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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 Repealed in 2003.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. 11.14. Tangible Personal Property not Producing Income

(a) A person is entitled to an exemption from taxation of all tangible personal property, other than manufactured homes, that the person owns and that is not held or used for production of income. This subsection does not exempt from taxation a structure that a person owns which is substantially affixed to real estate and is used or occupied as a residential dwelling.

(b) In this section, "manufactured home" has the meaning assigned by Section 11.432 of this code.

(c) The governing body of a taxing unit, by resolution or order, depending upon the method prescribed by law for official action by that governing body, may provide for taxation of tangible personal property exempted under Subsection (a). If a taxing unit provides for taxation of tangible personal property as provided by this subsection, the exemption prescribed by Subsection (a) does not apply to that unit.

(d) The central appraisal district for the county shall determine the cost of appraising tangible personal property required by a taxing unit under the provisions of Subsection (c) and shall assess those costs to the taxing unit or taxing units which provide for the taxation of tangible personal property.

(e) A political subdivision choosing to tax property otherwise made exempt by this section, pursuant to Article VIII, Section 1(e), of the Texas Constitution, may not do so until the governing body of the political subdivision has held a public hearing on the matter, after having given notice of the hearing at the times and in the manner required by this subsection, and has found that the action will be in the public interest of all the residents of that political subdivision. At the hearing, all interested persons are entitled to speak and present evidence for or against taxing the property. Not later than the 30th day prior to the date of a hearing held under this subsection, notice of the hearing must be:

(1) published in a newspaper having general circulation in the political subdivision and in a section of the newspaper other than the advertisement section;

(2) not less than one-half of one page in size; and

(3) republished on not less than three separate days during the period beginning with the 10th day prior to the hearing and ending with the actual date of the hearing.

Added by Acts 1979, 66th Leg., p. 2236, ch. 841, 1, eff. Jan. 1, 1980. Amended by Acts 1987, 70th Leg., ch. 181, 1, eff. May 26, 1987; Acts 1989, 71st Leg., ch. 76, 1, eff. Jan. 1, 1990; Acts 1991, 72nd Leg., ch. 391, 15, eff. Aug. 26, 1991; Acts 1993, 73rd Leg., ch. 347, 4.09, eff. May 31, 1993; Acts 2001, 77th Leg., ch. 521, 1, eff. Jan. 1, 2002; Acts 2003, 78th Leg., ch. 5, 1, eff. Sept. 1, 2003.

Cross References:
No application required, see Sec. 11.43(a).
Constitutional authorization, see art. VIII, Sec. 1, Tex. Const.
Definition of person, see Sec. 311.005, Government Code.
Notice of hearing, see Rule Sec. 9.3057.
Travel trailers, see Sec. 11.142.

Notes:
A boat used for recreational purposes is personal property but is not equivalent to "personal effects" for exemption from taxation, and the statutory construction does not require limitation to boats used as means of transportation. Twiford v. Nueces County Appraisal District, 725 S.W.2d 325 (Tex. App.-Corpus Christi 1987, writ ref'd n.r.e.). (Note: The 1987 amendment to Sec. 11.14 defines a boat as a "personal effect" in order to receive a property tax exemption.)

Under Tax Code Section 1.04(3), subsection (A), a travel trailer that has been permanently affixed to land is an improvement and is taxable as real property. Under subsection (B), a travel trailer is also an improvement and taxable as real property if the owner of the trailer owns the land on which it is located. It is not relevant under subsection (B) whether or not the travel trailer has been affixed to land. Subsection (B) is intended to expand rather than restrict the universe of structures taxable as improvements. Whether a travel trailer may be taxed as personal property will depend not only on whether the governmental body has complied with the procedural requirements of Section 11.14, but also whether the constitution permits its exemption from taxation. Op. Tex. Att'y Gen. No. JC-282 (2000).

Travel trailers that have been affixed to rented land are personal property, but are not exempt as personal property not used to produce income. Imposing property taxes on these travel trailers that have paid sales taxes and motor vehicle registration does not constitute double taxation. Determining if a particular piece of personal property has become an improvement depends on the intent of the owner as evidenced by the mode and sufficiency of annexation. The appraisal district must determine if the attachment is permanent, subject to the property owner's right to protest to the appraisal review board. Long-term placement of travel trailers on lots of land owned by another person results in separate taxable interests, but not two separate interests in real property. A trailer attached to a leased lot, while an improvement to real property, generally will remain the property of the person leasing the lot from the trailer park. Such a trailer is taxable to the lessee of the lot, but as personal property rather than real property. Op. Tex. Att'y Gen. No. JC-150 (1999).

A court likely would conclude that it is not unconstitutional to require a lessor to pay property taxes on a motor vehicle that the lessor leases to a person who uses the vehicle primarily for personal purposes and not for the production of income. Tex. Att'y Gen. LO-96-030 (1996).

The local-option exemption for personal boats applied to boats in a taxing unit as of January 1, 1987, if that unit had not approved its 1987 tax roll before May 26, 1987; the legislature could not forgive prior years' taxes since a tax liability has accrued, or is fixed, when a taxing unit has performed the Chapter 26 requirements. Op. Tex. Att'y Gen. JM-893 (1988).

Sec. 11.142. Repealed by Acts 2003, 78th Leg., ch. 5, 2, effective September 1, 2003

Cross References:
Constitutional authorization, see art. VIII, Sec. 1(d) & (j), Tex. Const.

Sec. 11.145. Income-Producing Tangible Personal Property Having Value of Less Than $500.

(a) A person is entitled to an exemption from taxation of the tangible personal property the person owns that is held or used for the production of income if that property has a taxable value of less than $500.

(b) The exemption provided by Subsection (a) applies to each separate taxing unit in which a person holds or uses tangible personal property for the production of income, and, for the purposes of Subsection (a), all property in each taxing unit is aggregated to determine taxable value.

Added by 1995 Tex. Laws, p. 2664, ch. 296, Sec. 1.

Cross References:
Constitutional authorization, see art. VIII, Sec. 1 (d) and (g), Tex. Const.
Income-producing personal property with value above $500, see Sec. 21.02.
No exemption application required, Sec. 11.43(a).
Not on absolute exemption list, see Rule Sec. 9.3011.
Rendering of property, see Sec. 22.01 and Rule Sec. 9.3031.

Sec. 11.146. Mineral Interest Having Value of Less Than $500

(a) A person is entitled to an exemption from taxation of a mineral interest the person owns if the interest has a taxable value of less than $500.

(b) The exemption provided by Subsection (a) applies to each separate taxing unit in which a person owns a mineral interest and, for the purposes of Subsection (a), all mineral interests in each taxing unit are aggregated to determine value.

Added by 1995 Tex. Laws, p. 2664, ch. 296, Sec. 1.

Cross References:
Constitutional authorization, see art. VIII, Sec. 1 (d and (h), Tex. Const.
No exemption application required, Sec. 11.43(a).
Not on absolute exemption list, see Rule Sec. 9.3011.

Sec. 11.15. Family Supplies

(a) family is entitled to an exemption from taxation of its family supplies for home or farm use.

Acts 1979, 66th Leg., p. 2236, ch. 841, 1, eff. Jan. 1, 1980.

Cross References:
No application required, see Sec. 11.43(a).
Constitutional authorization, see art. VIII, Secs. 1 & 19, Tex. Const.

Sec. 11.16. Farm Products

(a) A producer is entitled to an exemption from taxation of the farm products that he produces and owns. A nursery product, as defined by Section 71.041, Agriculture Code, is a farm product for purposes of this section if it is in a growing state.

(b) Farm products in the hands of the producer are exempt.

(c) For purposes of this exemption, the following definitions apply:

(1) "Farm products" include livestock, poultry, and timber.

(2) "In the hands of the producer," for livestock and poultry, means under the ownership of the person who is financially providing for the physical requirements of such livestock and poultry on January 1 of the tax year and, for timber, means standing timber or timber that has been harvested and, on January 1 of the tax year, is located on the real property on which it was produced and is under the ownership of the person who owned the timber when it was standing.

Amended by 1981 Tex. Laws, p. 457, ch. 192, Sec. 1; amended by 1981 Tex. Laws, p. 1487, ch. 388, Sec. 3; amended by 1999 Tex. Laws, p. 3191, ch. 631, Sec. 2.

Cross References:
No application required, see Sec. 11.43(a).
Constitutional authorization, see art. VIII, Sec. 19, Tex. Const.

Notes:
Marijuana is not a farm product and, therefore, not exempt under art. VIII, Sec. 19, Tex. Const., or under Sec. 11.16, Tax Code. Even assuming marijuana were a farm product, it would not be exempt in a case where the defendant was accused of the possession and delivery of marijuana, as a controlled substance, and the possession of it as a taxable substance, because the defendant was a marijuana dealer, not a marijuana farmer. Marijuana was not contemplated by the framers to be a tax-exempt farm product. Lopez v. State, 837 S.W.2d 863 (Tex. App.-Houston [1st Dist.] 1992).

Grain delivered to a cooperative marketing association incorporated under the Cooperative Marketing Act (Sec. 52.001, Agriculture Code) by producer members is still a farm product in the hands of the producer for the purposes of this exemption, even though held for sale by the marketing association. Plainview Independent School District v. Edmonson Wheat Growers, Inc., 681 S.W.2d 299 (Tex. App.-Amarillo 1984, writ ref'd n.r.e.).

The exemption of nursery products under this section is constitutional. The term "nursery product" as used within the Property Tax Code is an "agricultural product" as that term is used in the Agricultural Code. Nursery stock in its first growth stage is "in the hands of the producer" within the meaning of art. VIII, Sec. 19, Tex. Const. Op. Tex. Att'y Gen. No. MW-583 (1982).

Seed in the possession of a cooperative marketing association was still a farm product in the hands of the producer. Op. Tex. Att'y Gen. No. M-632 (1970).

Sec. 11.161. Implements of Husbandry

Machinery and equipment items that are used in the production of farm or ranch products or of timber, regardless of their primary design, are considered to be implements of husbandry and are exempt from ad valorem taxation.

Added by Acts 1981, 67th Leg., 1st C.S., p. 127, ch. 13, 32, eff. Jan. 1, 1982. Amended by Acts 1983, 68th Leg., p. 4823, ch. 851, 7, eff. Aug. 29, 1983; Acts 1991, 72nd Leg., ch. 16, 17.01, eff. Aug. 26, 1991; Acts 1999, 76th Leg., ch. 631, 3, eff. Jan. 1, 2000; Acts 2005, 79th Leg., ch. 412, 6, eff. Jan. 1, 2006.

Cross References:
No application required, see Sec. 11.43(a).
Constitutional authorization, see art. VIII, Sec. 19a, Tex. Const.
Nursery stock protection unit, see Sec. 71.041(5), Agriculture Code.

Notes:
An item must be either equipment or machinery to qualify as an implement of husbandry under the Constitution and Tax Code. A structure or fixture on the land could not qualify. "Winter protection structures" are structures that could affect the value of the land to which they are affixed, so they could not qualify as implements of husbandry. Hawkins v. Van Zandt County Appraisal District, 834 S.W.2d 619 (Tex. App.-Eastland 1992, writ denied). (Note: In 1993, the Legislature amended Sec. 71.041, Agriculture Code, to define "nursery stock protection units" as implements of husbandry for all purposes, including the Constitution and Sec. 11.161, Tax Code.)

The phrase "implements of husbandry" in Sec. 11.161 includes those items of machines or equipment whose primary design and primary use or purpose is that of an implement used by a farmer or rancher in conducting his farming or ranching operations. Op. Tex. Att'y Gen. No. JM-718 (1987).

Personal property used in fish farming is exempt under art. VIII, Sec. 19a, Tex. Const. However, equipment must be used for cultivation which implies a degree of human labor to produce the fish products, rather than the mere harvesting. Op. Tex. Att'y Gen. No. JM-87 (1983).

The term "implement of husbandry" does not include structures or fixtures. But any item that has a primary design and is primarily used for farming and ranching operations may be exempted as an implement of husbandry. Op. Tex. Att'y Gen. No. MW-451 (1982).

Sec. 11.17. Cemeteries

(a) person is entitled to an exemption from taxation of the property he owns and uses exclusively for human burial and does not hold for profit.

Acts 1979, 66th Leg., p. 2236, ch. 841, 1, eff. Jan. 1, 1980.

Cross References:
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Annual application not required, see Sec. 11.43(c).
Exemption application form, see Rule Sec. 9.415.

Notes:
Publicly-dedicated cemetery property is exempt from taxation, even though a corporation owns the property. Once an owner publicly dedicated land for burial purposes only, the land's use was fixed since the land cannot be sold or otherwise disposed of for any purpose other than burials. The owner of the dedicated property may sell the land for more than the land originally cost the owner. Notwithstanding these sales transactions, the property is not dedicated or held for profit. Laurel Land Memorial Park, Inc., et al. v. Dallas Central Appraisal District, 911 S.W.2d 783 (Tex. App.-Dallas 1995, rehearing denied).

Execution of an oil and gas lease on cemetery lands made the mineral estate taxable, even though the revenue was used for the upkeep of the cemetery. Op. Tex. Att'y Gen. No. 0-4755 (1942).

Sec. 11.18. Charitable Organizations

(a) An organization that qualifies as a charitable organization as provided by this section is entitled to an exemption from taxation of:

(1) the buildings and tangible personal property that:

(A) are owned by the charitable organization; and

(B) except as permitted by Subsection (b), are used exclusively by qualified charitable organizations; and

(2) the real property owned by the charitable 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 qualified charitable organizations; and

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

(b) Use of exempt property by persons who are not charitable organizations qualified as provided by this section does not result in the loss of an exemption authorized by this section if the use is incidental to use by qualified charitable organizations and limited to activities that benefit the beneficiaries of the charitable organizations that own or use the property.

(c) To qualify as a charitable organization for the purposes of this section, an organization, whether operated by an individual, or as a corporation, foundation, trust, or association, must meet the applicable requirements of Subsections (d), (e), (f), and (g).

(d) A charitable organization must be organized exclusively to perform religious, charitable, scientific, literary, or educational purposes and, except as permitted by Subsections (h) and (l), engage exclusively in performing one or more of the following charitable functions:

(1) providing medical care without regard to the beneficiaries' ability to pay, which in the case of a nonprofit hospital or hospital system means providing charity care and community benefits in accordance with Section 11.1801:

(2) providing support or relief to orphans, delinquent, dependent, or handicapped children in need of residential care, abused or battered spouses or children in need of temporary shelter, the impoverished, or victims of natural disaster without regard to the beneficiaries' ability to pay;

(3) providing support to elderly persons, including the provision of recreational or social activities and facilities designed to address the special needs of elderly persons, or to the handicapped, without regard to the beneficiaries' ability to pay;

(4) preserving a historical landmark or site;

(5) promoting or operating a museum, zoo, library, theater of the dramatic or performing arts, or symphony orchestra or choir;

(6) promoting or providing humane treatment of animals;

(7) acquiring, storing, transporting, selling, or distributing water for public use;

(8) answering fire alarms and extinguishing fires with no compensation or only nominal compensation to the members of the organization;

(9) promoting the athletic development of boys or girls under the age of 18 years;

(10) preserving or conserving wildlife;

(11) promoting educational development through loans or scholarships to students;

(12) providing halfway house services pursuant to a certification as a halfway house by the pardons and paroles division of the Texas Department of Criminal Justice;

(13) providing permanent housing and related social, health care, and educational facilities for persons who are 62 years of age or older without regard to the residents' ability to pay;

(14) promoting or operating an art gallery, museum, or collection, in a permanent location or on tour, that is open to the public;

(15) providing for the organized solicitation and collection for distributions through gifts, grants, and agreements to nonprofit charitable, education, religious, and youth organizations that provide direct human, health, and welfare services;

(16) performing biomedical or scientific research or biomedical or scientific education for the benefit of the public;

(17) operating a television station that produces or broadcasts educational, cultural, or other public interest programming and that receives grants from the Corporation for Public Broadcasting under 47 U.S.C. Section 396, as amended;

(18) providing housing for low-income and moderate-income families, for unmarried individuals 62 years of age or older, for handicapped individuals, and for families displaced by urban renewal, through the use of trust assets that are irrevocably and, pursuant to a contract entered into before December 31, 1972, contractually dedicated on the sale or disposition of the housing to a charitable organization that performs charitable functions described by Subdivision (9);

(19) providing housing and related services to persons who are 62 years of age or older in a retirement community, if the retirement community provides independent living services, assisted living services, and nursing services to its residents on a single campus:

(A) without regard to the residents' ability to pay; or

(B) in which at least four percent of the retirement community's combined net resident revenue is provided in charitable care to its residents; or

(20) providing housing on a cooperative basis to students of an institution of higher education if:

(A) the organization is exempt from federal income taxation under Section 501(a), Internal Revenue Code of 1986, as amended, by being listed as an exempt entity under Section 501(c)(3) of that code;

(B) membership in the organization is open to all students enrolled in the institution and is not limited to those chosen by current members of the organization;

(C) the organization is governed by its members; and

(D) the members of the organization share the responsibility for managing the housing.

(e) A charitable organization must 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 performs one or more of the charitable functions specified by Subsection (d) other than a function specified by Subdivision (1), (2), (8), (9), (12), (16), or (18), be organized as a nonprofit corporation as defined by the Texas Non-Profit Corporation Act (Article 1396 1.01 et seq., Vernon's Texas Civil Statutes).

(f) A charitable organization must:

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

(2) 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:

(A) the assets are to be transferred to this state, the United States, or an educational, religious, charitable, or other similar organization that is qualified as a charitable organization under Section 501(c)(3), Internal Revenue Code of 1986, as amended; or

(B) if required for the organization to qualify as a tax-exempt organization under Section 501(c)(12), Internal Revenue Code of 1986, as amended, the assets are to be transferred directly to the organization's members, each of whom, by application for an acceptance of membership in the organization, has agreed to immediately transfer those assets to this state or to an educational, religious, charitable, or other similar organization that is qualified as a charitable organization under Section 501(c)(3), Internal Revenue Code of 1986, as amended, as designated in the bylaws, charter, or regulation adopted by the organization.

(g) A charitable organization that performs a charitable function specified by Subsection (d)(15) must:

(1) be affiliated with a state or national organization that authorizes, approves, or sanctions volunteer charitable fundraising organizations;

(2) qualify for exemption under Section 501(c)(3), Internal Revenue Code of 1986, as amended;

(3) be governed by a volunteer board of directors; and

(4) distribute contributions to at least five other associations to be used for general charitable purposes, with all recipients meeting the following criteria:

(A) be governed by a volunteer board of directors;

(B) qualify for exemption under Section 501(c)(3), Internal Revenue Code of 1986, as amended;

(C) receive a majority of annual revenue from private or corporate charitable gifts and government agencies; and

(D) provide services without regard to the ability of persons receiving the services to pay for the services.

(h) Performance of noncharitable functions by a charitable organization that owns or uses exempt property does not result in loss of an exemption authorized by this section if those other functions are incidental to the organization's charitable functions. The division of responsibilities between an organization that qualifies as a charitable organization under Subsection (c) and another organization will not disqualify the organizations or any property owned or used by either organization from receiving an exemption under this section if the collaboration furthers the provision of one or more of the charitable functions described in Subsection (d) and if the other organization:

(1) is exempt from federal income taxation under Section 501(a), Internal Revenue Code of 1986, as an organization described by Section 501(c)(3) of that code;

(2) meets the criteria for a charitable organization under Subsections (e) and (f); and

(3) is under common control with the charitable organization described in this subsection.

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

(j) The exemption of an organization preserving or conserving wildlife is limited to land and improvements and may not exceed 1,000 acres in any one county.

(k) In connection with a nursing home or retirement community, for purposes of Subsection (d):

(1) "Assisted living services" means responsible adult supervision of or assistance with routine living functions of an individual in instances where the individual's condition necessitates that supervision or assistance.

(2) "Charity care," "government-sponsored indigent health care," and "net resident revenue" are determined in the same manner for a retirement community or nursing home as for a hospital under Section 11.1801(a)(2).

(3) "Nursing care services" includes services provided by nursing personnel, including patient observation, the promotion and maintenance of health, prevention of illness or disability, guidance and counseling to individuals and families, and referral of patients to physicians, other health care providers, or community resources if appropriate.

(4) "Retirement community" means a collection of various types of housing that are under common ownership and designed for habitation by individuals over the age of 62.

(5) "Single campus" means a facility designed to provide multiple levels of retirement housing that is geographically situated on a site at which all levels of housing are contiguous to each other on a single property.

(l) A charitable organization described by Subsection (d)(3) that provides support to elderly persons must engage primarily in performing charitable functions described by Subsection (d)(3), but may engage in other activities that support or are related to its charitable functions.

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

(n) For purposes of Subsection (a)(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.

Added by Acts 1979, 66th Leg., p. 2236, ch. 841, 1, eff. Jan. 1, 1980. Amended by Acts 1981, 67th Leg., 1st C.S., p. 127, ch. 13, 33, eff. Jan. 1, 1982; Acts 1983, 68th Leg., p. 2207, ch. 412, 1, eff. Jan. 1, 1984; Acts 1985, 69th Leg., ch. 960, 1, eff. Jan. 1, 1986; Acts 1987, 70th Leg., ch. 430, 1, eff. Jan. 1, 1988; Acts 1991, 72nd Leg., ch. 407, 1, eff. Jan. 1, 1992; Acts 1993, 73rd Leg., ch. 360, 5, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 471, 1, eff. Jan. 1, 1996; Acts 1995, 74th Leg., ch. 781, 4, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 715, 1, eff. Jan. 1, 1998; Acts 1997, 75th Leg., ch. 1039, 7, eff. Jan. 1, 1998; Acts 1997, 75th Leg., ch. 1411, 1, eff. June 20, 1997; Acts 1999, 76th Leg., ch. 138, 1, eff. May 18, 1999; Acts 1999, 76th Leg., ch. 266, 1, eff. Jan. 1, 2000; Acts 1999, 76th Leg., ch. 924, 1, eff. Jan. 1, 2000; Acts 1999, 76th Leg., ch. 1443, 1, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 1420, 18.001(a), eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 288, 1.01, eff. June 18, 2003; Acts 2003, 78th Leg., ch. 288, 2.01, eff. Jan. 1, 2006.

Cross References:
Exemption application form, see Rule Sec. 9.415.
Immediate qualification for property acquired, see Sec. 11.42.
Annual application not required, see Sec. 11.43(c).
Filing deadline for property acquired after January 1, see Sec. 11.43(d).
Late application to correct failure to qualify, see Sec. 11.423.
Late application for exemption for preceding years, see Sec. 11.435.
Prorating taxes for exemption granted after January 1, see Secs. 26.112 and 26.113.
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Economic development corporation, See Sec. 32, Art. 5190.6, V.A.C.S.

Notes:
Acts 2003, 78th Leg., ch. 288, 1.01, eff. June 18, 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. Beginning with tax year 2006 thereafter changes the five years for an incomplete improvement back to three years, effective January 1, 2006.

The chief appraiser's duty to back access property omitted from the appraisal roll whenever an error is discovered is mandatory and not discretionary. A taxing unit may sue the chief appraiser who fails to perform this duty. Back assessment for an erroneously granted exemption is a current year tax, and it is not subject to a taxing unit filing a challenge in the tax year in question. Atascosa County v. Atascosa County Appraisal District, 990 S.W.2d 255 (Tex. 1999).

A non-profit water supply corporation must qualify as a "purely public charity" under art. VIII, Sec. 2, Texas Constitution, as a threshold requirement for exempt status under Sec. 11.18. North Alamo Water Supply v. Willacy County Appraisal District, 804 S.W.2d 894 (Tex. 1991).

Where a lodge organization conducted noncharitable activities, such as social meetings, which were not completely incidental to the charitable activities, the lodge could not qualify for exemption. City of Amarillo v. Amarillo Lodge No. 731, A.F. & A.M., 488 S.W.2d 69 (Tex. 1972).

To meet the constitutional requirement that the organization must be an institution of public charity, the organization must operate without profit, operate wholly for benevolent ends, and must either give relief to those in poverty or distress or assume to a material extent some community duty which otherwise would fall to the community or the state. See, e.g., City of McAllen v. Evangelical Lutheran Good Samaritan Society, 530 S.W.2d 806 (Tex. 1975); San Antonio Conservation Society, Inc. v. City of San Antonio, 455 S.W.2d 743 (Tex. 1970).

Incidental use of portion of a home for the aged for other purposes such as guest facilities, a canteen, a beauty shop, and vending machines does not defeat the tax exemption if the primary use of the home is as an institution of purely public charity. Hilltop Village, Inc. v. Kerrville Independent School District, 426 S.W.2d 943 (Tex. 1968).

To qualify for property tax exemption, an organization's dissolution clause must provide for transfer to another federally exempt organization or to the state of Texas. Transferring to a for-profit organization and to the U. S. Department of Housing and Urban Development does not meet the qualification test for the exemption. Texas VOA Elderly Housing, Inc. v. Montgomery County Appraisal District, 990 S.W.2d 938 (Tex. App.-Beaumont 1999).

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).

The cancellation of an exemption without giving notice to the taxpayer is void, and the failure to give such notice may be raised as a defense to the collection of delinquent taxes. The mere filing of a certified copy of the delinquent tax roll does not create a presumption that notice was in fact delivered where there is evidence to the contrary. Inwood Dad's Club, Inc. v. Aldine Independent School District, 882 S.W.2d 532 (Tex. App.-Houston [1st District] 1994, rehearing denied).

Property used by a charitable organization, not the organization itself, must qualify for a tax exemption to be granted under Sec. 11.18, Tax Code. The organization must use the property in furtherance of its charitable purpose. Baptist Memorials Geriatric Cntr. v. Tom Green County Appraisal Dist., 851 S.W.2d 938 (Tex. App.-Austin 1993, writ denied).

Taxpayer applying for nursing home exemption must show the nursing home provides a service the government would otherwise be required to provide. Court properly refused to hear taxpayer's claim that other similar nursing homes had been granted the exemption. First Baptist of Amarillo Foundation v. Potter County Appraisal District, 813 S.W.2d 192 (Tex. App.-Amarillo 1991, no writ).

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).

Where evidence established that water supply corporation's charter did not pledge its assets for performing charitable functions, organization could not qualify for charitable exemption under Sec. 11.18 or art. VIII, Sec. 2, Tex. Const. North Alamo Water Supply Corporation v. Willacy County Appraisal District, 769 S.W.2d 690 (Tex. App.-Corpus Christi 1989), aff'd, 804 S.W.2d 894 (Tex. 1991).

To qualify for property tax exemption, an organization's dissolution clause must provide for transfer to another federally exempt organization or to the state of Texas. Transferring to a for-profit organization and to the U. S. Department of Housing and Urban Development does not meet the qualification test for the exemption. Texas VOA Elderly Housing, Inc. v. Montgomery County Appraisal District, 990 S.W.2d 938 (Tex. App.-Beaumont 1999).

Nursing home was entitled to exemption under Sec. 11.18(d)(13) even though the organization's charter permitted it to engage in other benevolent work of a charitable or religious nature and even though only about ten percent of its patients failed to pay the entire cost of their care. El Paso Central Appraisal District v. Evangelical Lutheran Good Samaritan Society, 762 S.W.2d 207 (Tex. App.-El Paso, 1988, writ denied).

A nursing home met the constitutional and statutory charitable exemption requirements by providing medical care without regard to ability to pay even though substantially more patients paid than those that did not. Because it restricted its assets to charitable functions and offered services to persons who would otherwise become burdens of the state, it qualified regardless of the religious motivations of its operators or its effect on a limited group. Texas Rule of Appellate Procedure 84 providing penalty for frivolous appeals does apply to a government agency. Dallas County Appraisal District v. the Leaves, Inc., 742 S.W.2d 426 (Tex. App.-Dallas 1988, writ denied).

Where a corporation is created for purposes of purchasing and leasing land and buildings to a charitable organization, that corporation is not exempt from taxation because it does not directly perform the required charitable functions. Mere connection with an organization that is exempted from ad valorem taxation is not enough. Erath Central Appraisal District v. Pecan Valley Facilities, Inc., 704 S.W.2d 86 (Tex. App.-Eastland 1985, writ ref'd n.r.e.).

The appraisal district failed to deny the symphony's assertion that operation of the symphony would become the obligation or duty of the City of Dallas if private support for the organization did not exist. Accordingly, sufficient uncontroverted evidence exists in the record to hold that the Symphony Orchestra is a purely public charity entitled to an exemption under Sec. 11.18, Property Tax Code, and art. VIII, Sec. 2(a), Tex. Const. Dallas Symphony Ass'n., Inc. v. Dallas County Appraisal District, 695 S.W.2d 595 (Tex. App.-Dallas 1985, writ ref'd n.r.e.).

If the organization's charter permits it to perform activities other than those specified in Sec. 11.18(c)(1), the exemption is lost. A water supply corporation that amended its bylaws to permit it to perform other community services of benefit to its members in addition to selling water for public use was not entitled to the exemption. Military Highway Water Supply Corp. v. Boone, 688 S.W.2d 648 (Tex. App.-Corpus Christi 1985, no writ).

Trial court had sufficient evidence to find that hospital qualified for exemption from taxation as a charitable organization. Receiving income from paying patients does not destroy the organization's charity status. Any private gain that may result from infrequent medical staff practice of not charging employees or family members for services is de minimus and merely incidental to the hospital's charitable functions. Hospital's compensation arrangement with staff physicians is reasonable under the circumstances, and does not constitute private gain to the doctors. Lamb County Appraisal District v. South Plains Hospital-Clinic, Inc., 688 S.W.2d 896 (Tex. App.-Amarillo 1985, writ ref'd n.r.e.).

A water supply corporation whose bylaws did not provide for a direct transfer of its assets to an entity qualified for exemption under Sec. 501(c)(3) could not qualify for the exemption. Willacy County Appraisal District v. North Alamo Water Supply Corp., 676 S.W.2d 632 (Tex. App.-Corpus Christi 1984, writ ref'd n.r.e.). (Note: In response to this decision, the Texas Legislature amended Sec. 11.18 in 1985 to permit a two-step transfer of assets if required by federal tax regulations, but the final transfer must be to a Sec. 501(c)(3) organization.)

A women's auxiliary that engaged in historical preservation and other activities was not organized exclusively to perform and to engage in historical landmark preservation, and did not qualify under Sec. 11.18. City of Dallas v. Women's Auxiliary to Dallas County Medical Soc., 620 S.W.2d 695 (Tex. App.-Dallas 1981, writ ref'd n.r.e.).

Article VIII, Sec. 2, Tex. Const. authorizes the legislature to exempt "all buildings used exclusively and owned by . . . institutions of purely public charity." The constitution imposes four limits on the legislature's power to grant exemptions to charitable organizations. Property may only be exempted by statute if it is (1) owned by a charitable organization, (2) exclusively used by the charitable organization, (3) the organization is operated exclusively as a charitable organization, and (4) the organization is an institution of purely public charity. Methodist River Oaks Apartment, Inc. v. City of Waco, 409 S.W.2d 485 (Tex. App.-Waco 1966, writ ref'd n.r.e.), cert. denied, 88 S.Ct. 75, 389 U.S. 848, 19 L.Ed.2d 117 (1967).

A county may not waive taxes, penalties, and interest on real property owned by an individual that houses a nonprofit organization. Op. Tex. Att'y Gen. No. JC-134 (1999).

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.)

A thrift shop operated by a charitable organization was not entitled to exemption under this section because the property was not used exclusively for one of the listed charitable activities in this section. Op. Tex. Att'y Gen. No. JM-269 (1984).

Section 11.18 requires the organization's charter or bylaws to pledge use of its property for charitable purposes and to provide for distribution of its assets on dissolution to the state or to a charitable entity qualified for exemption from federal tax under Sec. 501(c)(3), Internal Revenue Code. A charter provision stating that an organization's property would not be used for private gain was insufficient under Subsection (c)(3). Op. Tex. Att'y Gen. No. JM-269 (1984).

A non-profit radio station did not qualify under this statute as it was not exclusively performing any of the charitable functions enumerated in Sec. 11.18(c)(1)(A) - (O). Op. Tex. Att'y Gen. No. JM-41 (1983).

A residence owned by a religious organization and used as a home for a needy family could not be exempted under Sec. 11.18 because the organization was not exclusively organized to perform one of the enumerated charitable functions nor did its charter pledge its property for use in charitable functions. Op. Tex. Att'y Gen. No. MW-553 (1982).

A non-profit corporation that provides employment training and assistance to ex-offenders does not fall within Sec. 11.18(c)(1)(C) and, therefore, is not exempt as an institution "providing support to . . . the handicapped without regard to the beneficiaries' ability to pay." Op. Tex. Att'y Gen. No. MW-543 (1982).

The organization must operate exclusively for charitable purposes. A charitable organization must be organized exclusively to perform one of the fifteen functions set out in Section 11.18(c)(1)(A) - (O) to qualify for the exemption. An organization whose charter stated it was organized to "engage in religious, missionary, benevolent, eleemosynary, and scientific undertakings which may be authorized by the Baptist General Convention" was not qualified for the exemption. Op. Tex. Att'y Gen. No. MW-288 (1980).