taxation.
No application required, see Sec. 11.43(a).
Jurisdiction to tax, see Sec. 11.01.
Interstate allocation, see Sec. 21.03.
Allocation of vessels and other watercraft, see Secs. 21.021 & 21.031.
Foreign trade zones constitute foreign and, hence, interstate commerce, so they are in the purview of U. S. Congress. Imposing local property taxes on the property in foreign trade zones would affect interstate and foreign commerce, and forbidding such taxes would provide uniform treatment of foreign trade zones throughout the country. The exemption from local property taxes does not violate the Tenth Amendment nor the Guarantee Clause of the U. S. Constitution. Deer Park Independent School District et al. v. Harris County Appraisal District et al, 132 F.3d 1095 (U.S. 5th Cir. 1998, petition denied).
Rule in Harris Co. v. Xerox (below) does not apply to goods in a customs warehouse bound for domestic distribution. These goods can be taxed. R.J. Reynolds v. Durham County, N.C., 107 S.Ct. 499 (1986).
Goods stored in a U.S. customs warehouse under customs bond could not be taxed by the city of Houston. The U.S. Congress created these duty-free zones as part of a comprehensive scheme to encourage use of American ports as centers for goods in foreign trade. State property taxes on goods located within the area were pre-empted by action of Congress. Harris County v. Xerox Corp., 103 S.Ct. 523 (1982).
As a general rule, property of the federal government is not taxable unless it is being used by a private party. In that instance, as with property of the state and its political subdivisions, the possessory interest of the private party is taxable. See United States v. County of Fresno, 429 U.S. 452, 50 L.Ed.2d 683, 97 S.Ct. 699 (1977).
Congress has the sole authority to determine whether and to what extent its agencies are immune from state taxation, and any waiver of immunity is strictly construed. Reconstruction Finance Corp. v. State of Texas, 229 F.2d 9 (5th Cir. 1956), cert. denied, 76 S.Ct. 695, 351 U.S. 907, 100 L.Ed. 1442 (1956).
An exporter that detains goods in a warehouse while awaiting overseas export is entitled to a property tax exemption under the Commerce Clause and the Equal Protection Clause of the United States Constitution. Taxation would prevent the federal government from speaking with one voice in its regulation of commercial relations with foreign governments. Vinmar, Inc. v. Harris County Appraisal District, 947 S.W.2d 554 (Tex. 1997).
Even though property owned by private persons contained leasehold interests of a federal entity, the appraisal district must appraise lessors' property at its full fee simple value. Leaseholds held by the Postal Service were not exempt from taxation because their value did not affect the value of the fee simple, which already included the value of any leasehold interests. Dallas Central Appraisal Dist. v. United States Postal Service, 866 S.W.2d 209 (Tex. 1993).
An exempt organization must narrowly define the recipients of the organization's dissolved assets to insure that they fit within the Property Tax Code's delineated list of exempt entities. Failure to do so allowed the appraisal district to deny exempt status to the organization, thereby allowing the organization's land to be taxed. Since there is no federal law preemption of this Code requirement, the appraisal district could legally deny the exemption. Mission Palms Retirement Housing, Inc. v. Hidalgo County Appraisal District, 896 S.W.2d 819 (Tex. App.-Corpus Christi 1995, no writ).