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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. Repealed in 2003.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]

Sec. 11.184. Organizations Engaged Primarily in Performing Charitable Functions.

(a) In this section:

(1) "Local charitable organization" means an organization that:

(A) is a chapter, subsidiary, or branch of a statewide charitable organization; and

(B) with respect to its activities in this state, is engaged primarily in performing functions listed in Section 11.18(d).

(2) "Qualified charitable organization" means a statewide charitable organization or a local charitable organization.

(3) "Statewide charitable organization" means a statewide organization that, with respect to its activities in this state, is engaged primarily in performing functions listed in Section 11.18(d).

(b) An exemption under this section may not be granted unless the exemption is adopted either:

(1) by the governing body of the taxing unit; or

(2) by a favorable vote of a majority of the qualified voters of the taxing unit at an election called by the governing body of a taxing unit, and the governing body shall call the election on the petition of at least 20 percent of the number of qualified voters who voted in the preceding election of the taxing unit.

(c) If approved under Subsection (b), a qualified charitable organization is entitled to an exemption from taxation of:

(1) the buildings and other real property and the tangible personal property that:

(A) are owned by the organization; and

(B) except as permitted by Subsection (d), are used exclusively by the organization and other organizations eligible for an exemption from taxation under this section or Section 11.18; and

(2) the real property owned by the organization consisting of:

(A) an incomplete improvement that:

(i) is under active construction or other physical preparation; and

(ii) is designed and intended to be used exclusively by the organization and other organizations eligible for an exemption from taxation under this section or Section 11.18; and

(B) the land on which the incomplete improvement is located that will be reasonably necessary for the use of the improvement by the organization and other organizations eligible for an exemption from taxation under this section or Section 11.18.

(d) Use of exempt property by persons who are not charitable organizations eligible for an exemption from taxation under this section or Section 11.18 does not result in the loss of an exemption authorized by this section if the use is incidental to use by those charitable organizations and limited to activities that benefit the charitable organization that owns or uses the property.

(e) Before an organization may submit an application for an exemption under this section, the organization must apply to the comptroller for a determination of whether the organization is engaged primarily in performing functions listed in Section 11.18(d) and is eligible for an exemption under this section. In making the determination, the comptroller shall consider:

(1) whether the organization is recognized by the Internal Revenue Service as a tax-exempt organization under Section 501 of the Internal Revenue Code of 1986;

(2) whether the organization holds a letter of exemption issued by the comptroller certifying that the organization is entitled to issue an exemption certificate under Section 151.310;

(3) whether the charter or bylaws of the organization require charitable work or public service;

(4) the amount of monetary support contributed or in-kind charitable or public service performed by the organization in proportion to:

(A) the organization's operating expenses;

(B) the amount of dues received by the organization; and

(C) the taxes imposed on the organization's property during the preceding year if the property was taxed in that year or, if the property was exempt from taxation in that year, the taxes that would have been imposed on the property if it had not been exempt from taxation; and

(5) any other factor the comptroller considers relevant.

(f) Not later than the 30th day after the date the organization submits an application under Subsection (e), the comptroller may request that the organization provide additional information the comptroller determines necessary. Not later than the 90th day after the date the application is submitted or, if applicable, the date the additional information is provided, the comptroller shall issue a letter to the organization stating the comptroller's determination.

(g) The comptroller may:

(1) adopt rules to implement this section;

(2) prescribe the form of an application for a determination letter under this section; and

(3) charge an organization a fee not to exceed the administrative costs of processing a request, making a determination, and issuing a determination letter under this section.

(h) An organization applying for an exemption under this section shall submit with the application a copy of the determination letter issued by the comptroller under Subsection (f). The chief appraiser shall accept the copy of the letter as conclusive evidence as to whether the organization engages primarily in performing charitable functions and is eligible for an exemption under this section.

(i) A property may not be exempted under Subsection (c)(2) for more than five years.

(j) For purposes of Subsection (c)(2), an incomplete improvement is under physical preparation if the charitable organization 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.

(k) An exemption under this section expires at the end of the fifth tax year after the year in which the exemption is granted. To continue to receive an exemption under this section after that year, the organization must obtain a new determination letter and reapply for the exemption.

Added by 2001 Tex. Laws, p. 2178, ch. 1040, Sec. 1; amended by HB 2416, 78th Tex. Leg., 2003, effective June 18, 2003.

Cross References:

One-time application required, see Sec. 11.43(b).
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Exception from January 1 qualifications, see Sec. 11.436.
Exemption application form, see Rule Sec. 9.415.
Prorating taxes, see Sec. 26.111.
Model application form, see Rule Sec. 9.415.

Notes:

HB 2416, 78th Tex. Leg, 2003, effective June 18, 2003, applies for the 2003 tax year regardless of whether the property owner applied for the exemption, if the owner qualified for the three years preceding the 2003 tax year. For the 2006 tax year, HB 2416 changes the five years for an incomplete improvement back to three years, effective January 1, 2006.

HB 1689, 77th Tex. Leg., 2001, provided that an organization may not receive an exemption under Section 11.184 before the tax year that begins January 1, 2002.

Sec. 11.185. Colonia Model Subdivision Program.

(a) An organization is entitled to an exemption from taxation of unimproved real property it owns if the organization:

(1) meets the requirements of a charitable organization provided by Sections 11.18(e) and (f);

(2) purchased the property or is developing the property with proceeds of a loan made by the Texas Department of Housing and Community Affairs under the colonia model subdivision program under Subchapter GG, Chapter 2306, Government Code; and

(3) owns the property for the purpose of developing a model colonia subdivision.

(b) Property may not be exempted under Subsection (a) after the fifth anniversary of the date the organization acquires the property.

(c) An organization entitled to an exemption under Subsection (a) is also entitled to an exemption from taxation of any building or tangible personal property the organization owns and uses in the administration of its acquisition, building, repair, or sale of property. To qualify for an exemption under this subsection, property must be used exclusively by the charitable organization, except that another individual or organization may use the property for activities incidental to the charitable organization's use that benefit the beneficiaries of the charitable organization.

(d) For the purposes of Subsection (e), the chief appraiser shall determine the market value of property exempted under Subsection (a) and shall record the market value in the appraisal records.

(e) If the organization that owns improved or unimproved real property that has been exempted under Subsection (a) sells the property to a person other than a person described by Section 2306.786(b)(1), Government Code, a penalty is imposed on the property equal to the amount of the taxes that would have been imposed on the property in each tax year that the property was exempted from taxation under Subsection (a), plus interest at an annual rate of 12 percent computed from the dates on which the taxes would have become due.

Added by 2001 Tex. Laws, p. 3245, ch. 1367, Sec. 2.14; amended by HB 3506, 78th Tex. Leg., 2003, effective September 1, 2003.

Cross References:

Annual application required, see Sec. 11.43(b).
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Filing deadline, see Sec. 11.43(d).

Sec. 11.19. Youth Spiritual, Mental, and Physical Development Associations.

(a) An association that qualifies as a youth development association as provided by Subsection (d) is entitled to an exemption from taxation of:

(1) the tangible property that:

(A) is owned by the association;

(B) except as permitted by Subsection (b), is used exclusively by qualified youth development associations; and

(C) is reasonably necessary for the operation of the association; and

(2) the real property owned by the youth development association consisting of:

(A) an incomplete improvement that:

(i) is under active construction or other physical preparation; and

(ii) is designed and intended to be used exclusively by qualified youth development associations when complete; and

(B) the land on which the incomplete improvement is located that will be reasonably necessary for the use of the improvement by qualified youth development associations.

(b) Use of exempt tangible property by persons who are not youth development associations qualified as provided by Subsection (d) of this section does not result in the loss of an exemption under this section if the use is incidental to use by qualified associations and benefits the individuals the associations serve.

(c) An association that qualifies as a youth development association as provided by Subsection (d) of this section is entitled to an exemption from taxation of those endowment funds the association owns that are used exclusively for the support of the association and are invested exclusively in bonds, mortgages, or property purchased at a foreclosure sale for the purpose of satisfying or protecting the bonds or mortgages. However, foreclosure-sale property that is held by an endowment fund for longer than the two-year period immediately following purchase at the foreclosure sale is not exempt from taxation.

(d) To qualify as a youth development association for the purposes of this section, an association must:

(1) be organized and operated primarily for the purpose of promoting the threefold spiritual, mental, and physical development of boys, girls, young men, or young women;

(2) 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;

(3) operate in conjunction with a state or national organization that is organized and operated for the same purpose as the association;

(4) use its assets in performing the association's youth development functions or the youth development functions of another youth development association; and

(5) by charter, bylaw, or other regulation adopted by the association to govern its affairs direct that on discontinuance of the association by dissolution or otherwise the assets are to be transferred to this state, the United States, or a charitable, educational, religious, or other similar organization that is qualified as a charitable organization under Section 501(c)(3), Internal Revenue Code of 1954, as amended.

(e) A property may not be exempted under Subsection (a)(2) for more than five years.

(f) For purposes of Subsection (a)(2), an incomplete improvement is under physical preparation if the youth development association 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. 129, ch. 13, Sec. 34; amended by 1997 Tex. Laws, p. 3900, ch. 1039, Sec. 8, and p. 5286, ch. 1411, Sec. 2; amended by 1999 Tex. Laws, p. 597, ch. 138, Sec. 2; amended by HB 2416, 78th Tex. Leg., 2003, effective June 18, 2003.

Cross References:

Exemption application form, see Rule Sec. 9.415.
Annual application not required, see Sec. 11.43(c).
Conflicts with United States government contract, see Sec. 11.424.
Immediate qualification for property acquired after January 1, see Sec. 11.42(c).
Filing another application if denied for failure to meet requirement, see Sec. 11.423.
Filing deadline for property acquired after January 1, see Sec. 11.43(d).
Prorating taxes for exemption for part of tax year, see Secs. 26.112 and 26.113.
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.

Notes:

HB 2416, 78th Tex. Leg, 2003, effective June 18, 2003, applies for the 2003 tax year regardless of whether the property owner applied for the exemption, if the owner qualified for the three years preceding the 2003 tax year. For the 2006 tax year, HB 2416 changes the five years for an incomplete improvement back to three years, effective January 1, 2006.

An organization whose primary purpose was religious in nature could not qualify its property under Sec. 11.19(a), which requires the organization to engage primarily in youth spiritual, mental, and physical development. Texas Conference Ass'n of Seventh Day Adventists v. Leander Independent School District, 669 S.W.2d 353 (Tex. App.-Austin 1984), aff'd 679 S.W.2d 487 (Tex. 1984).

The question regarding the exempt status of property does not always involve only a question of law but the exemption depends on the character and nature of the land's use. Where there is conflicting evidence, the trier of fact must resolve the question raised by conflicting testimony. Youth Camps, Inc. v. Comfort Independent School District, 705 S.W.2d 333 (Tex. App.-San Antonio 1986, no writ).

Qualification of agricultural open-space land owned by a youth development association qualified for a property tax exemption does not itself constitute a change of use for purposes of the rollback tax, when the land continues to be used for agricultural purposes. Referring to Opinion No. JM-667 (1987), no change of use occurs if the land continues to be used for agricultural purposes even though the land may no longer qualify for open-space land appraisal. Op. Tex. Att'y Gen. No. JC-299 (2000).

Sec. 11.20. Religious Organizations.

(a) An organization that qualifies as a religious organization as provided by Subsection (c) is entitled to an exemption from taxation of:

(1) the real property that is owned by the religious organization, is used primarily as a place of regular religious worship, and is reasonably necessary for engaging in religious worship;

(2) the tangible personal property that is owned by the religious organization and is reasonably necessary for engaging in worship at the place of worship specified in Subdivision (1);

(3) the real property that is owned by the religious organization and is reasonably necessary for use as a residence (but not more than one acre of land for each residence) if the property:

(A) is used exclusively as a residence for those individuals whose principal occupation is to serve in the clergy of the religious organization; and

(B) produces no revenue for the religious organization;

(4) the tangible personal property that is owned by the religious organization and is reasonably necessary for use of the residence specified by Subdivision (3);

(5) the real property owned by the religious organization consisting of:

(A) an incomplete improvement that is under active construction or other physical preparation and that is designed and intended to be used by the religious organization as a place of regular religious worship when complete; and

(B) the land on which the incomplete improvement is located that will be reasonably necessary for the religious organization's use of the improvement as a place of regular religious worship;

(6) the land that the religious organization owns for the purpose of expansion of the religious organization's place of regular religious worship or construction of a new place of regular religious worship if:

(A) the religious organization qualifies other property, including a portion of the same tract or parcel of land, owned by the organization for an exemption under Subdivision (1) or (5); and

(B) the land produces no revenue for the religious organization; and

(7) the real property owned by the religious organization that is leased to another person and used by that person for the operation of a school that qualifies as a school under Section 11.21(d).

(b) An organization that qualifies as a religious organization as provided by Subsection (c) of this section is entitled to an exemption from taxation of those endowment funds the organization owns that are used exclusively for the support of the religious organization and are invested exclusively in bonds, mortgages, or property purchased at a foreclosure sale for the purpose of satisfying or protecting the bonds or mortgages. However, foreclosure-sale property that is held by an endowment fund for longer than the two-year period immediately following purchase at the foreclosure sale is not exempt from taxation.

(c) To qualify as a religious organization for the purposes of this section, an organization (whether operated by an individual, as a corporation, or as an association) must:

(1) be organized and operated primarily for the purpose of engaging in religious worship or promoting the spiritual development or well-being of individuals;

(2) 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;

(3) use its assets in performing the organization's religious functions or the religious functions of another religious organization; and

(4) by charter, bylaw, or other regulation adopted by the organization to govern its affairs direct that on discontinuance of the organization by dissolution or otherwise the assets are to be transferred to this state, the United States, or a charitable, educational, religious, or other similar organization that is qualified as a charitable organization under Section 501(c)(3), Internal Revenue Code of 1954, as amended.

(d) Use of property that qualifies for the exemption prescribed by Subsection (a)(1) or (2) or by Subsection (h)(1) for occasional secular purposes other than religious worship does not result in loss of the exemption if the primary use of the property is for religious worship and all income from the other use is devoted exclusively to the maintenance and development of the property as a place of religious worship.

(e) For the purposes of this section, "religious worship" means individual or group ceremony or meditation, education, and fellowship, the purpose of which is to manifest or develop reverence, homage, and commitment in behalf of a religious faith.

(f) A property may not be exempted under Subsection (a)(5) for more than five years.

(g) For purposes of Subsection (a)(5), an incomplete improvement is under physical preparation if the religious organization has engaged in architectural or engineering work, soil testing, land clearing activities, or site improvement work necessary for the construction of the improvement or has conducted an environmental or land use study relating to the construction of the improvement.

Text of Subsections (h) and (i) added by HB 1278, 78th Tex. Leg., 2003, effective January 1, 2004:

(h) A tract of land that is contiguous to the tract of land on which the religious organization's place of regular religious worship is located may not be exempted under Subsection (a)(6) for more than six years. A tract of land that is not contiguous to the tract of land on which the religious organization's place of regular religious worship is located may not be exempted under Subsection (a)(6) for more than three years. For purposes of this subsection, a tract of land is considered to be contiguous with another tract of land if the tracts are divided only by a road, railroad track, river, or stream.

(i) For purposes of Subsection (a)(6), an application or statement accompanying an application for the exemption stating that the land is owned for the purposes described by Subsection (a)(6) and signed by an authorized officer of the organization is sufficient to establish that the land is owned for those purposes.

Text of Subsections (h) and (i) added by HB 2383, 78th Tex. Leg., 2003, effective January 1, 2004:

(h) Property owned by this state or a political subdivision of this state, including a leasehold or other possessory interest in the property, that is held or occupied by an organization that qualifies as a religious organization as provided by Subsection (c) is entitled to an exemption from taxation if the property:

(1) is used by the organization primarily as a place of regular religious worship and is reasonably necessary for engaging in religious worship; or

(2) meets the qualifications for an exemption under Subsection (a)(5).

(i) For purposes of the exemption provided by Subsection (h), the religious organization may apply for the exemption and take other action relating to the exemption as if the organization owned the property.

Amended by 1981 Tex. Laws (1st C.S.), p. 129, ch. 13, Sec. 35; amended by 1987 Tex. Laws, ch. 640, Sec. 1; amended by 1995 Tex. Laws, p. 3167, ch. 458, Sec. 1; amended 1997 Tex. Laws, p. 3900, ch. 1039, Sec. 9, and p. 5286, ch. 1411, Sec. 30; amended by 1999 Tex. Laws, p. 597, ch. 138, Sec. 3; amended by HB 2416, 78th Tex. Leg., 2003, effective June 18, 2003; amended by HB 1278, 78th Tex. Leg., 2003, effective January 1, 2004; amended by HB 2383, 78th Tex. Leg., 2003, effective January 1, 2004.

Cross References:

Exemption application form, see Rule Sec. 9.415.
Annual application not required, see Sec. 11.43(c).
Conflicts with United States government contract, see Sec. 11.424.
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Immediate qualification for property acquired after January 1, see Sec. 11.42(d).
Filing another application if denied for failure to meet requirement, see Sec. 11.423.
Filing deadline for property acquired after January 1, see Sec. 11.43(d).
Prorating taxes for exemption for part of tax year, see Secs. 26.112 and 26.113.
Sale of certain religious property and additional taxes, see Sec. 11.201.

Notes:

HB 2416, 78th Tex. Leg, 2003, effective June 18, 2003, applies for the 2003 tax year regardless of whether the property owner applied for the exemption, if the owner qualified for the three years preceding the 2003 tax year. For the 2006 tax year, HB 2416 changes the five years for an incomplete improvement back to three years, effective January 1, 2006.

Property Tax Code Section 11.433 is a constitutional act of the Texas Legislature. Therefore, a retroactive exemption of a religious organization's property is valid so long as taxes have not been paid on the property. Corpus Christi People's Baptist Church, Inc. v. Nueces County Appraisal District, 904 S.W.2d 621 (Tex. 1995).

While the "actual use" of the property (in this case, parking lots) is an important factor in determining if its primary use is for religious purposes, it is not the only consideration. The property's use must be examined on a qualitative, as well as a quantitative, basis. First Baptist Church of San Antonio v. Bexar County Appraisal Review Board, 833 S.W.2d 108 (Tex. 1992).

Evidence that a parking lot was purchased to ensure adequate church parking, that church's primary use of the lot was to give church members access to church facilities, that the church always had 40 spaces reserved for church members and the remainder was reserved for the church at all times except Monday through Friday, 7:30 to 5:30; that the church had the right to use the lots on Valero's holidays; and that the lots were used regularly by church members on Sundays and Wednesday evenings, sometimes on Saturdays and for special events throughout the week was evidence on which a jury could find that parking lots were used primarily for religious purposes. Id.

A church which leased parking lots during the week to an operator who in turn charged for parking could still claim tax exempt status for the parking lots provided that the income received by the church from the property was used entirely for the purpose of maintaining and developing the property as a place of religious worship. City of Austin v. University Christian Church, 768 S.W.2d 718 (Tex. 1988).

The supreme court affirmed the court of appeals decision that the definition of religious worship set out in this section did not expand the constitutional authorization for the exemption. The court also held that a finding that all land and buildings within a 1,000 foot radius of a lodge used both for worship and as a cafeteria were actual places of religious worship or reasonably necessary for religious worship was supported by the evidence. Texas Conference Ass'n of Seventh Day Adventists v. Leander Independent School District, 669 S.W.2d 353 (Tex. App.-Austin 1984), aff'd 679 S.W.2d 487 (Tex. 1984).

Tax exempt status is denied to a church camp, except for portions of the camp used for minister's residence and an open air chapel. The supreme court noted that educational activities took place at the camp, and that while education may be a part of worship, it is not necessarily the same as worship. The court distinguished between a place of religious worship and a place of religious education, holding that the majority of the camp was devoted to the latter, and thus not qualified for exemption. Davies v. Meyer, 541 S.W.2d 827 (Tex. 1976).

The exemption extends to land, buildings, and personal property used exclusively for housing professional clergy. The exemption applies to housing for administrative and supervisory personnel, as long as they are in the clergy, as well as to local pulpit ministers. McCreless v. City of San Antonio, 454 S.W.2d 393 (Tex. 1970).

This case replaces the previous Fourth Court of Appeals decision, Bexar County Appraisal Review Bd. v. First Baptist Church, 800 S.W.2d 892 (Tex. App.-San Antonio 1990), which was reversed by the Supreme Court in Bexar County Appraisal Review Bd. v. First Baptist Church, 833 S.W.2d 108 (Tex. 1992). The cause came back to the Fourth Court of Appeals for consideration of points of error not reached in the previous decision. The court dismissed all points of error, except for the award of attorney's fees to the church, which the court denied. Bexar County Appraisal Review Board v. First Baptist Church, 846 S.W.2d 554 (Tex. App.-San Antonio 1993, writ denied).

Taxpayer must present legally sufficient evidence that primary use of a property is religious before the question will be submitted to jury. First Baptist Church of San Antonio v. Bexar County Appraisal Review Board, 800 S.W.2d 892 (Tex. App.-San Antonio, 1990), rev'd 833 S.W.2d 108 (Tex. 1992).

The exempt status of a church could not be raised in a suit for delinquent taxes. The church failed to include the appraisal district as a party to the lawsuit, so that no action could be taken on its counterclaim concerning denial of its late application and qualification for exemption as a religious organization. The Tax Code remedies are exclusive. St. Joseph Orthodox Christian Church v. Spring Branch Independent School District, 110 S.W.3d 477 (Tex. App.-Houston [14th Dist.] 2003, no pet.).

The primary use of a religious organization's property is a question of fact. University Christian Church v. City of Austin, 789 S.W.2d 361 (Tex. App.-Austin 1990, no writ).

Church parking lot leased and used regularly for university student parking was reasonably necessary for religious worship and qualified as property used with the sanctuary as property "used primarily as place of regular religious worship." University Christian Church v. City of Austin, 724 S.W.2d 94 (Tex. App.-Austin 1986) rev'd, 768 S.W.2d 718 (Tex. 1988).

Church was entitled to exemption of only that acreage used with its tabernacle and not to the remaining acreage used as a range for animals owned by the church and for walking, health, welfare, and education of its members. The two rules of construction in Davies v. Meyer, 541 S.W.2d 827 (Tex. 1976) must be followed. General Association Branch Davidian Seventh Day Adventist v. McLennan County Appraisal District, 715 S.W.2d 391 (Tex. App.-Waco 1986, writ ref'd n.r.e.).

An actual place of religious worship need not be an enclosed structure; the evidence was sufficient to support a jury finding that an entire 64-acre contiguous tract was an actual place of religious worship. The presence of dormitories, cooking facilities, a swimming pool, and a recreation program did not defeat the exemption where the land itself would qualify. Collateral programs taking place on the land did not defeat the exemption. However, 23 additional lots separated by a street from the 64-acre tract were not places of religious worship merely because their development would interfere with the worship on the tract. Kerrville Independent School Dist. v. Southwest Texas Encampment Ass'n, 673 S.W.2d 256 (Tex. App.-San Antonio 1984, writ ref'd n.r.e.).

Use of the property as a place of religious worship must be both primary and regular for the property to qualify for an exemption. Earle v. Program Centers of Grace Union Presbytery, Inc., 670 S.W.2d 777 (Tex. App.-Ft. Worth 1984, no writ).

A radio and television studio used for religious programming was an actual place of religious worship under Sec. 11.20. More restrictive distinctions between religious work and religious worship probably do not apply under the new statute. The studio was a separately secured part of a building, and the exemption applied only to that part of the building. The remainder of the building was rented to commercial tenants, and therefore taxable. Highland Church of Christ v. Powell, 644 S.W.2d 177 (Tex. App.-Eastland 1983, writ ref'd n.r.e.), distinguishing Davies v. Meyer, 541 S.W.2d 827 (Tex. 1976). See also Swearingen v. City of Texarkana, 596 S.W.2d 157 (Tex. App.-Texarkana 1979, ref'd n.r.e.); Radio Bible Hour, Inc. v. Hurst-Euless Independent School District, 341 S.W.2d 467 (Tex. App.-Fort Worth 1960, ref'd n.r.e.).

Tax Code Section 11.20 supported its holding under art. 7150 (now repealed) that a bookstore operated by a religious organization could qualify for the exemption only if it functioned as an actual place of religious worship. Mere dissemination of religious information was insufficient for that purpose. Swearingen v. City of Texarkana, 596 S.W.2d 157 (Tex. Civ. App.-Texarkana 1979).

The Constitution did not require exclusive use of property as an actual place of religious worship. The court also said that occasional rental of parts of a synagogue did not destroy the exemption where the proceeds were used for the maintenance of the synagogue. Davis v. Congregation Agudas Achim, 456 S.W.2d 459 (Tex. App.-San Antonio 1970, no writ).

A house owned by a religious organization and used to house a needy family was not an actual place of religious worship. A tax lien on property in the hands of the church could be foreclosed, even though the church was not the owner at the time the lien attached. Op. Tex. Att'y Gen. No. MW-553 (1982).

Sec. 11.201. Additional Tax on Sale of Certain Religious Organization Property.

(a) If land is sold or otherwise transferred to another person in a year in which the land receives an exemption under Section 11.20(a)(6), an additional tax is imposed on the land equal to the tax that would have been imposed on the land had the land been taxed for each of the five years preceding the year in which the sale or transfer occurs in which the land received an exemption under that subsection, plus interest at an annual rate of seven percent calculated from the dates on which the taxes would have become due.

(b) A tax lien attaches to the land on the date the sale or transfer occurs to secure payment of the tax and interest imposed by this section and any penalties incurred. The lien exists in favor of all taxing units for which the tax is imposed.

(c) If only part of a parcel of land that is exempted under Section 11.20(a)(6) is sold or transferred, the tax applies only to that part of the parcel and equals the taxes that would have been imposed had that part been taxed.

(d) The assessor for each taxing unit shall prepare and deliver a bill for the additional taxes plus interest as soon as practicable after the sale or transfer occurs. The taxes and interest are due and become delinquent and incur penalties and interest as provided by law for ad valorem taxes imposed by the taxing unit if not paid before the next February 1 that is at least20 days after the date the bill is delivered to the owner of the land.

(e) The sanctions provided by Subsection (a) do not apply if the sale or transfer occurs as a result of:

(1) a sale for right-of-way;

(2) a condemnation;

(3) a transfer of property to the state or a political subdivision of the state to be used for a public purpose; or

(4) a transfer of property to a religious organization that qualifies the property for an exemption under Section 11.20 for the tax year in which the transfer occurs.

Added by HB 1278, 78th Tex. Leg., 2003, effective January 1, 2004.

Cross References:

Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Prorating taxes for exemption for part of tax year, see Secs. 26.112 and 26.113.

Sec. 11.21. Schools.

(a) A person is entitled to an exemption from taxation of:

(1) the buildings and tangible personal property that the person owns and that are used for a school that is qualified as provided by Subsection (d) if:

(A) the school is operated exclusively by the person owning the property;

(B) except as permitted by Subsection (b), the buildings and tangible personal property are used exclusively for educational functions; and

(C) the buildings and tangible personal property are reasonably necessary for the operation of the school.

(2) the real property owned by the person consisting of:

(A) an incomplete improvement that:

(i) is under active construction or other physical preparation; and

(ii) is designed and intended to be used for a school that is qualified as provided by Subsection (d); and

(B) the land on which the incomplete improvement is located that will be reasonably necessary for the use of the improvement for a school that is qualified as provided by Subsection (d).

(b) Use of exempt tangible property for functions other than educational functions does not result in loss of an exemption authorized by this section if those other functions are incidental to use of the property for educational functions and benefit the students or faculty of the school.

(c) A person who operates a school that is qualified as provided by Subsection (d) of this section is entitled to an exemption from taxation of those endowment funds he owns that are used exclusively for the support of the school and are invested exclusively in bonds, mortgages, or property purchased at a foreclosure sale for the purpose of satisfying or protecting the bonds or mortgages. However, foreclosure-sale property that is held by an endowment fund for longer than the two-year period immediately following purchase at the foreclosure sale is not exempt from taxation.

(d) To qualify as a school for the purposes of this section, an organization (whether operated by an individual, as a corporation, or as an association) must:

(1) be organized and operated primarily for the purpose of engaging in educational functions;

(2) normally maintain a regular faculty and curriculum and normally have a regularly organized body of students in attendance at the place where its educational functions are carried on;

(3) 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 and, if the organization is a corporation, be organized as a nonprofit corporation as defined by the Texas Non-Profit Corporation Act;

(4) use its assets in performing the organization's educational functions or the educational functions of another educational organization; and

(5) by charter, bylaw, or other regulation adopted by the organization to govern its affairs direct that on discontinuance of the organization by dissolution or otherwise the assets are to be transferred to this state, the United States, or an educational, charitable, religious, or other similar organization that is qualified as a charitable organization under Section 501(c)(3), Internal Revenue Code of 1954, as amended.

(e) In this section, "building" includes the land that is reasonably necessary for use of, access to, and ornamentation of the building.

(f) Notwithstanding Subsection (a), a person is entitled to an exemption from taxation of the buildings and tangible personal property the person acquires for use for a school that meets each requirement of Subsection (d) if:

(1) the person authorizes the former owner to continue to use the property pending the use of the property for a school; and

(2) the former owner would be entitled to an exemption from taxation of the property if the former owner continued to own the property.

(g) A property may not be exempted under Subsection (a)(2) for more than five years.

(h) For purposes of Subsection (a)(2), 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. 36; amended by 1997 Tex. Laws, p. 3901, ch. 1039, Sec. 10; p. 4930, ch. 1293, Sec. 1; and p. 5286, ch. 1411, Sec. 4; amended by 1999 Tex. Laws, p. 597, ch. 138, Sec. 4; amended by HB 2416, 78th Tex. Leg., 2003, effective June 18, 2003.

Cross References:

Exemption application form, see Rule Sec. 9.415.
Annual application not required, see Sec. 11.43(c).
Conflicts with United States government contract, see Sec. 11.424.
Immediate qualification for property acquired after January 1, see Sec. 11.42(c).
Filing another application if denied for failure to meet requirement, see Sec. 11.423.
Filing deadline for property acquired after January 1, see Sec. 11.43(d).
Prorating taxes for exemption for part of tax year, see Secs. 26.112 and 26.113.
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.

Notes:

HB 2416, 78th Tex. Leg, 2003, effective June 18, 2003, applies for the 2003 tax year regardless of whether the property owner applied for the exemption, if the owner qualified for the three years preceding the 2003 tax year. For the 2006 tax year, HB 2416 changes the five years for an incomplete improvement back to three years, effective January 1, 2006.

HB 2383, 75th Tex. Leg., 1997, provides that the chief appraiser of an appraisal district shall accept and approve or deny an application for an exemption from ad valorem taxation under Section 11.21(f), Tax Code, for the ad valorem tax year that began January 1, 1997, if the application is filed as provided by Section 11.434.

To qualify for exemption under the constitution, school property must be owned exclusively by the persons who operate the school. The supreme court has held that where one partner of a partnership operating a school owned no interest in the property, the property could not qualify for exemption. Smith v. Feather, 234 S.W.2d 418 (Tex. 1951).

Where school operators lease a building and use it for a school, the building cannot qualify for the exemption. Red v. Morris, 72 Tex. 554, 10 S.W. 681 (Tex. 1889).

A center that was primarily a child care facility and only an education facility secondarily did not qualify for exemption as a school. If the center's primary function had been education, the amount of daycare provided was not an incidental use of the property. Circle C Child Development Center, Inc. v. Travis Central Appraisal District, 981 S.W.2d 483 (Tex. App.-Austin 1998).

House owned by a college and used primarily as the residence of the college's president was not exempt from property taxation because it was not used primarily for educational purposes. Bexar Appraisal District and Bexar County Appraisal Review Board v. Incarnate Word College, 824 S.W.2d 295 (Tex. App.-San Antonio 1992, writ denied).

School owners must comply with code administrative provisions for appealing the denial of the school exemption to district court. Keggereis v. Dallas Central Appraisal District, 749 S.W.2d 516 (Tex. App.-Dallas 1988, no writ).

A private school is entitled to an exemption under this section. The land, which was used for formal instruction in biology, geology, and archaeology, and for recreational and athletic purposes, was reasonably necessary for school operations. In determining whether property is reasonably necessary for the operation of the school, the court can consider how land is used and its relationship to goals of public education. Board of Review for Travis County Appraisal District v. Protestant Episcopal Church Council, 676 S.W.2d 616 (Tex. App.-Austin 1984, writ dism'd).

Sec. 11.22. Disabled Veterans.

(a) A disabled veteran is entitled to an exemption from taxation of a portion of the assessed value of a property the veteran owns and designates as provided by Subsection (f) of this section in accordance with the following schedule:


ex11.22a

(b) A disabled veteran is entitled to an exemption from taxation of $12,000 of the assessed value of a property the veteran owns and designates as provided by Subsection (f) of this section if the veteran:

(1) is 65 years of age or older and has a disability rating of at least 10 percent;

(2) is totally blind in one or both eyes; or

(3) has lost the use of one or more limbs.

(c) If a disabled veteran who is entitled to an exemption by Subsection (a) or (b) of this section dies, the veteran's surviving spouse is entitled to an exemption from taxation of a portion of the assessed value of a property the spouse owns and designates as provided by Subsection (f) of this section. The amount of the exemption is the amount of the veteran's exemption at time of death. The spouse is entitled to an exemption by this subsection only for as long as the spouse remains unmarried. If the spouse does not survive the veteran, each of the veteran's surviving children who is younger than 18 years of age and unmarried is entitled to an exemption from taxation of a portion of the assessed value of a property the child owns and designates as provided by Subsection (f) of this section. The amount of exemption for each eligible child is computed by dividing the amount of the veteran's exemption at time of death by the number of eligible children.

(d) If an individual dies while on active duty as a member of the armed services of the United States:

(1) the individual's surviving spouse is entitled to an exemption from taxation of $5,000 of the assessed value of the property the spouse owns and designates as provided by Subsection (f) of this section; and

(2) each of the individual's surviving children who is younger than 18 years of age and unmarried is entitled to an exemption from taxation of a portion of the assessed value of a property the child owns and designates as provided by Subsection (f) of this section, the amount of exemption for each eligible child to be computed by dividing $5,000 by the number of eligible children.

(e) An individual who qualifies for more than one exemption authorized by this section is entitled to aggregate the amounts of the exemptions, except that:

(1) a disabled veteran who qualifies for more than one exemption authorized by Subsections (a) and (b) of this section is entitled to only one exemption but may choose the greatest exemption for which he qualifies; and

(2) an individual who receives an exemption as a surviving spouse of a disabled veteran as provided by Subsection (c) of this section may not receive an exemption as a surviving child as provided by Subsection (c) or (d) of this section.

(f) An individual may receive an exemption to which he is entitled by this section against only one property, which must be the same for every taxing unit in which the individual claims the exemption. If an individual is entitled by Subsection (e) of this section to aggregate the amounts of more than one exemption, he must take the entire aggregated amount against the same property. An individual must designate on his exemption application form the property against which he takes an exemption under this section.

(g) An individual is not entitled to an exemption by this section unless he is a resident of this state.

(h) In this section:

(1) "Child" includes an adopted child or a child born out of wedlock whose paternity has been admitted or has been established in a legal action.

(2) "Disability rating" means a veteran's percentage of disability as certified by the Veterans' Administration or its successor or the branch of the armed services in which the veteran served.

(3) "Disabled veteran" means a veteran of the armed services of the United States who is classified as disabled by the Veterans' Administration or its successor or the branch of the armed services in which the veteran served and whose disability is service-connected.

(4) "Surviving spouse" means the individual who was married to a disabled veteran or member of the armed services at the time of the veteran's or member's death.

Amended by 2001 Tex. Laws, p. 4299, ch. 1420, Sec. 18.002.

Cross References:

Exemption application form, see Rule Sec. 9.415.
Annual application not required, see Sec. 11.43(c).
Late application allowed, see Sec. 11.439.
Partial ownership of property, see Sec. 11.41.
Prorating taxes for loss of exemption during the year, see Sec. 26.10.
Constitutional authorization, see art. VIII, Sec. 2(b), Tex. Const.

Notes:

HJR 68, 74th Leg., 1995, effective January 1, 1996, increased the amounts of tax exemption for disabled veterans, their surviving spouses and surviving minor children and for the spouses and children of members of the armed services who die while on active duty. HJR 68 provided that the amounts permitted under art. VIII, Sec. 2(b), Tex. Const., are the maximum amounts permitted instead of the amounts specified by Section 11.22, Tax Code, unless the legislature enacts a new law after January 1, 1995. HB 2812, 77th Tex. Leg, 2001, amended this section to conform with the constitutional amendment.

Under prior statute art. 7150h, V.T.C.S. (repealed, now this section), the exemption for surviving spouses and children of a qualified veteran applied regardless of whether the veteran died before the effective date of the act. Op. Tex. Att'y Gen. No. H-894 (1976).