NEW PROPERTY TAX LEGISLATION
2005
© 2005 John Brusniak Jr. (All rights reserved. Reprinted with permission.)
House Bills
Effective: September 1, 2005.
A taxpayer may appeal an appraisal review board determination pertaining to the appraised value or market value of real property through binding arbitration if the Order Determining Protest sets a value of $1,000,000 or less for the property. Strict compliance with the statute is essential. (A party appealing through arbitration may not also file a lawsuit appealing the appraisal review board determination.) The appeal must be filed with the appraisal district along with a fee of $500.00 payable to the Comptroller within 45 days of the date of receipt of the Order Determining Protest. The Comptroller shall keep 10% of the fee to offset its costs. The Comptroller shall provide a list of arbitrators from which the parties may mutually select an arbitrator. If the parties fail to do so, the Comptroller shall select the arbitrator. The taxpayer may represent himself or herself at the hearing, or may use the services of an attorney, an appraiser, a real estate broker or salesperson, or a tax consultant. The appraisal district may be represented by an appraisal district employee. The arbitrator is required to rule on the appeal within 20 days of the date of the hearing. If the taxpayer substantially prevails, the Comptroller shall refund the portion of the arbitration fee not kept by the Comptroller, and the appraisal district shall pay that same amount to the Comptroller. If the taxpayer does not prevail, the Comptroller shall refund to the taxpayer any amounts remaining after the arbitrator and the Comptroller have been paid. Arbitration awards are enforceable under the Civil Practices and Remedies Code, but the arbitration results are not otherwise appealable. The taxpayer is required to pay the tax amount not in dispute to preserve the appeal. Failure to do so will result in the dismissal of the appeal.
Effective: September 1, 2005.
A property’s designation as timber land does not change solely because its owner claims a portion of it as a residential homestead. Rollback sanctions are not imposed if a religious organization converts timber land to religious use within five years of ceasing to use it as timber land. Rollback sanctions do not occur if five acres or less of timber land are converted to non-profit cemetery use and the property is adjacent to a cemetery which has been in existence for more than 100 years.
Effective: September 1, 2005.
Cities, with a population of more than 650,000 that are located in a uniform state service region with fewer than 550,000 occupied housing units, may establish Homestead Preservation Districts, Homestead Land Trusts and Homeowner Land Banks to expand and promote affordable housing and to prevent the involuntary loss of homesteads by existing homeowners living in the district. Taxing units may transfer land into a homestead land trust without competitive bidding and may forgive taxes owing on property so transferred. Real property owned by a homestead land trust is exempt from taxation. The cities may create tax increment financing zones for this purpose as well. All taxing units within the zone shall pay their tax increment to the district. A Homeowner Land Bank may also be created. Tax foreclosed property may be sold by, and to, the land bank. Property sold to a land bank shall be exempted from taxation for up to three years.
Effective: January 1, 2006
A person who operates one or more cars or trucks in connection with their occupation or profession (and who also uses the same vehicle or vehicles for personal activities) is not required to render those vehicles for taxation.
Effective: June 18, 2005.
Cities no longer need to file copies of their annual TIF reports with the attorney general. Such reports are to be filed solely with the Comptroller.
Effective: January 1, 2006.
Notices of appraised value shall state the percentage of increase or decrease in appraised value for a property from the current tax year to the fifth preceding tax year. Tax bills shall also be required to state the percentage of increase or decrease in appraised value for a property from the current tax year to the fifth preceding tax year and the tax differential for the same period. Through December 31, 2011, if this information is unavailable, the tax bill must state that this data is unavailable.
Effective: June 17, 2005
A license to occupy a residential unit in an exempt elderly retirement community is not a taxable leasehold even if the resident is required to pay a deposit or a periodic service fee.
Effective: June 18, 2005.
Property involved in either a clean coal project or a gasification project for a coal and biomass mixture is eligible for limited appraisal under the Texas Economic Development Act.
Effective: September 1, 2005.
The interest rate for elderly and disabled persons making delinquent property tax installment payments, on their residential homesteads, is reduced from 12% to 6%.
Effective: June 18, 2005.
The Board of Tax Professional Examiners shall create a training program for new chief appraisers. A new chief appraiser may serve up to one year without completing the training program, but no longer. This provision does not apply to a county tax assessor-collector who serves as chief appraiser.
Effective: June 18, 2005.
If a person has elected to treat a manufactured home as real property, a tax lien attaches to both the home and the land on which it sits. A tax lien on a manufactured home may not be enforced unless the lien was recorded with the Texas Department of Housing and Community Affairs prior to October 1, 2005 or not later than six months after the end of the year for which the tax is owed. Other than manufactured homes held in inventory, titles to manufactured homes may not be transferred until all perfected liens have been cleared. Bona fide purchasers for value and lien holders on “Manufactured Home Statements of Ownership and Location” are not required to pay taxes that have not been recorded with the Texas Department of Housing and Community Affairs.
Effective: September 1, 2005.
A request to an appraisal district that communications be directed to a taxpayer’s fiduciary (other than a tax consultant) must be made in writing by the taxpayer and may only be revoked in writing by the taxpayer.
Residential homestead applications shall contain a place for applicants to list their birth dates. The elderly shall be automatically granted the additional exemption without the necessity of an additional application when the homeowner reaches the age of 65.
Rendition penalties and Section 25.25(d) penalties are to be added to tax bills and are secured by the tax lien on the property. The tax collector shall remit five percent of the rendition penalties to the chief appraiser.
The chief appraiser shall be required to consider the effect of a conservation easement on land that is included in a habitat preserve (or any other law that restricts the use of property to an endangered species) in determining the market value of the property.
The chief appraiser shall be required to distinguish between the currently specified categories of open space land use and shall further be required to divide each category into the currently specified categories of soil type and land use.
If a prorated tax tender is made after the acquisition of property by a governmental entity, the taxing unit is absolved from liability for making a refund in connection with the taxes that were due in the year of acquisition.
A taxing unit, which collects taxes for other units, may adopt tax discounts only on behalf of itself. It may charge an additional fee to the taxing units for which it collects taxes which do not adopt like discounts. A county tax assessor may terminate any collection contracts with taxing units which do not adopt like discounts.
A restriction or condition on a tax tender check which attempts to limit the payment of taxes, penalties or interest to an amount less than that shown on the collector’s records is void.
A tax certificate shall reflect all additional allowable costs due to the government which are incidental to the collection of a delinquent tax.
A tax lien is superior to liens held by homeowner’s associations and other similar entities. Homeowner’s associations and similar entities are not necessary parties to a delinquent tax suit unless they have filed a sworn notice of lien with the county clerk. Such liens are foreclosed by the delinquent tax suit if the homeowner’s association is made a party to the suit or if the lien was not of record at the time the suit was commenced.
A tax lien is superior to any right of remainder, right or possibility of reverter, or other future interest in the property whether it is vested or contingent. The tax lien has priority over these interests regardless of whether those interests existed prior to the creation of the lien.
A tax lien is inferior to a claim for a survivor’s allowance, funeral expenses, or expenses of a last illness and to a validly recorded easement, provided that the easement was recorded prior to January 1 of the tax year in question.
A tax lien may only be transferred prior to the tax delinquency date if there are no other liens on the property; otherwise, only transfers of delinquent taxes are authorized. Once a lien has been transferred, subsequent tax year liens may be transferred without regard to whether the taxes are delinquent.
A tax lien loan may also include collection costs paid as shown on the receipt, expenses paid to record the lien, and reasonable closing costs.
The sworn lien transfer documents shall state the name and address of the transferee and a street address and legal description of the property.
The collector shall execute all lien transfer documents within30 days. The collector may sign the documents before a notary public. All lien transfer documents may be combined into one form.
A transferred tax lien may be foreclosed nonjudicially if the contract so specifies.
The sworn statement and affidavit pertaining to a tax lien transfer must be filed in the county deed records to be enforceable.
Within six months of the date of transfer, a mortgage service provider is entitled to obtain a release of a transferred lien by paying the transferee the amount due under the contract. A transferee may charge a reasonable fee for a payoff statement after an initial payoff statement is provided.
After six months and before the initiation of foreclosure proceedings, a transferee may charge the property owner a reasonable amount to inform the property owner of the outstanding balance on the tax lien loan.
A mortgage service provider who pays off a tax lien loan becomes subrogated to all rights under the loan.
Unless otherwise specified in a contract, a tax lien loan may not be foreclosed until one year after the date the lien transfer is recorded.
A right of redemption exists on all foreclosed lien transfer properties. For all properties other than homesteads, agricultural land and minerals, the redemption period is 180 days. For homesteads, agricultural land and minerals, the period is two years. The redemption amount is 125% of the amount paid at foreclosure during the first year, and 150% of the amount paid at foreclosure in the second year.
A tax lien contract providing for nonjudicial foreclosure shall be recorded in each county in which the property is located. Foreclosure notices are to be served in the same fashion as deed of trust foreclosure notices. A copy of the foreclosure notice is required to be served simultaneously on the property owner and the mortgage service provider. A mortgage service provider may obtain a release of a tax lien by paying the amounts due under the contract.
Before accepting an application fee or executing a contract for tax lien transfer, the transferee shall inform the property owner of each type and amount of additional charges and fees which the owner may incur in connection with the loan.
A foreclosure affidavit executed by the transferee and recorded in the deed records reciting compliance with the tax lien foreclosure statute shall be prima facie proof of compliance with the statute and may be relied upon conclusively by a bona fide purchaser.
A religious organization acquiring property for its use is not entitled to a waiver of penalties or interest unless it makes its written request for waiver within a year of its acquisition of the property. Additionally, it must pay the taxes and obtain evidence of the approval of the exemption by the chief appraiser within the same period.
Requests for waivers of interest and penalties, based on existing statutory grounds, must be made within 181 days of the delinquency date.
A tax collector, who collects taxes on behalf of other taxing units, may enter into a tax payment contract with a taxpayer on behalf of those taxing units.
The government may recover its statutory attorney’s fees in a tax warrant proceeding.
Tax bills threatening collection proceedings must inform the elderly and disabled of their right to abate payment of a delinquent tax on their homestead.
The government may assess its collection penalties on personal property anytime between February 1 and July 1.
After a tax warrant is issued, a tax seizure or sale may be canceled at any time by the applicant, the applicant’s agent or the applicant’s attorney.
A tax collector who accepts payments of court costs and other monies shall forward those monies to the appropriate parties.
Once a writ of possession is ordered by the court after a tax foreclosure, no further action by the court is necessary.
A sheriff or constable may use reasonable force in placing the purchaser of property at a tax foreclosure sale in possession of the property. A written notice shall be affixed to the front door of the premises, at least 10 days in advance, notifying the occupants of the impending eviction. The sheriff or constable may store property seized pursuant to a writ of possession at a bonded warehouse. A lien for the storage cost shall be placed on the property. The purchaser at a tax foreclosure sale shall not be responsible for the storage costs and may not be made to hold the property. A taxing unit is not required to post a bond to obtain a writ of possession.
Properties with tax delinquencies of ten or more years, and with total delinquencies exceeding the appraised value of the property, may be foreclosed on a streamlined basis. Suits may be filed by single or multiple taxing units, and may include multiple defendants with multiple properties. Petitions shall be served by certified mail (and by publication in a newspaper or other publication if a newspaper is not available) at least 45 days prior to the date set for hearing on the petition. The taxpayer may file a written response up to seven before the date set for the hearing. Taxing units are required to search for the identity and location of taxpayers by title search, by checking the tax records and appraisal districts records, and by looking in telephone directories, voter registration records and assumed name records. Under no circumstances may an attorney ad litem be appointed to represent the interests of a taxpayer in these suits. Before entry of judgment, an erroneously included parcel may be removed from the suit. A judgment may only be taken against the property and not against the person owning the property. Notice of the suit is valid, even if the prescribed methods for delivery of notice are not followed if: (a) the person has constructive notice of the suit by acquiring the parcel after the date of the filing of the petition; (b) the person has appeared at the hearing or filed a response or written communication with the clerk of the court before the hearing; or (c) the person has actual notice of the proceeding before the hearing.
If a taxpayer in a property tax lawsuit makes a written offer of settlement and a request for alternative dispute resolution within 120 days of the filing of the suit, deadlines for designating expert witnesses shall be the same for all parties. A property owner must designate a cause of action for either market value or equity as the basis of the request, but not both. Discovery on the alternate and any other grounds shall be conducted under the Texas Rules of Civil Procedure.
Monies paid into the registry of the court in a condemnation proceeding may not be withdrawn until proof is presented that the ad valorem taxes on the property have been paid.
Effective: June 18, 2005.
A tax increment financing zone may be created to develop a bus rapid transit project or a rail transportation project.
Effective: June 18, 2005
If within six months of a foreclosure sale, the purchaser at the sale does not provide to the peace officer the requisite certificate showing that the purchaser is not delinquent in the payment of his or her property taxes, the peace officer shall deliver the return to the county tax assessor-collector. The return shall be filed with the county clerk and recorded in the name of the successful purchaser and all prior owners. The appraisal district may list the successful purchaser as the owner of the property in the appraisal records.
Effective: January 1, 2006.
A beneficiary’s residence, included in a court-ordered trust, qualifies for a homestead exemption.
Senate Bills
Effective: September 1, 2005.
If a taxing unit, other than a school district, wishes to increase the tax rate above the rollback tax rate, it must hold two public hearings prior to adopting the new tax rate. If a taxing unit, other than a school district, imposes $5,000,000 or more in taxes for maintenance and operations purposes, a tax rollback election may be called by obtaining the signatures of at least seven percent of the registered voters in the taxing unit. Real property tax bills must state for both the current year and for each of the preceding five years: (a) the appraised and taxable value of the property; (b) the tax rate for the taxing unit; (c) the amount of taxes imposed on the property; and the difference between the numbers expressed as a percentage. Additionally, the same comparison shall be provided, in percentage terms, between the current year and the fifth preceding year. If any of this data is unavailable, the tax bill must state that the data is unavailable.
Effective: September 1, 2005.
Other than aerial photographs depicting five or more separately owned buildings, photographs, sketches and floor plans of residential real property may not be posted on the internet.
Effective: June 17, 2005.
In addition to the current “Truth in Taxation” publication requirements, taxing units shall publish in the newspaper the percentage difference in spending in the current proposed budget compared to the prior year budget, the total appraised value and taxable value in the current and the prior tax year and the total amount of outstanding bonded indebtedness for the taxing unit.
Effective: May 17, 2005.
Upon request by the recipient of a Purple Heart, Congressional Medal of Honor, Bronze Star, Silver Star, Legion of Merit, Service Cross, or a disabled veteran, a tax collector shall establish an escrow account into which the recipient may make tax payments.
Effective: May 17, 2005.
The existing provisions limiting eligibility of purchasers at a tax foreclosure sale do not apply in counties with a population of less than 250,000 unless the commissioners court of that county specifically adopts those provisions.
Effective: May 9, 2005.
A county tax assessor may not charge a river authority a greater fee for collecting its taxes than is specified in the statute authorizing the creation of that river authority.
Effective: January 1, 2006.
The chief appraiser shall be required to distinguish between the currently specified categories of open space land use and shall further be required to divide each category into the currently specified categories of soil type and land use.
Effective: June 18, 2005.
A tax increment financing zone may be created by a city with a population of 100,000 or more to redevelop an area in which less than ten percent of the structures (other than single family residences) have been used for commercial, industrial or residential purposes during the preceding twelve years.
In certain large cities, a property owner’s obligation to dedicate property or waive rights for property located in a Tax Increment Financing Zone is restricted to petitions which were filed prior to July 31, 2004.
A city creating a Tax Increment Financing Zone may determine the portion of the tax increment which is to be retained by the zone. If the city fails to specify a percentage, then the entire increment shall be retained. Certain large municipalities may reduce their existing contributions into tax increment zones provided that they allow the participating counties to do the same and provided that the reduction does not impair the ability of the zone to pay its obligations.
Effective: January 1, 2006.
Upon providing proper proof, a taxpayer may file a notice of protest up to the tax delinquency date if the taxpayer was working in the Gulf of Mexico (including on a drilling rig) for at least 20 consecutive days during which time the filing deadline passed or if the taxpayer was serving on full time duty in the United States military outside the United States on the date the filing deadline passed.
Effective: September 1, 2005.
A tax bill shall be mailed to both the taxpayer and the taxpayer’s agent. A tax lien is extinguished if a tax certificate erroneously shows that no outstanding taxes are due because of the erroneous omission of the property from the appraisal district’s appraisal roll.
Effective: June 17, 2005.
With the approval of the voters, a multi-jurisdiction library district may be created by a city or a county, and it may impose an ad valorem tax to finance its operations.
Effective: September 1, 2005.
A taxpayer may appeal an appraisal review board determination pertaining to the appraised value or market value of real property through binding arbitration if the Order Determining Protest sets a value of $1,000,000 or less for the property. Strict compliance with the statute is essential. (A party appealing through arbitration may not also file a lawsuit appealing the appraisal review board determination.) The appeal must be filed with the appraisal district along with a fee of $500.00 payable to the Comptroller within 45 days of the date of receipt of the Order Determining Protest. The Comptroller shall keep 10% of the fee to offset its costs. The Comptroller shall provide a list of arbitrators from which the parties may mutually select an arbitrator. If the parties fail to do so, the Comptroller shall select the arbitrator. The taxpayer may represent himself or herself at the hearing, or may use the services of an attorney, an appraiser, a real estate broker or salesperson, or a tax consultant. The appraisal district may be represented by an appraisal district employee. The arbitrator is required to rule on the appeal within 20 days of the date of the hearing. If the taxpayer substantially prevails, the Comptroller shall refund the portion of the arbitration fee not kept by the Comptroller, and the appraisal district shall pay that same amount to the Comptroller. If the taxpayer does not prevail, the Comptroller shall refund to the taxpayer any amounts remaining after the arbitrator and the Comptroller have been paid. Arbitration awards are enforceable under the Civil Practices and Remedies Code, but the arbitration results are not otherwise appealable. The taxpayer is required to pay the tax amount not in dispute to preserve the appeal. Failure to do so will result in the dismissal of the appeal.
Effective: September 1, 2005.
The transferee of a tax lien must notify all recorded lienholders of an intended foreclosure on the property in the same manner as in a deed of trust foreclosure. All tax lien transfer contracts shall contain language to this effect.
Effective: September 1, 2005 except for the farm and ranch machinery provision which shall be effective January 1, 2006.
If a taxpayer mails something to the government on the due date, it is deemed timely filed or delivered.
The appraisal district board of directors shall biennially, at a public hearing, develop a written plan for the reappraisal of all real and personal property appraised by the appraisal district.
Machinery and equipment used for the production of farm or ranch products (regardless of its primary design) is exempt from taxation.
The Comptroller may prepare and issue publications relating to tax appraisal and may approve publications of other organizations such as the Appraisal Institute and International Association of Assessing Officers. The Comptroller may prepare cost, price and depreciation schedules, but the Comptroller’s authority for preparing local market index factors and departure standards is removed.
A taxpayer whose property is subject to an agreement to limit its appraised value pursuant to the Texas Economic Development Act is not eligible to receive a sales tax or franchise tax refund under chapters 151 and 171 of the Tax Code.
The Comptroller shall prepare a report every two years of the number of state franchise and sales tax refund applications received as a result of the limited appraisal provisions contained in the Texas Economic Development Act.
A motor vehicle does not have a taxable situs in a taxing unit if it is located there for less than 60 days and is offered for resale by a person who holds a wholesale vehicle auction general distinguishing number from the Texas Department of Transportation. A person who holds a wholesale vehicle auction general distinguishing number from the Texas Department of Transportation is not required to report to the appraisal district vehicles which have not acquired a tax situs within the taxing unit, vehicles offered for sale which are otherwise subject to the motor vehicle inventory tax and vehicles which are in the process of being resold under foreclosure proceedings.
Notices of appraised value for residential property subject to a tax freeze because they are owned by disabled individuals shall state that the taxes on the property may not be increased.