Overviewofpropertytaxexemptions

OVERVIEW OF PROPERTY TAX EXEMPTIONS

Linebarger Goggan Blair & Sampson Presented By: James Guest Special thanks to Midget Sherman, John Manuel, and the Lufkin Office

Property Tax Code • TITLE 1. PROPERTY TAX CODE • SUBTITLE C. Taxable Property and Exemptions • CHAPTER 11. Taxable Property and Exemptions

Authorization and General Information of Exemptions • Art. VIII Sec. 1 Const. states that all property in the state is taxable unless exempt by law • Art. VIII Sec. 2 Const. enumerates certain types of exemptions, and states that all exemptions not expressly mentioned are “null and void”

CHAPTER 11 SUBCHAPTER A. TAXABLE PROPERTY • Real and Tangible Personal Property – “All real and tangible personal property that this state has jurisdiction to tax is taxable unless exempt by law”

• Intangible Personal Property – With very few exceptions, intangible personal property is not taxable (i.e., specific intangible property identified under Texas Finance Code and Insurance Code)(e.g., copyright, trademark, and goodwill)

Defining Exemptions • An exclusion of all or part of a property’s value from taxation (See Texas Property Tax Exemptions, Glenn Hegar, TX. Comp. of Pub. Accounts., 2016) – Total Exemption – Partial Exemption

• No state property tax • Property taxes are locally assessed and administered • Constitution gives discretion to taxing units for certain local-option exemptions • Constitution mandates taxing units for certain exemptions

Sec. 11.11. PUBLIC PROPERTY.

1. Property owned by Texas or a political subdivisions of Texas is exempt if the property is used for public purposes EXCEPT for two situations: 1. Agriculture or grazing land that is owned by county for benefit of public schools is taxable (no exceptions) 2. Land owned by the Permanent University Fund is taxable

Sec. 11.111. PUBLIC PROPERTY USED TO PROVIDE TRANSITIONAL HOUSING FOR INDIGENT PERSONS. • Exempt property owned by US or its agency used by the Department of Housing and Urban Development

Sec. 11.12.

FEDERAL EXEMPTIONS.

The federal government is exempt from taxation (post office, military base, courthouse, etc.)

Sec. 11.13. RESIDENCE HOMESTEAD • Most common type of exemption • Mandatory Exemptions – SCHOOL required to grant $25,000 HS to all qualified residences – SCHOOL required to grant a $10,000 Over-65 or disabled person’s exemption from school taxes (additional amount authorized if school district chooses) – COUNTY required to grant $3,000 for farm to market roads (if there are F2M roads)

• Optional – SCHOOL, COUNTY, CITY, SPECIAL DISTRICTS may give an additional general exemption of up to 20% of appraised value for residence (exemption of at least $5,000) – COUNTY, ET AL may give at least $3,000 for over 65 or disabled individuals

Homestead Classes of Owners 1.

2.

3.

4.

5.

6.

Homestead Over-65 Over 55 surviving spouse Disabled Person Homestead 100% Disabled Veteran Disabled Veteran Surviving Spouse

MANDATORY HOMESTEAD EXEMPTION Table 1 School

County

General (must be adopted before July 1)

$25,000

Over-65 Disabled

$10,000 additional $10,000 additional

$3,000 from farm-tomarket/flood control tax, if levied -0-0-

General

Over-65

Disabled

School City County Up to 20% ofMANDATORY SameHOMESTEAD EXEMPTION Same appraised value, Table 1 but not less than $5,000 At least $3,000 Same Same, but a person who gets this exemption does not get the mandatory $3,000 exemption from FM/FC tax At least $3,000 Same Same, but a person who gets this exemption does not get the mandatory $3,000 exemption from FM/FC tax

Special District Same

Same

Same

Sec. 11.131. RESIDENCE HOMESTEAD OF 100 PERCENT OR TOTALLY DISABLED VETERAN. Qualified disabled veterans (to include a surviving spouse) receiving 100 percent disability are entitled to an exemption from taxation of the total appraised value of the veteran's residence homestead.

Sec. 11.132. DONATED RESIDENCE HOMESTEAD OF PARTIALLY DISABLED VETERAN. • Disabled Veteran (and surviving spouse) is entitled to exemption of the appraised value of the disabled Vet HS equal to the disability rating if the residence HS was donated by a charitable organization at no cost to disabled veteran • Exemption is effective January 1 regardless of when the application was filed and accepted

Sec. 11.133. RESIDENCE HOMESTEAD OF SURVIVING SPOUSE OF MEMBER OF ARMED SERVICES KILLED IN ACTION. • 100% tax exemption of total appraised value • If surviving spouse has not remarried since the death of the member of the armed services

Sec. 11.135. CONTINUATION OF RESIDENCE HOMESTEAD EXEMPTION WHILE REPLACEMENT STRUCTURE IS CONSTRUCTED; SALE OF PROPERTY.

• A qualified homestead that is unusable by a casualty or by wind or water damage retains the homestead exemption for two years while owner constructs a replacement residential structure

Sec. 11.14. TANGIBLE PERSONAL PROPERTY NOT PRODUCING INCOME. • Personal property (not manufactured homes) that is not held or used for production of income is completely exempt

Sec. 11.145. INCOMEPRODUCING TANGIBLE PERSONAL PROPERTY HAVING VALUE OF LESS THAN $500. • all property in each taxing unit is aggregated to determine taxable value

Sec. 11.146. MINERAL INTEREST HAVING VALUE OF LESS THAN $500. • all mineral interests in each taxing unit are aggregated to determine value.

Sec. 11.15. FAMILY SUPPLIES. • A family is entitled to an exemption from taxation of its family supplies for home or farm use

Sec. 11.16. FARM PRODUCTS. • A producer is entitled to an exemption from taxation of the farm products that the producer produces and owns.

• “Farm products" include livestock, poultry, and timber (also includes chicken eggs and nursery products that are in a growing state)

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 • Not fixtures or improvements to real property

Sec. 11.17. CEMETERIES. • Exemption from taxation for property owned and used exclusively for human burial NOT held for profit

Sec. 11.18. CHARITABLE ORGANIZATIONS. • Qualified organizations are exempt from paying taxes on buildings and tangible personal property

Sec. 11.1801. CHARITY CARE AND COMMUNITY BENEFITS REQUIREMENTS FOR CHARITABLE HOSPITAL.

• Listing of qualifications and requirements for charitable hospitals

Sec. 11.181.

CHARITABLE ORGANIZATIONS IMPROVING PROPERTY FOR LOW INCOME HOUSING.

Sec. 11.182.

COMMUNITY HOUSING DEVELOPMENT ORGANIZATIONS IMPROVING PROPERTY FOR LOWINCOME AND MODERATEINCOME 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 LOWINCOME AND MODERATEINCOME HOUSING EXEMPTIONS.

Sec. 11.1827.

COMMUNITY LAND TRUST.

Sec. 11.183.

ASSOCIATION PROVIDING ASSISTANCE

TO AMBULATORY HEALTH CARE CENTERS.

Sec. 11.184. ORGANIZATIONS ENGAGED PRIMARILY IN PERFORMING CHARITABLE FUNCTIONS.

http://adltexas.org/

Sec. 11.185. COLONIA MODEL SUBDIVISION PROGRAM. •

HUD and USDA Rural Development both define colonias as rural communities within the USMexico border region that lack adequate water, sewer, or decent housing, or a combination of all three. (https://www.hudexchange.info/cdbg-colonias/colonias-history/)

•

5 year exemption from taxation of unimproved real property

•

Exempt from taxation of any building or tangible personal property that meets certain qualifications

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.

an exemption of for a disability rating of up to: at least: but less than: $5,000 of the 10% 30% Assessed value 7,500 30 50 10,000 50 70 12,000 70 and over

Sec. 11.23. MISCELLANEOUS EXEMPTIONS. • Exemptions apply to specific entities

THE 13 MISC. EXEMPTIONS’ LIST 1. Veterans Organizations 2. Federation of Women’s Clubs 3. Nature Conservancy of Texas 4. Congress of Parents and Teachers 5. Private Enterprise Demonstration Associations 6. Bison, Buffalo, and Cattle 7. Theater Schools 8. County Fair Associations 9. Community Service Clubs 10.Medical Center Development 11.Medical Center Development in Populous Counties 12.Scientific Research Corporations 13.National Hispanic Institute

Sec. 11.231. NONPROFIT COMMUNITY BUSINESS ORGANIZATION PROVIDING ECONOMIC DEVELOPMENT SERVICES TO LOCAL COMMUNITY.

Community-wealth.org

Sec. 11.24. HISTORIC SITES.

Sec. 11.25. MARINE CARGO CONTAINERS USED EXCLUSIVELY IN INTERNATIONAL COMMERCE.

Sec. 11.251. TANGIBLE PERSONAL PROPERTY EXEMPT. • Certain exports from Texas are exempt • Exemption of freeport goods, wares, ores, merchandise and other tangible property, other than oil, gas and petroleum products

Sec. 11.252. MOTOR VEHICLES LEASED FOR PERSONAL USE.

Sec. 11.253. TANGIBLE PERSONAL PROPERTY IN TRANSIT. • Goods-in-transit are goods acquired inside or outside the state, stored under a bailment contract by a public warehouse operator at one or more public warehouse facilities that are not in any way owned or controlled by the owner of the property who acquired or imported the property and then shipped to another location in or out of this state within 175 days. (several exceptions apply (e.g., oil & gas products.) (See http://comptroller.texas.gov.)

Sec. 11.254. MOTOR VEHICLE USED FOR PRODUCTION OF INCOME AND FOR PERSONAL ACTIVITIES.

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. 11.34.

LIMITATION OF TAXES ON REAL PROPERTY IN DESIGNATED AREAS OF CERTAIN MUNICIPALITIES.

Sec. 11.27. SOLAR AND WINDPOWERED ENERGY DEVICES.

Sec. 11.271. OFFSHORE DRILLING EQUIPMENT NOT IN USE.

Sec. 11.28. PROPERTY EXEMPTED FROM CITY TAXATION BY AGREEMENT. • Tax Abatements

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. 11.315. ENERGY STORAGE SYSTEM IN NONATTAINMENT AREA. • In United States environmental law, a nonattainment area is an area considered to have air quality worse than the National Ambient Air Quality Standards as defined in the Clean Air Act Amendments of 1970 (P.L. 91-604, Sec. 109).

Energy Storage Systems INC. (Create batteries)

Sec. 11.311. LANDFILLGENERATED GAS CONVERSION FACILITIES.

Sec. 11.32. CERTAIN WATER CONSERVATION INITIATIVES.

SUBCHAPTER C. ADMINISTRATION OF EXEMPTIONS • Exemption Qualification Date: A tax payer’s eligibility and amount of exemption for a year are determined by the their qualification on January 1 (unless there is an exception expressly stated in the statute)

• Exceptions – 11.42(c) Property exempt for entire year regardless of application filing (effective as of January 1) for: • • • •

Over-65 Disabled Person’s Donated Residence HS of Partially Disabled Veteran Residence HS of Surviving Spouse or member armed svc. killed in action

TX. Tax Prop. Code 11.42(d): property acquired after the first of the year qualified for a pro rata exemption include: • • • • • • • • •

11.131 100% disabled veteran HS 11.17 Cemeteries 11.18 Charitable Organizations 11.19 Youth Development 11.20 Religious Organizations 11.21 Schools 11.23 Miscellaneous 11.231 Non-profit business development; or 11.30 Nonprofit water supply

Application Requirements (11.43) – Subject to exceptions, a person who claims an exemption must apply for the exemption by filing the appropriate application with the Chief Appraiser in each appraisal district the property has situs.

– Some exemptions do not require an application (11.43(a)) • • • •

State owned property Federal Exemptions Tangible Personal Property not producing income Among others.

– A person must apply annually for exemption unless code specifically provides otherwise (11.43(b))

One Time Application exemptions (11.43(c)) • Exemption applies until change of ownership or person’s qualification for the exemption changes • Chief Appraiser may require a person to “confirm” qualifications by filing a new application (must send a written notice of the requirement, along with a blank application) • Once allowed, do not require annual reapplication and include – – – –

Residence Homestead (11.13) Residence HS of 100% or Totally Disabled Veteran (11.131) Disabled Veterans (11.22) Among others

Application Deadlines • for exemptions determined by claimant’s qualifications on January 1 the deadline is May 1 (must furnish all information required by the form) (11.43(d)) • With only a few exemptions, if applicant fails to file timely, then loses the exemption.

– Disabled Veterans (11.439): deadline is one year after the delinquency date for the taxes on the property.

– Over 65, Disabled Person’s HS, 100% Disabled, Donated Residence HS of Partially Disabled Vet (11.431) » No later than the first anniversary of the date the person qualified for the exemption » Automatic qualification if: • The person received a HS exemption in the preceding year; • The person becomes 65; and either • The person provided information allowing the appraisal district to determine her age in the exemption application; or • The person’s age is indicated in information by the Dept. of Public Safety; and • In either case, the chief appraiser has not determined that the person no longer has a right to a HS exemption

Veteran HS Late Application (11.431) ÂťResident HS Applications for 100 % disabled veterans or surviving spouses, or for spouse of veteran KIA are still valid if they are filed not later than one year after the delinquency date for taxes on the homestead (applies to 11.131, 11.132 and 11.133) ÂťIf application is granted after ARB has approved the appraisal records, then the chief appraiser must notify the collector for each unit

THANK YOU TACA

James Guest James.guest@lgbs.com (936) 639-5040