Subtitle C. Taxable Property and Exemptions
Chapter 11. Taxable Property and Exemptions
(continued)
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. 11.145 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. 11.181. Charitable Organizations Improving Property for Low-Income Housing.
Sec. 11.182. Community Housing Development Organizations Improving Property for Low-Income and Moderate-Income Housing.
Sec. 11.183. Association Providing Assistance to Ambulatory Health Care Centers.
Sec. 11.19. Youth Spiritual, Mental, and Physical Development Associations.
Sec. 11.20. Religious Organizations.
Sec. 11.21. Schools.
Sec. 11.22. Disabled Veterans.
Sec. 11.23. Miscellaneous Exemptions.
Sec. 11.24. Historic Sites.
Sec. 11.25. Marine Cargo Containers Used Exclusively in International Commerce.
Sec. 11.251. Tangible Personal Property Exempt.
Sec. 11.26. Limitation of School Tax on Homesteads of Elderly.
Sec. 11.27. Solar and Wind-Powered Energy Devices.
Sec. 11.271. Offshore Drilling Equipment Not in Use.
Sec. 11.28. Property Exempted from City Taxation by Agreement.
Sec. 11.29. Intracoastal Waterway Dredge Disposal Site.
Sec. 11.30. Nonprofit Water Supply or Wastewater Service Corporation.
Sec. 11.31. Pollution Control Property.
Sec. 11.32. Certain Water Conservation Initiatives.
[Sections 11.33 to 11.40 reserved for expansion]
Subchapter B. Exemptions
Sec. 11.11. Public PropertySec. 11.111. Public Property Used to Provide Transitional Housing for Indigent Persons. (a) Except as provided by Subsections (b) and (c) of this section, property owned by this state or a political subdivision of this state is exempt from taxation if the property is used for public purposes. (b) Land owned by the Permanent University Fund is taxable for county purposes. Any notice required by Section 25.19 of this code shall be sent to the comptroller, and the comptroller shall appear in behalf of the state in any protest or appeal relating to taxation of Permanent University Fund land.
(c) Agricultural or grazing land owned by a county for the benefit of public schools under Article VII, Section 6, of the Texas Constitution is taxable for all purposes. The county shall pay the taxes on the land from the revenue derived from the land. If revenue from the land is insufficient to pay the taxes, the county shall pay the balance from the county general fund.
(d) Property owned by the state that is not used for public purposes is taxable. Property owned by a state agency or institution is not used for public purposes if the property is rented or leased for compensation to a private business enterprise to be used by it for a purpose not related to the performance of the duties and functions of the state agency or institution or used to provide private residential housing for compensation to members of the public other than students and employees of the state agency or institution owning the property, unless the residential use is secondary to its use by an educational institution primarily for instructional purposes. Any notice required by Section 25.19 of this code shall be sent to the agency or institution that owns the property, and it shall appear in behalf of the state in any protest or appeal related to taxation of the property.
(e) It is provided, however, that property that is held or dedicated for the support, maintenance, or benefit of an institution of higher education as defined in Chapter 61, Texas Education Code, but is not rented or leased for compensation to a private business enterprise to be used by it for a purpose not related to the performance of the duties and functions of the state or institution or is not rented or leased to provide private residential housing to members of the public other than students and employees of the state or institution is not taxable. All oil, gas, and other mineral interests owned by an institution of higher education are exempt from all ad valorem taxes. Property bequeathed to an institution is exempt from the assessment of ad valorem taxes from the date of the decedent’s death, unless:
(1) the property is leased for compensation to a private business enterprise as provided in this subsection; or
(2) the transfer of the property to an institution is contested in a probate court. In this case, ad valorem taxes shall be assessed to the estate of the decedent until the final determination of the disposition of the property is made. The property is exempt from the assessment of ad valorem taxes upon vesting of the property in the institution.
(f) Property of a higher education development foundation or an alumni association that is located on land owned by the state for the support, maintenance, or benefit of an institution of higher education as defined in Chapter 61, Education Code, is exempt from taxation if:
(1) the foundation or organization meets the requirements of Sections 11.18(e) and (f) and is organized exclusively to operate programs or perform other activities for the benefit of institutions of higher education; and
(2) the property is used exclusively in those programs or activities.
(g) For purposes of this section, an improvement is owned by the state and is used for public purposes if it is:
(1) located on land owned by the Texas Department of Corrections;
(2) leased and used by the department; and
(3) subject to a lease-purchase agreement providing that legal title to the improvement passes to the department at the end of the lease period.
(h) For purposes of this section, tangible personal property is owned by this state or a political subdivision of this state if it is subject to a lease-purchase agreement providing that the state or political subdivision, as applicable, is entitled to compel delivery of the legal title to the property to the state or political subdivision, as applicable, at the end of the lease term. The property ceases to be owned by the state or political subdivision, as applicable, if, not later than the 30th day after the date the lease terminates, the state or political subdivision, as applicable, does not exercise its right to acquire legal title to the property.
Amended by 1981 Tex. Laws (1st C.S.), p. 127, ch. 13, Sec. 30; amended by 1983 Tex. Laws, p. 4821, ch. 851, Sec. 5; amended by 1983 Tex. Laws, p. 5419, ch. 1007, Sec. 1; amended by 1989 Tex. Laws, p. 3595, ch. 796, Sec. 14, and p. 4119, ch. 1021, Sec. 1; amended by 1989 Tex. Laws (6th C.S.), p. 90, ch. 12, Sec. 2; amended by 1991 Tex. Laws (2nd C.S.), p. 28, ch. 6, Sec. 9; amended by 1997 Tex. Laws, p. 2715, ch. 843, Sec. 1.
Cross References:
Public property for public purposes, see art. VIII, Sec. 2 & art. IX, Sec. 9, Tex. Const.
County taxation of university lands, see art. VII, Sec. 16, Tex. Const.
Taxation of school lands, see art. VII, Sec. 6b, Tex. Const.
No application required, see Sec. 11.43(a).
Exemption effective immediately on qualification, see Sec. 11.42(b).
Proration of taxes where property is acquired by a governmental body, see Sec. 26.11.
Administration of exemptions generally, see Secs. 11.41 — 11.47.
Economic development corporation exemption, see Sec. 32, Art. 5190.6, V.A.C.S.
Housing finance corporation exemption, see Sec. 394.905, Local Government Code.Notes:
Article XI, Sec. 9, Tex. Const., applies only to property exclusively owned by a public entity, free of any kind of legal or equitable ownership. Satterlee v. Gulf Coast Waste Disposal Authority, 576 S.W.2d 773 (Tex. 1978).Article VIII, Sec. 1, Tex. Const., requires taxation of "all property . . . whether owned by natural persons or corporations, other than municipal." Under a statute exempting all property owned by the state or a political subdivision regardless of use, city property leased to a private business is exempt from taxation. City of Beaumont v. Fertitta, 415 S.W.2d 902 (Tex. 1967).
Article VIII, Sec. 2, Tex. Const., which permits the legislature to exempt "public property used for public purposes," allows an exemption only for publicly owned property. Leander Independent School District v. Cedar Park Water Supply Corp., 479 S.W.2d 908 (Tex. 1972).
Article IX, Sec. 9, Tex. Const., which exempts ". . . property devoted to the use and benefit of the public," exempts publicly owned property used for public purposes. Lower Colorado River Authority v. Chemical Bank & Trust Co., 190 S.W.2d 48 (Tex. 1945).
Rural electrification lines owned by a home rule city outside its limits and within the boundaries of an independent school district were exempt from ad valorem taxation as public property used for public purposes. The test for "public purpose" is whether it is used primarily for health, comfort and welfare of the public. Incidental use of the property to generate revenue is permissible if the proceeds are used for the benefit of the public. A & M Consolidated Independent School District v. City of Bryan, 184 S.W.2d 914 (Tex. 1945).
Use of public property for public purposes must be exclusive for exemption as public property. A separate non-profit foundation that held legal title to a building and parking lot was affiliated with a public university that used 80 percent of the building and 33 percent of the parking lot. The foundation was denied the exemption because the foundation was not a public entity and because there was no existing written agreement between the foundation and the university allowing transfer of title to the university. Hays County Appraisal District v. Southwest Texas State University, 973 S.W.2d 419 (Tex. App. -- Austin 1998).
The public property used for public purpose exemption is not lost when a county does not participate in the appraisal proceedings. Three counties did not lose their tax exemption when the counties did not challenge the property tax appraisal of a juvenile detention facility. While Tax Code Section 42.09 is the exclusive procedure for appealing a property tax appraisal, it does not bar the exemption granted political subdivisions by Article XI, Section 9, Texas Constitution. Sweetwater ISD v. ReCor, Inc., 955 S.W.2d 703 (Tex. App. -— Eastland 1997).
The burden of taxation falls on the owner of equitable title. The Texas Department of Corrections (TDC) held equitable title to improvements built and owned by a private corporation, but to which TDC would acquire full legal title when its "lease" payments were made. This property, used as a prison, was exempt as public property used for a public purpose. Texas Department of Corrections v. Anderson County Appraisal District, 834 S.W.2d 130 (Tex. App.–Tyler 1992, writ denied).
Acts taken by a political subdivision to maintain its own existence are acts for a public purpose. Property held by a political subdivision solely for resale is exempt from property taxation. Klein Independent School District v. Harris County Appraisal Review Board, et. al., 843 S.W.2d 201 (Tex. App.–Texarkana 1992, no writ).
A medical office building owned by a hospital district and partially leased to private doctors conducting their own practices was not exclusively used for the use and benefit of the public and not entitled to tax exempt status under this section. Enactment of this section repealed hospital exemption set out in art. 4437e, Sec. 16, VTCS. Grand Prairie Hospital Authority v. Dallas CAD, 730 S.W.2d 849 (Tex. App.–Dallas 1987, writ ref’d n.r.e.).
Property owned by a hospital authority with a portion leased to private doctors for their own commercial enterprise was not used exclusively for the use and benefit of the public and was not exempt as public property. A hospital authority must exhaust its procedural administrative remedies under the Tax Code before seeking judicial review. Grand Prairie Hospital Authority v. Tarrant Appraisal District, 707 S.W.2d 281 (Tex. App.–Fort Worth 1986, writ ref’d n.r.e.).
Whether the Karnes County Correctional Center is exempt as provided by Section 11.11 was a question of fact to be determined. It must be determined if the correctional center is publicly owned and used for a public purpose. Letter Op. Tex. Att’y Gen. No. DM-98-028 (1998).
State-owned land used for public purposes and exempt under Tax Code Section 11.11 is not subject to the agricultural use rollback tax in Tax Code Section 23.55. Opinion No. JM-949 (1988) held that acquisition alone does not trigger the rollback tax provisions. The rollback tax process is triggered when a change of use occurs from an agricultural use to a nonagricultural use. No Texas courts have addressed directly the rollback tax provision with regard to the state acquiring and changing a qualified land’s use. The opinion disagreed with the State Property Tax Board’s position in its 1990 rule for the Manual for the Appraisal of Agricultural Land that governmental acquisition and change of use of qualified agricultural land triggered the rollback provisions. Op. Tex. Att’y Gen. No. DM-448 (1997).
Airport property leased by the state to a private entity may be exempt from property taxes if the use is in direct support of the state’s operation of the airport. A particular leased facility would be exempt from property taxes depending on the fact questions of the lease. Op. Tex. Att’y Gen. No. DM-436 (1997).
University-owned property will meet the public purpose test only if it is used for education purposes. State institutions of higher education have authority to undertake a wide variety of activities that are not strictly educational but that support the education mission of the university. University property operated not for education purposes but as an amusement park to generate income is not property used for a public purpose. However, the courts might find for a public purpose if continuing the operation of the amusement park for a short term was necessary while phasing in education activities. Op. Tex. Att’y Gen. No. DM-429 (1996).
A court must examine a specific contract’s facts to determine if a jail facility that a county leases under a lease-purchase agreement from a private entity is subject to property taxes. A court likely would consider whether the county held equitable title to the jail facility and whether the county may compel the lessor to convey the property’s legal title if the county meets all contract conditions. Op. Tex. Att’y Gen. No. DM-383 (1996).
The Rotary House, "a patient housing center," providing temporary accommodations for M.D. Anderson Cancer Center patients, their families and guests of the University of Texas, is public property used for a public purpose. Op. Tex. Att’y Gen. No. DM-272 (1993).
Contraband seized by peace officers pursuant to Chapter 59 of the Code of Criminal Procedure is exempt from taxation as public property. The property serves a public purpose because it can be used by law enforcement agencies for official purposes, or sold, with proceeds either deposited in the state treasury’s general revenue fund or used for law enforcement purposes. Op. Tex. Att’y Gen. No. DM-187 (1992).
Contraband seized by peace officers pursuant to Chapter 59 of the Code of Criminal Procedure becomes tax-exempt from the time the state acquires title. Tax-exempt status applies as long as the property is owned by the state and used for public purposes. Id.
As a matter of law, the holdings in the cases of Grand Prairie Hosp. Auth. v. Tarrant Appraisal Dist. and Grand Prairie Hosp. Auth. v. Dallas County Appraisal Dist. do not prescribe that the LCRA’s mineral interests are subject to taxation. If the LCRA holds its working interests in oil and gas wells exclusively for the public’s benefit and use, the interests are exempt from ad valorem taxation. Op. Tex. Att’y Gen. No. DM-78 (1992).
A municipal airport hangar used to support the safe and efficient operation of the airport is exempt from taxation under Sections 11.11 and 25.05. However, when most of the aircraft stored and serviced at the hangar will be brought there solely for purposes of maintenance and storage and will not be used for transportation to and from the airport, the property is not exempt because it is not used exclusively for the benefit of the public. Public property used by private entities is tax-exempt if the private use is a public purpose or is in direct support of a public purpose. Property owned by a public entity and leased purely for private commercial use is not exempt. If a city owns buildings purely for the purpose of leasing them to private commercial interests, the buildings are not exempt. Putting the property to a constructive use pending its sale and depositing the proceeds to the credit of the public fund used to purchase the property does not deprive the property of its public purpose. Temporary rental of property owned by a city does not remove a tax exemption if the purpose for which the property was originally acquired was a public purpose and the city did not abandon this purpose when it leased the property for private use. Section 11.11(e), Tax Code, governs residences leased by a junior college to employees or students of the institution for private residential housing to non-students or persons not employed by the institution are not tax-exempt. Op. Tex. Att’y Gen. No. DM-188 (1992).
Property owned by a trust and used exclusively for the benefit of a state university was exempt from ad valorem taxation under Sec. 11.11(e). Op. Tex. Att’y Gen. No. JM-551 (1986).
A city is not exempt from ad valorem taxation on city-owned land surrounding an airport where such land is leased for commercial and agricultural purposes. Op. Tex. Att’y Gen. No. JM-464 (1986).
The fact that a hospital district receives remuneration for leasing a building owned by that district will not deprive that district of tax-exempt status on such property. Op. Tex. Att’y Gen. No. JM-405 (1985).
Concession rights in state parks were possessory interests taxable to the interest holder under Sec. 25.07 and not exempt under Sec. 11.11. Op. Tex. Att’y Gen. No. JM-59 (1983).
Offices in a hospital district’s office building are taxable if sold under a condominium arrangement. Op. Tex. Att’y Gen. No. MW-430 (1981).
Housing provided by the state for its employees was used as a form of compensation and therefore used for public purposes. Op. Tex. Att’y Gen. No. MW-391 (1981).
Sec. 11.12. Federal Exemptions. (a) The governing body of a taxing unit by ordinance or order may exempt from ad valorem taxation residential property owned by the United States or an agency of the United States and used to provide transitional housing for the indigent under a program operated or directed by the United States Department of Housing and Urban Development. (b) For purposes of this section, transitional housing for indigent individuals is housing provided at no cost or nominal cost to an indigent individual or family during a temporary period in which the individual or a member of the family participates in a job training program, job placement program, or other program intended to assist the individual or family to become self-sufficient.
(c) The exemption provided by this section applies even if the United States or its agency leases the property to a nonprofit organization in return for the organization’s assistance in operating the program to provide transitional housing, as long as the lease does not require the nonprofit organization to pay more than a nominal amount to lease the property.
Added by 1991 Tex. Laws, p. 2710, ch. 762, Sec. 13.
Property exempt from ad valorem taxation by federal law is exempt from taxation.
Cross References: Sec. 11.13. Residence Homestead.
No application required, see Sec. 11.43(a).
Jurisdiction to tax, see Sec. 11.01.
Interstate allocation, see Sec. 21.03.
Allocation of vessels and other watercraft, see Secs. 21.021 & 21.031.Notes:
Foreign trade zones constitute foreign and, hence, interstate commerce, so they are in the purview of U. S. Congress. Imposing local property taxes on the property in foreign trade zones would affect interstate and foreign commerce, and forbidding such taxes would provide uniform treatment of foreign trade zones throughout the country. The exemption from local property taxes does not violate the Tenth Amendment nor the Guarantee Clause of the U. S. Constitution. Deer Park Independent School District et al. v. Harris County Appraisal District et al, 132 F.3d 1095 (U.S. 5th Cir. 1998, petition denied).Rule in Harris Co. v. Xerox (below) does not apply to goods in a customs warehouse bound for domestic distribution. These goods can be taxed. R.J. Reynolds v. Durham County, N.C., 107 S.Ct. 499 (1986).
Goods stored in a U.S. customs warehouse under customs bond could not be taxed by the city of Houston. The U.S. Congress created these duty-free zones as part of a comprehensive scheme to encourage use of American ports as centers for goods in foreign trade. State property taxes on goods located within the area were pre-empted by action of Congress. Harris County v. Xerox Corp., 103 S.Ct. 523 (1982).
As a general rule, property of the federal government is not taxable unless it is being used by a private party. In that instance, as with property of the state and its political subdivisions, the possessory interest of the private party is taxable. See United States v. County of Fresno, 429 U.S. 452, 50 L.Ed.2d 683, 97 S.Ct. 699 (1977).
Congress has the sole authority to determine whether and to what extent its agencies are immune from state taxation, and any waiver of immunity is strictly construed. Reconstruction Finance Corp. v. State of Texas, 229 F.2d 9 (5th Cir. 1956), cert. denied, 76 S.Ct. 695, 351 U.S. 907, 100 L.Ed. 1442 (1956).
An exporter that detains goods in a warehouse while awaiting overseas export is entitled to a property tax exemption under the Commerce Clause and the Equal Protection Clause of the United States Constitution. Taxation would prevent the federal government from speaking with one voice in its regulation of commercial relations with foreign governments. Vinmar, Inc. v. Harris County Appraisal District, 947 S.W.2d 554 (Tex. 1997).
Even though property owned by private persons contained leasehold interests of a federal entity, the appraisal district must appraise lessors’ property at its full fee simple value. Leaseholds held by the Postal Service were not exempt from taxation because their value did not affect the value of the fee simple, which already included the value of any leasehold interests. Dallas Central Appraisal Dist. v. United States Postal Service, 866 S.W.2d 209 (Tex. 1993).
An exempt organization must narrowly define the recipients of the organization’s dissolved assets to insure that they fit within the Property Tax Code’s delineated list of exempt entities. Failure to do so allowed the appraisal district to deny exempt status to the organization, thereby allowing the organization’s land to be taxed. Since there is no federal law preemption of this Code requirement, the appraisal district could legally deny the exemption. Mission Palms Retirement Housing, Inc. v. Hidalgo County Appraisal District, 896 S.W.2d 819 (Tex. App.–Corpus Christi 1995, no writ).
Sec. 11.14. Tangible Personal Property Not Producing Income. (a) A family or single adult is entitled to an exemption from taxation for the county purposes authorized in Article VIII, Section 1-a, of the Texas Constitution of $3,000 of the assessed value of his residence homestead. (b) An adult is entitled to exemption from taxation by a school district of $15,000 of the appraised value of the adult’s residence homestead, except that $10,000 of the exemption does not apply to an entity operating under former Chapter 17, 18, 25, 26, 27, or 28, Education Code, as those chapters existed on May 1, 1995, as permitted by Section 11.301, Education Code.
(c) In addition to the exemption provided by Subsection (b) of this section, an adult who is disabled or is 65 or older is entitled to an exemption from taxation by a school district of $10,000 of the appraised value of his residence homestead.
(d) In addition to the exemptions provided by Subsections (b) and (c) of this section, an individual who is disabled or is 65 or older is entitled to an exemption from taxation by a taxing unit of a portion (the amount of which is fixed as provided by Subsection (e) of this section) of the appraised value of his residence homestead if 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 the 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.
(e) The amount of an exemption adopted as provided by Subsection (d) of this section is $3,000 of the appraised value of the residence homestead unless a larger amount is specified by:
(1) the governing body authorizing the exemption if the exemption is authorized as provided by Subdivision (1) of Subsection (d) of this section; or
(2) the petition for the election if the exemption is authorized as provided by Subdivision (2) of Subsection (d) of this section.
(f) Once authorized, an exemption adopted as provided by Subsection (d) of this section may be repealed or decreased or increased in amount by the governing body of the taxing unit or by the procedure authorized by Subdivision (2) of Subsection (d) of this section. In the case of a decrease, the amount of the exemption may not be reduced to less than $3,000 of the market value.
(g) If the residence homestead exemption provided by Subsection (d) of this section is adopted by a county that levies a tax for the county purposes authorized by Article VIII, Section 1-a, of the Texas Constitution, the residence homestead exemptions provided by Subsections (a) and (d) of this section may not be aggregated for the county tax purposes. An individual who is eligible for both exemptions is entitled to take only the exemption authorized as provided by Subsection (d) of this section for purposes of that county tax.
(h) Joint, community, or successive owners may not each receive the same exemption provided by or pursuant to this section for the same residence homestead in the same year. An eligible disabled person who is 65 or older may not receive both a disabled and an elderly residence homestead exemption but may choose either. A person may not receive an exemption under this section for more than one residence homestead in the same year.
(i) The assessor and collector for a taxing unit may disregard the exemptions authorized by Subsection (b), (c), (d), or (n) of this section and assess and collect a tax pledged for payment of debt without deducting the amount of the exemption if:
(1) prior to adoption of the exemption, the unit pledged the taxes for the payment of a debt; and
(2) granting the exemption would impair the obligation of the contract creating the debt.
(j) For purposes of this section:
(1) "Residence homestead" means a structure (including a mobile home) or a separately secured and occupied portion of a structure (together with the land, not to exceed 20 acres, and improvements used in the residential occupancy of the structure, if the structure and the land and improvements have identical ownership) that:
(A) is owned by one or more individuals, either directly or through a beneficial interest in a qualifying trust;
(B) is designed or adapted for human residence;
(C) is used as a residence; and
(D) is occupied as his principal residence by an owner or, for property owned through a beneficial interest in a qualifying trust, by a trustor of the trust who qualifies for the exemption.
(2) "Trustor" means a person who transfers an interest in residential property to a qualifying trust, whether by deed or by will, or the person’s spouse.
(3) "Qualifying trust" means a trust:
(A) in which the agreement or will creating the trust provides that the trustor of the trust has the right to use and occupy as the trustor’s principal residence residential property rent free and without charge except for taxes and other costs and expenses specified in the instrument:
(i) for life;
(ii) for the lesser of life or a term of years; or
(iii) until the date the trust is revoked or terminated by an instrument that describes the property with sufficient certainty to identify it and is recorded in the real property records of the county in which the property is located; and
(B) that acquires the property in an instrument of title that:
(i) describes the property with sufficient certainty to identify it and the interest acquired;
(ii) is recorded in the real property records of the county in which the property is located; and
(iii) is executed by the trustor or the personal representative of the trustor.
(k) A qualified residential structure does not lose its character as a residence homestead if a portion of the structure is rented to another or is used primarily for other purposes that are incompatible with the owner’s residential use of the structure. However, the amount of any residence homestead exemption does not apply to the value of that portion of the structure that is used primarily for purposes that are incompatible with the owner’s residential use.
(l) A qualified residential structure does not lose its character as a residence homestead when the owner who qualifies for the exemption temporarily stops occupying it as a principal residence if that owner does not establish a different principal residence and intends to return and occupy the structure as his principal residence.
(m) In this section:
(1) "Disabled" means under a disability for purposes of payment of disability insurance benefits under Federal Old-Age, Survivors, and Disability Insurance.
(2) "School district" means a political subdivision organized to provide general elementary and secondary public education. "School district" does not include a junior college district or a political subdivision organized to provide special education services.
(n) In addition to any other exemptions provided by this section, an individual is entitled to an exemption from taxation by a taxing unit of a percentage of the appraised value of his residence homestead if the exemption is adopted by the governing body of the taxing unit before July 1 in the manner provided by law for official action by the body. If the percentage set by the taxing unit produces an exemption in a tax year of less than $5,000 when applied to a particular residence homestead, the individual is entitled to an exemption of $5,000 of the appraised value. The percentage adopted by the taxing unit may not exceed 20 percent.
(o) For purposes of this section, a residence homestead also may consist of an interest in real property created through ownership of stock in a corporation incorporated under the Cooperative Association Act (Article 1396-50.01, Vernon’s Texas Civil Statutes) to provide dwelling places to its stockholders if:
(1) the interests of the stockholders of the corporation are appraised separately as provided by Section 23.19 of this code in the tax year to which the exemption applies;
(2) ownership of the stock entitles the owner to occupy a dwelling place owned by the corporation;
(3) the dwelling place is a structure or a separately secured and occupied portion of a structure; and
(4) the dwelling place is occupied as his principal residence by a stockholder who qualifies for the exemption.
(p) Exemption under this section for a homestead described by Subsection (o) of this section extends only to the dwelling place occupied as a residence homestead and to a portion of the total common area used in the residential occupancy that is equal to the percentage of the total amount of the stock issued by the corporation that is owned by the homestead claimant. The size of a residence homestead under Subsection (o) of this section, including any relevant portion of common area, may not exceed 20 acres.
(q) The surviving spouse of an individual who qualifies for an exemption under Subsection (d) for the residence homestead of a person 65 or older is entitled to an exemption for the same property from the same taxing unit in an amount equal to that of the exemption for which the deceased spouse qualified if:
(1) the deceased spouse died in a year in which the deceased spouse qualified for the exemption;
(2) the surviving spouse was 55 or older when the deceased spouse died; and
(3) the property was the residence homestead of the surviving spouse when the deceased spouse died and remains the residence homestead of the surviving spouse.
(r) An individual who receives an exemption under Subsection (d) is not entitled to an exemption under Subsection (q).
(s) Expired January 1, 1999.
Amended by 1981 Tex. Laws (1st C.S.), p. 127, ch. 13, Sec. 31; amended by 1983 Tex. Laws, p. 4822, ch. 851, Sec. 6; amended by 1985 Tex. Laws, p. 2452, ch. 301, Sec. 1; amended by 1987 Tex. Laws, ch. 547, Sec. 1; amended by 1991 Tex. Laws, p. 413, ch. 20, Secs. 18 and 19, and p. 1481, ch. 391, Sec. 14; amended by 1993 Tex. Laws, p. 1526, ch. 347, Sec. 4.08 and by p. 3364, ch. 854, Sec. 1; amended by 1995 Tex. Laws, p. 844, ch. 76, Sec. 15.01, and p. 3460, ch. 610, Sec. 1; amended by 1997 Tex. Laws, p. 1062, ch. 194, Sec. 1; p. 2067, ch. 592, Sec. 2.01; p. 3899, ch. 1039, Sec. 6; p. 4030, ch. 1059, Sec. 2; and p. 4094, ch. 1071, Sec. 28; amended by HB 3549, 76th Tex. Leg., 1999, eff. January 1, 2000; amended by SB 435, 76th Tex. Leg., 1999, eff. June 19, 1999.
Cross References:
Annual application not required, see Sec. 11.43(c).
Late application for homestead exemption, see Sec. 11.431.
Partial ownership, see Sec. 11.41.
School tax ceiling on homesteads of elderly, see Sec. 11.26.
Abatement of delinquent tax suits on homesteads of elderly, see Sec. 33.06.
Installment payments for certain homesteads, see Secs. 31.031 and 31.032.
Deferral of tax increase for a value increase exceeding 105 percent, see Sec. 33.065.
Exemption application form, see Rule Sec. 9.415.
Prorating taxes for elderly exemption granted after January 1, see Sec. 26.112.
Qualification date for homestead exemptions, see Sec. 11.42.
Separate appraisal of cooperative housing, see Sec. 23.19.
Termination of elderly homestead exemption, see Sec. 26.10.
Constitutional authorization, see art. VIII, Sec. 1-b, Tex. Const.
Consolidated school districts, see Sec. 41.008, Education Code.Notes:
The Tax Injunction Act bars injunctive or declaratory relief for state tax matters in federal court unless the state fails to have a speedy and efficient remedy for a taxpayer’s claim. Texas courts have such a remedy, and taxpayers could not seek injunctive remedy for taxes assessed on their homesteads for improperly granted exemptions to previous owners of the homes. Hamilton v. Dallas Central Appraisal District, No. 3:98-CV-2553-L (N. D. Tex. 1999).A spouse with a legal life estate is an owner of the property for property tax purposes and entitled to claim a homestead exemption. The Tax Code requires the property to be listed in the name of the life tenant. Copeland v. Tarrant Appraisal District, 906 S.W.2d 148 (Tex. App.–Fort Worth 1995, writ denied).
Where a residence homestead was the separate property of the under-65 husband, the over-65 wife could not qualify for the over-65 exemption, even though the property was her homestead for other constitutional purposes. Under the statute, the qualified person must be an owner of the residence. Ripley v. Stephens, 686 S.W.2d 757 (Tex. App.–Austin 1985, writ ref’d n.r.e.).
A blind person under the age of 55 who is engaged in substantial gainful activity is not under a disability for purposes of payment of disability insurance benefits under the Federal Old-Age, Survivors, and Disability Insurance, and is therefore not entitled to a homestead exemption under Property Tax Code Section 11.13(c) and (d). Tex. Att’y Gen. LO-95-060 (1995).
All homestead exemptions are to be adopted by the actions of a taxing unit’s governing body, not through an election ballot voted on by the taxpayers. Op. Tex. Att’y. Gen. No. DM-312 (1994).
A taxing unit does not have to offer the optional homestead exemption set forth in art. 8, Sec. 1-b, Tex. Const., to both the elderly and the disabled, but may choose either one or both. Op. Tex. Att’y Gen. No. JM-829 (1987).
Neither the residence owned by a corporation, nor the corporate stock owned by persons who live in cooperative housing is entitled to the residence homestead tax exemption or to the protection afforded homesteads exempt from forced sale for debt. Op. Tex. Att’y Gen. No. JM-612 (1986). (Note: Sec. 11.13(o) has been added to permit owners of cooperative housing to receive a residential homestead exemption beginning January 1, 1988.)
A chief appraiser cannot arbitrarily limit the amount of land granted a homestead exemption to less than the maximum 20 acres specified in Subsection (j). The amount of land must be determined on a case-by-case basis according to its actual use. Op. Tex. Att’y Gen. No. JM-40 (1983).
The exemption application deadline in Sec. 11.43 does not apply to local option over-65 exemptions granted under art. VIII, Sec. 1-b of the Texas Constitution. Op. Tex. Att’y Gen. No. MW-146 (1980). However, in a later opinion in the same year, the attorney general said a taxpayer could wait so long that granting his exemption would be administratively impracticable. Op. Tex. Att’y Gen. No. MW-259 (1980). (Note: These opinions preceded the addition of Sec. 11.431 to the Property Tax Code.)
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 all tangible personal property, other than manufactured homes, that the person owns and that is not held or used for production of income. (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.
Amended by 1987 Tex. Laws, ch. 1, Sec. 1; amended by 1989 Tex. Laws, p. 391, ch. 76, Sec. 1; amended by 1991 Tex. Laws, p. 1482, ch. 391, Sec. 15; amended by 1993 Tex. Laws, p. 1527, ch. 347, Sec. 4.09.
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, Tax Code.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.)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. 11.146. Mineral Interest 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.(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.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.Sec. 11.161. Implements of Husbandry. (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 SB 977, 76th Tex. Leg., 1999, eff. January 1, 2000.
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.).
Standing timber on a tree farm is not a farm product. Kirby Lumber Corp. v. Hardin Independent School Dist., 351 S.W.2d 310 (Tex. App.–Waco 1961, 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. 11.17. Cemeteries. Implements of husbandry that are used in the production of farm or ranch products or of timber are exempt from ad valorem taxation.
Added by 1981 Tex. Laws (1st C.S.), p. 127, ch. 13, Sec. 32; amended by 1983 Tex. Laws, p. 4823, ch. 851, Sec. 7; amended by SB 977, 76th Tex. Leg., 1999, eff. January 1, 2000.
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:
HB 334, 73rd Legislature, 1993, effective January 1, 1994, defines a "nursery stock weather protection unit" as "a plant cover consisting of a series of removable, portable metal hoops, covered by nonreusable plastic sheeting, shade cloth, or other similar removable material, used exclusively for protecting nursery products from weather elements. A nursery stock weather protection unit is an implement of husbandry for all purposes, including Article VIII, Section 19a, of the Texas Constitution."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. 11.18. Charitable Organizations. 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. 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. 11.181. Charitable Organizations Improving Property for Low-Income Housing. (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, as a corporation, as a foundation, as a trust, or as an association, must meet the applicable requirements of Subsections (d), (e), (f), and (g) of this section.
(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) of this section, 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 as set forth in Paragraph (A), (B), (C), (D), (E), (F), (G) or (H):
(A) charity care and government sponsored indigent health care are provided at a level which is reasonable in relation to the community needs, as determined through the community needs assessment, the available resources of the hospital or hospital system, and the tax-exempt benefits received by the hospital or hospital system;
(B) charity care and government-sponsored indigent health care are provided in a amount equal to at least four percent of the hospital’s or hospital system’s net patient revenue;
(C) charity care and government-sponsored indigent health care are provided in an amount equal to at least 100 percent of the hospital’s or hospital system’s tax-exempt benefits, excluding federal income tax;
(D) a nonprofit hospital that has been designated as a disproportionate share hospital under the state Medicaid program in the current year or in either of the previous two fiscal years shall be considered to have provided a reasonable amount of charity care and government-sponsored indigent health care and shall be deemed in compliance with the standards in this subsection;
(E) for tax years before 1996, charity care and community benefits are provided in a combined amount equal to at least five percent of the hospital’s or hospital system’s net patient revenue, provided that charity care and government-sponsored indigent health care are provided in an amount equal to at least three percent of net patient revenue;
(F) beginning with the hospital’s or hospital system’s tax year starting after 1995, charity care and community benefits are provided in a combined amount equal to at least five percent of the hospital’s or hospital system’s net patient revenue, provided that charity care and government-sponsored indigent health care are provided in an amount equal to at least four percent of net patient revenue;
(G) a hospital operated on a nonprofit basis that is located in a county with a population of less than 50,000 and in which the entire county or the population of the entire county has been designated as a health professionals shortage area is considered to be in compliance with the standards provided by this subsection; or
(H) a hospital providing health care services to inpatients or outpatients without receiving any payment for providing those services from any source, including those services from any source, including the patient or person legally obligated to support the patient, third-party payers, Medicare, Medicaid, or any other state or local indigent care program but excluding charitable donations, legacies, bequests, or grants or payments for research, is considered to be in compliance with the standards provided by this subsection;
(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 Board of Pardons and Paroles;
(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 and its subsequent amendments;
(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); or
(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.
(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) of the Internal Revenue Code of 1986, and its subsequent amendments, 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.
For purposes of satisfying Paragraph (f) of Subdivision (1), a hospital or hospital system may not change its existing fiscal year unless the hospital or hospital system changes its ownership or corporate structure as a result of a sale or merger.
For purposes of this subsection, a hospital that satisfies Paragraph (A), (D), (G), or (H) of Subdivision (1) shall be excluded in determining a hospital system’s compliance with the standards provided by paragraph (B), (C), (E), or (F) of Subdivision (1).
For purposes of this subsection, the terms "charity care," "government-sponsored indigent health care," "health care organization," "hospital system," "net patient revenue," "nonprofit hospital," and "tax-exempt benefits" have the meanings set forth in Sections 311.031 and 311.042, Health and Safety Code. A determination of the amount of community benefits and charity care and government-sponsored indigent health care provided by a hospital or hospital system and the hospital’s or hospital system’s compliance with the requirements of Section 311.045, Health and Safety Code, shall be based on the most recently completed and audited prior fiscal year of the hospital or hospital system.
The providing of charity care and government-sponsored indigent health care in accordance with Paragraph (A) of Subdivision (1) shall be guided by the prudent business judgment of the hospital which will ultimately determine the appropriate level of charity care and government-sponsored indigent health care based on the community needs, the available resources of the hospital, the tax-exempt benefits received by the hospital, and other factors that may be unique to the hospital, such as the hospital’s volume of Medicare and Medicaid patients. These criteria shall not be determinative factors, but shall be guidelines contributing to the hospital’s decision along with other factors which may be unique to the hospital. The formulas contained in Paragraphs (B), (C), (E), and (F) of Subdivision (1) shall also not be considered determinative of a reasonable amount of charity care and government-sponsored indigent health care.
The requirements of this subsection shall not apply to the extent a hospital or hospital system demonstrates that reductions in the amount of community benefits, charity care, and government-sponsored indigent health care are necessary to maintain financial reserves at a level required by a bond covenant, are necessary to prevent the hospital or hospital system from endangering its ability to continue operations, or if the hospital or hospital system, as a result of a natural or other disaster, is required substantially to curtail its operations.
In any fiscal year that a hospital or hospital system, through unintended miscalculation, fails to meet any of the standards in Subdivision (1), the hospital or hospital system shall not lose its tax-exempt status without the opportunity to cure the miscalculation in the fiscal year following the fiscal year the failure is discovered by both meeting one of the standards and providing an additional amount of charity care and government-sponsored indigent health care that is equal to the shortfall from the previous fiscal year. A hospital or hospital system may apply this provision only once every five years.
(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) of this section other than a function specified in Subdivision (1), (2), (8), (9), (12), (16), or (18), be organized as a nonprofit corporation as defined by the Texas Non-Profit Corporation Act.
(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) of this section 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 Subsection (d)(1)(B).
(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.
Subsection (l) added by HB 1978, 76th Tex. Leg., 1999, eff. January 1, 2000, with passage of HJR 4:
(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.
Subsection (l) and (m) added by HB 873, 76th Tex. Leg., 1999, eff. May 18, 1999:
(l) A property may not be exempted under Subsection (a)(2) for more than three years.
(m) 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.
Amended by 1981 Tex. Laws (1st C.S.), p. 127, ch. 13, Sec. 33; amended by 1983 Tex. Laws, p. 2207, ch. 412, Sec. 1; amended by 1985 Tex. Laws, p. 7220, ch. 960, Sec. 1; amended by 1987 Tex. Laws, ch. 430, Sec. 1; amended by 1991 Tex. Laws, p. 1525, ch. 407, Sec. 1; amended by 1993 Tex. Laws, p. 1642, ch. 360, Sec. 5; amended by 1995 Tex. Laws, p. 3186, ch. 471, Sec. 1, and p. 4049, ch. 781, Sec. 4; amended by 1997 Tex. Laws, p. 2358, ch. 715, Sec. 1; p. 3900, ch. 1039, Sec. 7; and p. 5285, ch. 1411, Sec. 1; amended by HB 873, 76th Tex. Leg., 1999, eff. May 18, 1999; amended by HB 1978, 76th Tex. Leg., 1999, eff. January 1, 2000; amended by HB 2269, 76th Tex. Leg., 1999, eff. January 1, 2000; and amended by HB 2821, 76th Tex. Leg., 1999, eff. September 1, 1999.
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:
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).
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).
Sec. 11.182. Community Housing Development Organizations Improving Property for Low-Income and Moderate-Income Housing. (a) An organization is entitled to an exemption from taxation of improved or 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) owns the property for the purpose of building or repairing housing on the property primarily with volunteer labor to sell without profit to an individual or family satisfying the organization’s low-income and other eligibility requirements; and
(3) engages exclusively in the building, repair, and sale of housing as described by Subdivision (2), and related activities.
(b) Property may not be exempted under Subsection (a) after the third 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 an individual or family satisfying the organization’s low-income or other eligibility requirements, 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 calculated from the dates on which the taxes would have become due.
(f) The charitable organization and the purchaser of the property from that organization are jointly and severally liable for the penalty and interest imposed under Subsection (e). A tax lien in favor of all taxing units for which the penalty is imposed attaches to the property to secure payment of the penalty and interest.
(g) The chief appraiser shall make an entry in the appraisal records for the property against which a penalty under Subsection (e) is imposed and shall deliver written notice of the imposition of the penalty and interest to the charitable organization and to the person who purchased the property from that organization.
Added by 1993 Tex. Laws, p. 1478, ch. 345, Sec. 1.
Cross References:
Annual application required, see Sec. 11.43(c).
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Exception from January 1 qualifications, see Sec. 11.42(a).
Exemption application form, see Sec. 11.436 and Rule Sec. 9.415.
Prorating taxes, see Sec. 26.111.
Model application form, see Rule Sec. 9.415.Notes:
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).A nonprofit housing finance corporation created subsidiary corporations to which it loaned money to operate housing projects. The subsidiary corporations were entitled to exemption because the parent corporation had equitable title to the property owned by the corporations. Harris County Appraisal District v. Southeast Texas Housing Finance Corporation, 991 S.W.2d 18 (Tex. App. -- Amarillo 1998).
Sec. 11.183. Association Providing Assistance to Ambulatory Health Care Centers. (a) An organization is entitled to an exemption from taxation of improved or unimproved real property it owns if the organization: (1) is organized as a community housing development organization;
(2) meets the requirements of a charitable organization provided by Sections 11.18(e) and (f);
(3) owns the property for the purpose of building or repairing housing on the property to sell without profit to a low-income or moderate-income individual or family satisfying the organization’s eligibility requirements or to rent without profit to such an individual or family; and
(4) engages exclusively in the building, repair, and sale or rental of housing as described by Subdivision (3) and related activities.
(b) Property owned by the organization may not be exempted under Subsection (a) after the third anniversary of the date the organization acquires the property unless the organization is offering to rent or is renting the property without profit to a low-income or moderate-income individual or family satisfying the organization’s eligibility requirements.
(c) A person claiming an exemption for property described under this section must comply with the requirements of Sections 11.43(a) and (b).
(d) 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, sale, or rental of property. To qualify for an exemption under this subsection, property must be used exclusively by the organization, except that another person may use the property for activities incidental to the organization’s use that benefit the beneficiaries of the organization.
(e) In this section "community housing development organization" has the meaning assigned that term by 42 U.S.C. Section 12704.
Added by 1997 Tex. Laws, p. 2360, ch. 715, Sec. 2.
Cross References:
Annual application 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.
Exception from January 1 qualifications, see Sec. 11.436.
Exemption application form, see Sec. 11.436 and Rule Sec. 9.415.
Prorating taxes, see Sec. 26.111.
Model application form, see Rule Sec. 9.415.Notes:
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).A nonprofit housing finance corporation created subsidiary corporations to which it loaned money to operate housing projects. The subsidiary corporations were entitled to exemption because the parent corporation had equitable title to the property owned by the corporations. Harris County Appraisal District v. Southeast Texas Housing Finance Corporation, 991 S.W.2d 18 (Tex. App. -- Amarillo 1998).
Sec. 11.19. Youth Spiritual, Mental, and Physical Development Associations. (a) An association is entitled to an exemption from taxation of the property it owns and uses exclusively for the purposes for which the association is organized if the association: (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) complies with the criteria for a charitable organization under Sections 11.18(e) and (f);
(3) except as provided by Subsection (b), engages exclusively in providing assistance to ambulatory health care centers that provide medical care to individuals without regard to the individuals’ ability to pay, including providing policy analysis, disseminating information, conducting continuing education, providing research, collecting and analyzing data, or providing technical assistance to the health care centers;
(4) is funded wholly or partly, or assists ambulatory health care centers that are funded wholly or partly, by a grant under Section 330, Public Health Service Act (42 U.S.C. Section 254b), and its subsequent amendments; and
(5) does not perform abortions or provide abortion referrals or provide assistance to ambulatory health care centers that perform abortions or provide abortion referrals.
(b) Use of the property by a person other than the association does not affect the eligibility of the property for an exemption authorized by this section if the use is incidental to use by the association and limited to activities that benefit:
(1) the ambulatory health care centers to which the association provides assistance; or
(2) the individuals to whom the health care centers provide medical care.
(c) Performance of noncharitable functions by the association does not affect the eligibility of the property for an exemption authorized by this section if those other functions are incidental to the association’s charitable functions.
Added by HB 541, 76th Tex. Leg., 1999, eff. January 1, 2000.
Cross References:
Annual application not required, see Sec. 11.43(c).
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Exemption application form, see Rule Sec. 9.415.
Filing deadline, see Sec. 11.43(d).Sec. 11.20. Religious Organizations. (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 three 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 HB 873, 76th Tex. Leg., 1999, eff. May 18, 1999.
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:
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).
Sec. 11.21. Schools. (a) An organization that qualifies as a religious organization as provided by Subsection (c) of this section 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) of this subsection;
(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) of this subsection; and
(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.
(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 Subdivision (1) or (2) of Subsection (a) of this section 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 three 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.
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 HB 873, 76th Tex. Leg., 1999, eff. May 18, 1999.
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:
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).
In 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 court of appeals held 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.
In Davies v. Meyer, 541 S.W.2d 827 (Tex. 1976), the supreme court denied tax exempt status to a church camp, except for portions of the camp used for minister’s residence and an open air chapel. The 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.
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 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.).
In Swearingen v. City of Texarkana, 596 S.W.2d 157 (Tex. Civ. App.–Texarkana 1979), the court noted on rehearing that Sec. 11.20 of the Property Tax Code 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.
In Davis v. Congregation Agudas Achim, 456 S.W.2d 459 (Tex. App.–San Antonio 1970, no writ), the court indicated that 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.
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. 11.22. Disabled Veterans. (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 three 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 HB 873, 76th Tex. Leg., 1999, eff. May 18, 1999.
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 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).
(a) A disabled veteran is entitled to an exemption from taxation of a portion of the assessed value of a property he owns and designates as provided by Subsection (f) of this section in accordance with the following schedule:
For a Disability Rating Of An Exemption
Of Up ToAt Least But Not
Greater Than1,500 of the assessed value 10% 30% 2,000 50 2,500 51 70 3,000 71 and over Sec. 11.23. Miscellaneous Exemptions. Cross References: (b) A disabled veteran is entitled to an exemption from taxation of $3,000 of the assessed value of a property he 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 $2,500 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 $2,500 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.
Exemption application form, see Rule Sec. 9.415.
Annual application not required, see Sec. 11.43(c).
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, increases 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. The amounts of the exemptions are:Disability rating of not less than 10 but not more than 30 percent $ 5,000
Disability rating of more than 30 but not more than 50 percent $ 7,500
Disability rating of more than 50 but not more than 70 percent $10,000
Disability rating of more than 70 percent; or a veteran
who has a disability rating of not less than 10 percent and
is age 65 or older; or a disabled veteran whose disability
consists of the loss or loss of use of one or more limbs, total
blindness in one or both eyes, or paraplegia $12,000
Spouse and children of member of armed service who dies
while on active duty $ 5,000
HJR 68 provides 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.
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).
Sec. 11.24. Historic Sites. (a) Veteran’s Organizations. A nonprofit organization that is composed primarily of members or former members of the armed forces of the United States or its allies and that is chartered or incorporated by the United States Congress is entitled to an exemption from taxation of each of the buildings (including the land that is reasonably necessary for use of, access to, and ornamentation of the buildings) and other property owned and primarily used by that organization if the property is not used to produce revenue or held for gain. Occasional renting of the post or chapter property for other nonprofit activities does not result in loss of the exemption provided by this subsection if the rental proceeds are used solely for the maintenance and improvement of the property. For purposes of this subsection, an organization is a nonprofit organization if it is organized and operated in a way that does not result in the accrual of distributable profits, realization of private gain from payment of compensation in excess of a reasonable allowance for salary or other compensation for services rendered, or realization of any other form of private gain. (b) Federation of Women’s Clubs. The Texas Federation of Women’s Clubs is entitled to an exemption from taxation of the tangible property it owns if the property is not held for gain.
(c) Nature Conservancy of Texas. The Nature Conservancy of Texas, Incorporated, is entitled to an exemption from taxation of the tangible property it owns if the property is not held for gain, as long as the organization is a nonprofit corporation as defined by the Texas Non-Profit Corporation Act.
(d) Congress of Parents and Teachers. The Texas Congress of Parents and Teachers is entitled to an exemption from taxation for state and county purposes of the buildings (including the land that is reasonably necessary for use of, access to, and ornamentation of the buildings) it owns and uses as its state headquarters.
(e) Private Enterprise Demonstration Associations. An association that engages exclusively in conducting nonprofit educational programs designed to demonstrate the American private enterprise system to children and young people and that operates under a state or national organization that is organized and operated for the same purpose is entitled to an exemption from taxation of the tangible property that it owns and uses exclusively if it is reasonably necessary for the association’s operation.
(f) Bison, Buffalo, and Cattalo. A person is entitled to an exemption from taxation of the bison, buffalo, and cattalo he owns that are not held for gain and that are used in experimental breeding with cattle for the purpose of producing an improved strain of meat animal or kept in parks to preserve the species.
(g) Theater Schools. A corporation that is organized to promote the teaching and study of the dramatic arts is entitled to an exemption from taxation of the property it owns and uses in the operation of a school for the dramatic arts if:
(1) the corporation is organized as a nonprofit corporation as defined by the Texas Non-Profit Corporation Act;
(2) the corporation is not self-sustaining in any fiscal year from income other than gifts, grants, or donations;
(3) the corporation is exempt from federal income taxes;
(4) the school maintains a theater-school program with regular classes for at least four grades, formal textbooks and curriculum, an enrollment of 150 or more students during each of at least two semesters every calendar year, and a faculty substantially all of whom hold degrees in theater arts from an accredited school of higher education;
(5) the school offers apprenticeship or other practical training in theater management and operation for college students or offers similar training for playwrights, actors, and production personnel; and
(6) more than one-half of each season’s theatrical productions for which admission is charged have significant literary merit of the character that contributes to the educational programs of secondary schools and schools of higher education.
(h) Repealed January 1, 1988.
(i) Community Service Clubs. An association that qualifies as a community service club is entitled to an exemption from taxation of the tangible property the club owns that qualifies under Article VIII, Section 2, of the constitution and that is not used for profit or held for gain. To qualify as a community service club for the purposes of this subsection, an association must:
(1) be organized to promote and must engage primarily in promoting:
(A) the religious, educational, and physical development of boys, girls, young men, or young women;
(B) the development of the concepts of patriotism and love of country; and
(C) the development of interest in community, national, and international affairs;
(2) be affiliated with a state or national organization of similar purpose;
(3) be open to membership without regard to race, religion, or national origin; and
(4) be operated in a way that does not result in accrual of distributable profits, realization of private gain resulting from payment of compensation in excess of a reasonable allowance for salary or other compensation for services rendered, or realization of any other form of private gain.
(j) Medical Center Development. All real and personal property owned by a nonprofit corporation, as defined in the Texas Non-Profit Corporation Act, and held for use in the development of a medical center area or areas in which the nonprofit corporation has donated land for a state medical, dental, or nursing school, and for other hospital, medical, and educational uses and uses reasonably related thereto, during the time remaining property is held for the development to completion of the medical center and not leased or otherwise used with a view to profit, is exempt from all ad valorem taxation as though the property were, during that time, owned and held by the state for health and educational purposes.
(k) Scientific Research Corporations. A nonprofit corporation as defined in the Texas Non-Profit Corporation Act is entitled to an exemption from taxation of the property it owns and uses in scientific research and educational activities for the benefit of one or more colleges and universities. Use of property exempted by this subsection for purposes other than scientific research and education does not result in loss of the exemption if those other functions are incidental to use of the property for scientific research and education activities and benefit the scientific research corporation and the colleges or universities that it supports.
(l) Incomplete improvements. A person described by Subsection (a)-(e), (g), or (i)-(k) is entitled to an exemption from taxation of the real property owned by the person consisting of an incomplete improvement that is under active construction or other physical preparation and that is designed and intended to be used by the person for a purpose described by that subsection when complete and the land on which the incomplete improvement is located that will be reasonably necessary for the person’s use of the improvement for that purpose. A property may not be exempted under this subsection for more than three years. For purposes of this subsection, an incomplete improvement is under physical preparation if the person has:
(1) engaged in architectural or engineering work, soil testing, land clearing activities, or site improvement work necessary for the construction of the improvement; or
(2) conducted an environmental or land use study relating to the construction of the improvement.
Amended by 1981 Tex. Laws (1st C.S.), p. 130, ch. 13, Sec. 37; amended by 1987 Tex. Laws, ch. 430, Sec. 2 and ch. 640, Sec. 5; amended by 1991 Tex. Laws, p. 773, ch. 162, Sec. 1; amended by 1997 Tex. Laws, p. 2966, ch. 954, Sec. 2; amended by HB 873, 76th Tex. Leg., 1999, eff. May 18, 1999.
Cross References:
Exemption application forms, see Rule Sec. 9.415.
Annual application required, see Sec. 11.43(b).
Annual application not required for medical center development, see Sec. 11.43(c).
Definition of bison and buffalo, see Sec. 151.001, Agriculture Code.
Immediate qualification for property acquired by nonprofit corporation after January 1, see Sec. 11.42(c).
No application required for bison, buffalo, and cattalo, see Sec. 11.16 and Sec. 11.43(a).
Prorating taxes for exemption loss after January 1, see Sec. 26.10.
Purely public charity, sec. art. VIII, Sec. 2, Tex. Const.Notes:
Burden is on taxpayer under this section to show it meets both statutory and constitutional requirements. Exclusive use, like primary use, is a question of fact. Dallas County Appraisal District v. Institute for Aerobics Research, 766 S.W.2d 318 (Tex. App.–Dallas 1989, writ denied).Section 11.23(c) is unconstitutional. Section 11.23(c), the property tax exemption for the Nature Conservancy of Texas, Incorporated, is not a general law authorized by Article VIII, Section 2, of the Texas Constitution, and is a special law in violation of Article III. The Nature Conservancy does not meet the requirements of a purely public charity. Op. Tex. Att’y Gen. No. DM-432 (1997).
To qualify for exemption as a biomedical research corporation, an applicant must meet both the requirements of the Texas Constitution’s three-part test and Section 11.23(h). Op. Tex. Att’y Gen. No. JM-682 (1987). (Note: The biomedical research corporation exemption has been moved from Sec. 11.23(h) to Sec. 11.18, Tax Code).
The attorney general has ruled Sec. 11.23(a) unconstitutional. Op. Tex. Att’y Gen. No. MW-436 (1982). If an institution can qualify as an institution of purely public charity or under some other provision of the Texas Constitution, and it also qualifies under this section, then the exemption may be granted.
Section 11.23(j) replaced art. 7150, Sec. 28, V.T.C.S. (now repealed). Article 7150, Sec. 28 was ruled constitutional for land held for donation to medical organizations. However, whether a particular foundation’s property qualifies for the exemption depends upon whether the foundation is a public charity. The ultimate use for purely charitable purposes must be certain, with evidence readily available, and not based merely on intentions and plans. Op. Tex. Att’y Gen. No. H-315 (1974).
The governing body of a taxing unit by official action of the body adopted in the manner required by law for official actions may exempt from taxation part or all of the assessed value of a structure or archeological site and the land necessary for access to and use of the structure or archeological site, if the structure or archeological site is: Sec. 11.25. Marine Cargo Containers Used Exclusively in International Commerce.(1) designated as a Recorded Texas Historic Landmark under Chapter 442, Government Code, or a state archeological landmark under Chapter 191, Natural Resources Code, by the Texas Historical Commission; or
(2) designated as a historically or archeologically significant site in need of tax relief to encourage its preservation pursuant to an ordinance or other law adopted by the governing body of the unit.
Amended by 1995 Tex. Laws, p. 917, ch. 109, Sec. 21.
Cross References:
Exemption application form, see Rule Sec. 9.415.
Annual application required, see Sec. 11.43(b).
Constitutional authorization, see art. VIII, Sec. 1-f, Tex. Const.
Historical preservation societies, charitable exemption, see Sec. 11.18.Notes:
Where the trial record showed no evidence that a historic building was designated a landmark by the Texas Historical Commission or the city, that the city had designated it a historic site in need of tax relief, or that the city or school district had adopted an exemption, the building could not qualify under this section. City of Dallas v. Women’s’ Auxiliary, 620 S.W.2d 695 (Tex. App.–Dallas 1981, writ ref’d n.r.e.).A taxing unit may exempt a specific percentage of property value or a fixed dollar amount of value from an historically significant structure. A taxing unit may not freeze the taxes paid on the historic site as of the date the exemption is granted. The taxing unit is allowed to exempt value – either a percentage of the property value or a fixed dollar amount. Tex. Att’y Gen. LO-97-039 (1997).
(a) A person is entitled to an exemption from taxation of a marine cargo container and the equipment related to the container that the person owns if: (1) the person is:
(A) a citizen of a foreign country; or
(B) an entity organized under the laws of a foreign country; and
(2) the container is:
(A) based, registered, and subject to taxation in a foreign country; and
(B) used exclusively in international commerce.
(b) In this section, "marine cargo container":
(1) means a container that may be:
(A) used to transport goods by ship;
(B) readily handled;
(C) transferred from one mode of transport to another without reloading; and
(D) used repeatedly; and
(2) includes a container that is fully or partially enclosed so as to serve as a compartment for goods, has an open top suitable for loading goods into the container, or consists of a flat rack suitable for securing goods onto the container.
Added by 1997 Tex. Laws, p. 2389, ch. 726, Sec. 1.
Cross References:
No application required, see Sec. 11.43(a).Sec. 11.251. Tangible Personal Property Exempt.
(a) In this section, "freeport goods" means property that under Article VIII, Section 1-j, of the Texas Constitution is not taxable. (b) A person is entitled to an exemption from taxation of the appraised value of that portion of the person’s inventory or property consisting of freeport goods.
(c) The exemption provided by Subsection (b) is subtracted from the market value of the inventory or property determined under Section 23.12 to determine the taxable value of the inventory or property.
(d) Except as provided by Subsections (f) and (g), the chief appraiser shall determine the appraised value of freeport goods under this subsection. The chief appraiser shall determine the percentage of the market value of inventory or property owned by the property owner in the preceding calendar year that was contributed by freeport goods. The chief appraiser shall apply that percentage to the market value of the property owner’s inventory or property for the current year to determine the appraised value of freeport goods for the current year.
(e) In determining the market value of freeport goods that in the preceding year were assembled, manufactured, repaired, maintained, processed, or fabricated in this state or used by the person who acquired or imported the property in the repair or maintenance of aircraft operated by a certificated air carrier, the chief appraiser shall exclude the cost of equipment, machinery, or materials that entered into and became component parts of the freeport goods but were not themselves freeport goods or that were not transported outside the state before the expiration of 175 days after they were brought into this state by the property owner or acquired by the property owner in this state. For component parts held in bulk, the chief appraiser may use the average length of time a component part was held in this state by the property owner during the preceding year in determining whether the component parts were transported out of this state before the expiration of 175 days.
(f) If the property owner was not engaged in transporting freeport goods out of this state for the entire preceding year, the chief appraiser shall calculate the percentage of cost described in Subsection (d) for the portion of the year in which the property owner was engaged in transporting freeport goods out of this state.
(g) If the property owner or the chief appraiser demonstrates that the method provided by Subsection (d) significantly understates or overstates the market value of the property qualified for an exemption under Subsection (b) in the current year, the chief appraiser shall determine the market value of the freeport goods to be exempt by determining, according to the property owner’s records and any other available information, the market value of those freeport goods owned by the property owner on January 1 of the current year, excluding the cost of equipment, machinery, or materials that entered into and became component parts of the freeport goods but were not themselves freeport goods or that were not transported outside the state before the expiration of 175 days after they were brought into this state by the property owner or acquired by the property owner in this state.
(h) The chief appraiser by written notice delivered to a property owner who claims an exemption under this section may require the property owner to provide copies of inventory or property records in order to determine the amount and value of freeport goods. If the property owner fails to deliver the information requested in the notice before the 31st day after the date the notice is delivered to the property owner, the property owner forfeits the right to claim or receive the exemption for that year.
(i) The exemption provided by Subsection (b) does not apply to a taxing unit that takes action to tax the property under Article VIII, Section 1-j, Subsection (b), of the Texas Constitution.
(j) Petroleum products as set forth in Article VIII, Section 1-j, of the Texas Constitution shall mean liquid and gaseous materials that are the immediate derivatives of the refining of oil or natural gas.
(k) Property that meets the requirements of Article VIII, Sections 1-j(a)(1) and (2), of the Texas Constitution and that is transported outside of this state not later than 175 days after the date the person who owns it on January 1 acquired it or imported it into this state is freeport goods regardless of whether the person who owns it on January 1 is the person who transports it outside of this state.
Added by 1989 Tex. Laws, p. 1749, ch. 534, Sec. 1; amended by 1991 Tex. Laws, p. 1770, ch. 504, Sec. 1; amended by 1993 Tex. Laws, p. 3053, ch. 779, Sec. 1.
Cross References:
Constitutional authorization, see art. VIII, Sec. 1-j, Tex. Const.
Definition of petroleum products, see Rule Sec. 9.4201.
Exemption for cotton stored in warehouse, see Sec. 11.436.
Freeport application form, see Rule Sec. 9.415.
Rendition of freeport property, see Sec. 22.01.Notes:
The import-export clause of the U. S. Constitution and its related legal test of stream of export exempts goods from taxation once exportation has commenced as a part of transportation in a continuous route or journey. Seaboard states are prohibited from taxing goods merely flowing through their ports from other states. Goods are placed into the stream of export when they were shipped from the vendors to the export shipper for a pre-determined foreign destination. The inspection of the goods, approval for import, and packing the goods were necessary for the safe and efficient movement of these goods and merely facilitated their export. Taxing the goods violated the United States import-export clause. Virginia Indonesia Company v. Harris County Appraisal District, 910 S.W. 2d 905 (Tex. 1995).The freeport provision is not self executing, and the legislature is authorized to prescribe forfeiture provisions. The filing requirements of Section 11.251, while different from other exemption provisions, are not unreasonable or arbitrary. The request for additional information provided in Section 11.45 does apply to the freeport exemption. The 30-day deadline in Section 11.251 is not unconstitutional. Motorola, Inc. v. Tarrant County Appraisal District, 980 S.W.2d 899 (Tex. App. -- Fort Worth 1998).
The application of the freeport exemption does not require the person who acquired or imported the property into this state to own the property continuously until it is transported out of the state. The Legislature repealed the continuous ownership of the goods in 1991 by adopting Section 11.251(k). Op. Tex. Att’y Gen. No. DM-463 (1997).
Sec. 11.26. Limitation of School Tax on Homesteads of Elderly.
(a) The tax officials shall appraise the property to which this section applies and calculate taxes as on other property, but if the tax so calculated exceeds the limitation imposed by this section, the tax imposed is the amount of the tax as limited by this section, except as otherwise provided by this section. A school district may not increase the total annual amount of ad valorem tax it imposes on the residence homestead of an individual 65 years or older above the amount of the tax it imposed in the first tax year in which the individual qualified that residence homestead for the exemption provided by Section 11.13(c) for an individual 65 years of age or older. If the individual qualified that residence homestead for the exemption after the beginning of that first year and the residence homestead remains eligible for the exemption for the next year and if the school district taxes imposed on the residence homestead in the next year are less than the amount of taxes imposed in that first year, a school district may not subsequently increase the total annual amount of ad valorem taxes it imposes on the residence homestead above the amount it imposed in the year immediately following the first year for which the individual qualified that residence homestead for the exemption, except as provided by Subsection (b). If the first tax year the individual qualified the residence homestead for the exemption provided by Section 11.13(c) was a tax year before the 1997 tax year, the amount of the limitation provided by this section is the amount of tax the school district imposed for the 1996 tax year less an amount equal to the amount determined by multiplying $10,000 times the tax rate of the school district for the 1997 tax year, plus any 1997 tax attributable to improvements made in 1996, other than improvements made to comply with governmental regulations or repairs. (b) If an individual makes improvements to the individual’s residence homestead, other than improvements required to comply with governmental requirements or repairs, the school district may increase the tax on the homestead in the first year the value of the homestead is increased on the appraisal roll because of the enhancement of value by the improvements. The amount of the tax increase is determined by applying the current tax rate to the difference in the assessed value of the homestead with the improvements and the assessed value it would have had without the improvements. A limitation imposed by this section then applies to the increased amount of tax until more improvements, if any, are made.
(c) The limitation on tax increases required by this section expires if on January 1:
(1) none of the owners of the structure who qualify for the exemption and who owned the structure when the limitation first took effect is using the structure as a residence homestead; or
(2) none of the owners of the structure qualifies for the exemption.
(d) If the appraisal roll provides for taxation of appraised value for a prior year because a residence homestead exemption for persons 65 years or older was erroneously allowed, the tax assessor shall add, as back taxes due as provided by Subsection (d) of Section 26.09 of this code, the positive difference if any between the tax that should have been imposed for that year and the tax that was imposed because of the provisions of this section.
(e) For each school district in an appraisal district, the chief appraiser shall determine the portion of the appraised value of residence homesteads of the elderly on which school district taxes are not imposed in a tax year because of the limitation on tax increases imposed by this section. That portion is calculated by determining the taxable value that, if multiplied by the tax rate adopted by the school district for the tax year, would produce an amount equal to the amount of tax that would have been imposed by the school district on residence homesteads of the elderly if the limitation on tax increases imposed by this section were not in effect, but that was not imposed because of that limitation. The chief appraiser shall determine that taxable value and certify it to the comptroller as soon as practicable for each tax year.
(f) The limitation on tax increases required by this section does not expire because the owner of an interest in the structure conveys the interest to a qualifying trust as defined by Section 11.13(j) if the owner or the owner’s spouse is a trustor of the trust and is entitled to occupy the structure.
(g) Except as provided by Subsection (b), if an individual who receives a limitation on tax increases imposed by this section subsequently qualifies a different residence homestead for an exemption under Section 11.13, a school district may not impose ad valorem taxes on the subsequently qualified homestead in a year in an amount that exceeds the amount of taxes the school district would have imposed on the subsequently qualified homestead in the first year in which the individual receives that exemption for the subsequently qualified homestead had the limitation on tax increases imposed by this section not been in effect, multiplied by a fraction the numerator of which is the total amount of school district taxes imposed on the former homestead in the last year in which the individual received that exemption for the former homestead and the denominator of which is the total amount of school district taxes that would have been imposed on the former homestead in the last year in which the individual received that exemption for the former homestead had the limitation on tax increases imposed by this section not been in effect.
(h) An individual who receives a limitation on tax increases under this section and who subsequently qualifies a different residence homestead for an exemption under Section 11.13, or an agent of the individual, is entitled to receive from the chief appraiser of the appraisal district in which the former homestead was located a written certificate providing the information necessary to determine whether the individual may qualify for a limitation on the subsequently qualified homestead under Subsection (g) and to calculate the amount of taxes the school district may impose on the subsequently qualified homestead.
(i) If an individual who qualifies for the exemption provided by Section 11.13(c) for an individual 65 years of age or older dies, the surviving spouse of the individual is entitled to the limitation applicable to the residence homestead of the individual if:
(1) the surviving spouse is 55 years of age or older when the individual dies; and
(2) the residence homestead of the individual:
(A) is the residence homestead of the surviving spouse on the date that the individual dies; and
(B) remains the residence homestead of the surviving spouse.
(j) If an individual who qualifies for an exemption provided by Section 11.13(c) for an individual 65 years of age or older dies in the first year in which the individual qualified for the exemption and the individual first qualified for the exemption after the beginning of that year, except as provided by Subsection (k), the amount to which the surviving spouse’s school district taxes are limited under Subsection (i) is the amount of school district taxes imposed on the residence homestead in that year determined as if the individual qualifying for the exemption had lived for the entire year.
(k) If in the first tax year after the year in which an individual dies in the circumstances described by Subsection (j) the amount of school district taxes imposed on the residence homestead of the surviving spouse is less than the amount of school district taxes imposed in the preceding year as limited by Subsection (j), in a subsequent tax year the surviving spouse’s school district taxes on that residence homestead are limited to the amount of taxes imposed by the district in that first tax year after the year in which the individual dies.
(l) For purposes of the limitation on tax increases provided by Subsection (g) as added by this Act or by H.B. No. 4, Acts of the 75th Legislature, Regular Session, 1997, as applicable, the governing body of a school district in a county with a population of fewer than 75,000 in a manner provided by law for official action by the governing body may elect to apply the limitation provided by Subsection (g) to the residence homestead of an individual as if that subsection were in effect on January 1, 1993. The governing body must make the election before January 1, 1999. The election applies only to taxes imposed in a tax year that begins after the tax year in which the election is made.
Amended by 1981 Tex. Laws (1st C.S.) p. 130, ch. 13, Sec. 38; amended by 1984 Tex. Laws (2nd C.S.), p. 341, ch. 28, art. II, Sec. 16; amended by 1991 Tex. Laws (2nd C.S.), p. 28, ch. 6, Sec. 10; amended by 1993 Tex. Laws, p. 3365, ch. 854, Sec. 2; amended by 1997 Tex. Laws, p. 2067, ch. 592, Sec. 2.02; p. 3901, ch. 1039, Secs. 11 and 14; and, p. 4030, ch. 1059, Sec. 3; amended by HB 3549, 76th Tex. Leg., 1999, eff. January 1, 2000; amended by SB 1368, 76th Tex. Leg., 1999, eff. September 1, 1999.
Cross References:
Constitutional authorization, see art. VIII, Sec. 1-b(d), Tex. Const.
Residential homestead exemption, see Sec. 11.13.
Prorating over-65 homeowner’s taxes, see Secs. 26.10 and 26.112.
Abatement of delinquent tax suit, see Sec. 33.06.Notes:
HB 4, 75th Tex. Leg., 1997, amends Section 11.26 effective on the date that the constitutional amendment proposed by HJR 4, 75th Tex. Leg., 1997, takes effect, and applies to each tax year that begins on or after January 1, 1997. Texas voters approved the constitutional amendment August 9, 1997.SB 351, 72nd Leg., 1991, added Sec. 20.09, Ed. Code, providing that a school district may not exceed the tax limitation of a homestead qualified under art. VIII, Sec. 1-b(d), Tex. Const., when the school district taxes are added to the county education district taxes imposed on the homestead. A district may exceed the homestead limitation if the additional tax is necessary for the payment of principal and interest on certain authorized debt.
HJR 48, 70th Leg., 1987, passed November 3, 1987, and grants that the over-65 school freeze transfers to any surviving spouse that is 55 years of age or older at the time of the property owner’s death. Sec. 11.26 is not specifically amended by this constitutional change.
Where a residence homestead was the separate property of the under-65 husband, the over-65 wife could not qualify it for the over-65 exemption, even though the property was her homestead for other constitutional purposes. Under the statute, the qualified person must be an owner of the residence. Ripley v. Stephens, 686 S.W.2d 757 (Tex. App.–Austin 1985, writ ref’d n.r.e.).
The constitutional amendment authorizing extension of the tax ceiling to over-65 surviving spouses applies only to spouses whose husband or wife died after the constitutional amendment took effect. Op. Tex. Att’y Gen. No. JM-991 (1988).
The constitution authorizes a tax ceiling for school district taxes only. Op. Tex. Att’y Gen. No. MW-265 (1980).
Sec. 11.27. Solar and Wind-Powered Energy Devices.
(a) A person is entitled to an exemption from taxation of the amount of appraised value of his property that arises from the installation or construction of a solar or wind-powered energy device that is primarily for production and distribution of energy for on-site use. (b) The comptroller, with the assistance of the Texas Energy and Natural Resources Advisory Council, or its successor, shall develop guidelines to assist local officials in the administration of this section.
(c) In this section:
(1) "Solar energy device" means an apparatus designed or adapted to convert the radiant energy from the sun, including energy imparted to plants through photosynthesis employing the bioconversion processes of anaerobic digestion, gasification, pyrolysis, or fermentation, but not including direct combustion, into thermal, mechanical, or electrical energy; to store the converted energy, either in the form to which originally converted or another form; or to distribute radiant solar energy or the energy to which the radiant solar energy is converted.
(2) "Wind-powered energy device" means an apparatus designed or adapted to convert the energy available in the wind into thermal, mechanical, or electrical energy; to store the converted energy, either in the form to which originally converted or another form; or to distribute the converted energy.
Added by 1981 Tex. Laws (1st C.S.), p. 130, ch. 13, Sec. 39; amended by 1991 Tex. Laws (2nd C.S.), p. 29, ch. 6, Sec. 11.
Cross References:
Exemption application form, see Rule Sec. 9.415.
Annual application required, see Sec. 11.43(b).
Constitutional authorization, see art. VIII, Sec. 2(a), Tex. Const.Sec. 11.271. Offshore Drilling Equipment Not in Use.
An owner or lessee of a marine or mobile drilling unit designed for offshore drilling of oil or gas wells is entitled to an exemption from taxation of the drilling unit if the drilling unit: (1) is being stored in a county bordering on the Gulf of Mexico or on a bay or other body of water immediately adjacent to the Gulf of Mexico;
(2) is not being stored for the sole purpose of repair or maintenance; and
(3) is not being used to drill a well at the location at which it is being stored.
Added by 1987 Tex. Laws, ch. 805, Sec. 1.
Cross References:
Constitutional authorization, see art. VIII, Sec. I-i, Tex. Const.
Annual application required, see Sec. 11.43(b).
Model application form for offshore drilling equipment not in use, see Rule Sec. 9.415.Sec. 11.28. Property Exempted From City Taxation By Agreement.
The owner of property to which an agreement made under the Property Redevelopment and Tax Abatement Act (Chapter 312 of this code) applies is entitled to exemption from taxation by an incorporated city or town or other taxing unit of all or part of the value of the property as provided by the agreement. Added by 1981 Tex. Laws (1st C.S.), p. 56, ch. 5, Sec. 7; amended by 1987 Tex. Laws, ch. 191, Sec. 2.
Cross References:
Constitutional authorization, see art. VIII, Sec. 1-g, Tex. Const.
Exemption application required, see Sec. 11.43(a).
Property Redevelopment and Tax Abatement Act, see ch. 312, Tax Code.
Model application form, see Rule Sec. 9.415.Sec. 11.29. Intracoastal Waterway Dredge Disposal Site.
(a) A person is entitled to an exemption from taxation of land that the person owns and that has been dedicated by recorded donated easement dedicating said land as a disposal site for depositing and discharging materials dredged from the main channel of the Gulf Intracoastal Waterway by or under the direction of the state or federal government. (b) An exemption granted under this section terminates when the land ceases to be used as an active dredge material disposal site described by Subsection (a) of this section and is no longer dedicated for that purpose.
Added by 1987 Tex. Laws, ch. 428, Sec. 1.
Cross References:
Exemption application required, see Sec. 11.43(c).
Model application form, see Rule Sec. 9.415.Notes:
The state statute which authorizes a property tax exemption for easements used solely as disposal sites for material dredged from the Gulf Intracoastal Waterway is unconstitutional. Op. Tex. Att’y. No. DM-301 (1994).Sec. 11.30. Nonprofit Water Supply or Wastewater Service Corporation.
(a) A corporation organized under Chapter 67, Water Code, that provides in the bylaws of the corporation that on dissolution of the corporation the assets of the corporation remaining after discharge of the corporation’s indebtedness shall be transferred to an entity that provides a water supply or wastewater service, or both, that is exempt from ad valorem taxation is entitled to an exemption from taxation of: (1) property that the corporation owns and that is reasonably necessary for and used in the operation of the corporation:
(A) to acquire, treat, store, transport, sell, or distribute water; or
(B) to provide wastewater service; and
(2) the real property owned by the corporation 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 in the operation of the corporation for a purpose described by Subdivision (1) when complete; and
(B) the land on which the incomplete improvement is located that will be reasonably necessary for the use of the improvement in the operation of the corporation for a purpose described by Subdivision (1).
(b) A property may not be exempted under Subsection (a)(2) for more than three years.
(c) For purposes of Subsection (a)(2), an incomplete improvement is under physical preparation if the corporation 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 1991 Tex. Laws, p. 1340, ch. 306, Sec. 1; amended by HB 873, 76th Tex. Leg., 1999, eff. May 18, 1999.
Cross References:
Annual application not required, see Sec. 11.43(c).
Effect on rates, see Sec. 13.0435, Water Code.
Exemption application required, see Sec. 11.43(c).
Exemption application form, see Rule Sec. 9.415.
Filing deadline for property acquired after January 1, see Sec. 11.43(d).
Immediate qualification for property acquired after January 1, see Sec. 11.42(c).
Prorating taxes for exemption for part of tax year, see Secs. 26.112 and 26.113.
Constitutional authorization, see art. VIII, Sec. 1-k, Tex. Const.Sec. 11.31. Pollution Control Property.
(a) A person is entitled to an exemption from taxation of all or part of real and personal property that the person owns and that is used wholly or partly as a facility, device, or method for the control of air, water, or land pollution. A person is not entitled to an exemption from taxation under this section solely on the basis that the person manufactures or produces a product or provides a service that prevents, monitors, controls, or reduces air, water, or land pollution. Property used for residential purposes, or for recreational, park, or scenic uses as defined by Section 23.81, is ineligible for an exemption under this section. (b) In this section, "facility, device, or method for the control of air, water, or land pollution" means land that is acquired after January 1, 1994, or any structure, building, installation, excavation, machinery, equipment, or device, and any attachment or addition to or reconstruction, replacement, or improvement of that property, that is used, constructed, acquired, or installed wholly or partly to meet or exceed rules or regulations adopted by any environmental protection agency of the United States, this state, or a political subdivision of this state for the prevention, monitoring, control, or reduction of air, water, or land pollution. This section does not apply to a motor vehicle.
(c) In applying for an exemption under this section, a person seeking the exemption shall present in a permit application or permit exemption request to the executive director of the Texas Natural Resource Conservation Commission information detailing:
(1) the anticipated environmental benefits from the installation of the facility, device, or method for the control of air, water, or land pollution;
(2) the estimated cost of the pollution control facility, device, or method; and
(3) the purpose of the installation of such facility, device, or method, and the proportion of the installation that is pollution control property.
If the installation includes property that is not used wholly for the control of air, water, or land pollution, the person seeking the exemption shall also present such financial or other data as the executive director requires by rule for the determination of the proportion of the installation that is pollution control property.
(d) Following submission of the information required by Subsection (c), the executive director of the Texas Natural Resource Conservation Commission shall determine if the facility, device, or method is used wholly or partly as a facility, device, or method for the control of air, water, or land pollution. As soon as practicable, the executive director shall send notice by regular mail to the chief appraiser of the appraisal district for the county in which the property is located that the person has applied for a determination under this subsection. If the executive director determines that the facility, device, or method is used wholly or partly to control pollution, the director shall issue a letter to the person stating that determination and the proportion of the installation that is pollution control property.
(e) The Texas Natural Resource Conservation Commission may charge a person seeking a determination that property is pollution control property an additional fee not to exceed its administrative costs for processing the information, making the determination, and issuing the letter required by this section. The commission may adopt rules to implement this section.
(f) A person seeking an exemption under this section shall provide to the chief appraiser a copy of the letter issued by the executive director of the Texas Natural Resource Conservation Commission under Subsection (d). The chief appraiser shall accept the copy of the letter from the executive director as conclusive evidence that the facility, device, or method is used wholly or partly as pollution control property.
(g) This section does not apply to a facility, device, or method for the control of air, water, or land pollution that was subject to a tax abatement agreement executed before January 1, 1994.
Added by 1993 Tex. Laws, p. 1324, ch. 285, Sec. 1.
Cross References:
Annual application not required, see Sec. 11.43(c).
Constitutional authorization, see art. VIII, Sec. 1-l, Tex. Const.
Environmental response appraisal adjustment, see Sec. 23.14.
Exemption application required, see Sec. 11.43(c).
Rollback tax rate additional protection, see Sec. 26.045.
Tax rate calculation process, see Sec. 26.012.
Model application form, see Rule Sec. 9.415.Note:
A commercial business performing pollution control or abatement services is not entitled to a property tax exemption for its pollution control property. The pollution control exemption was not intended to give tax relief to those who are primarily engaged in the commercial business of pollution control but to give relief to businesses compelled by law to install or acquire pollution control equipment which generates no revenue for such businesses. Tex. Att’y Gen. LO-96-128 (1996).Sec. 11.32. Certain Water Conservation Initiatives.
The governing body of a taxing unit by official action of the governing body adopted in the manner required by law for official actions may exempt from taxation part or all of the assessed value of property on which approved water conservation initiatives have been implemented. For purposes of this section, approved water conservation initiatives shall be designated pursuant to an ordinance or other law adopted by the governing unit. Added by 1997 Tex. Laws, p. 3663, ch 1010, Sec. 5.11..
Cross References:
Annual application required, see Sec. 11.43(a).
Constitutional authorization, see art. VIII, Sec. 1-m, Tex. Const.
Model application form, see Rule Sec. 9.415.[Sections 11.33 to 11.40 reserved for expansion]