Disaster Exemption Relief
What is the Appraisal District’s Role in Disaster Assistance?
Texas property owners may wonder about how Tax Code Section 6.053 defines the requirements of their local county appraisal district in times of Property Tax Disaster Relief efforts. The chief appraiser plays a fundamental part, supporting efforts in property damage assessment. These duties include preparing emergency reappraisals, coordination with federal, state, and local government officials as well as emergency management agencies, providing communication to the public to ensure property owners are informed of their rights and aware of relief programs, and guiding the public through the process to obtain any potential tax deferrals or assistance.
What is the Property Tax Disaster Exemption?
A temporary exemption due to disaster damage usually refers to a policy or program that provides assistance to property that has been affected by natural disasters. This exemption can include temporary suspensions of taxes to help those impacted recover more quickly.
Tax Code Section 11.35 allows a Property Tax Disaster Exemption for governor-declared disaster areas with at least 15% damage. The valuation of the damaged property is excluded temporarily. Property owners must submit an application within 105 days of the disaster declaration in order to qualify for assistance. Assessing the damage and determining whether the property meets the criteria, the chief appraiser will designate a damage assessment rating. The ratings range based on the amount of damage caused: Level I, II, III, or IV.
Properties that qualify include:
- Tangible personal property utilized for generating revenue
- Enhancements or improvements done to the property
- Specific manufactured property, such as houses
What Penalties Are Waived?
Subject to the provisions of Tax Code Section 23.129, chief appraisers and tax assessor-collectors are permitted to exempt themselves from fines for late files pertaining to motor vehicles, dealer’s heavy equipment, or retail manufactured housing inventory if the delay was caused by a natural disaster or an incident that was beyond their control. To be eligible for a waiver, taxpayers must submit a written application within 30 days before the deadline for filing their tax returns and must otherwise comply with the provisions of Chapter 23 of the Tax Code.
How Can Homeowners Keep Their Homestead Exemption?
The Residence Homestead Exemption lowers a homeowner’s principal residence’s taxable value and property taxes.
Even if the residence is uninhabitable due to a disaster. Tax Code Section 11.135 allows property owners to continue receiving the homestead exemption on their property. For this exemption to continue while the property owner builds a replacement building:
- The construction or site preparation must commence within one year of the former residence’s departure.
- Notify the appraisal office 30 days before eligibility expires.
- Construction must begin within five years in governor-declared disaster regions.
When the property is sold before the replacement structure is completed, additional taxes and interest are incurred. Important to note, the exemption cannot exceed two years, and the exemption is limited to five years.
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What is The Residence Homestead Cap?
The appraised value of residence homesteads is restricted by Tax Code Section 23.23 to a 10% increase from the previous year’s value, in addition to the market value of any new improvements. If the square footage or quality of a replacement structure for a damaged property exceeds that of the original, it is classified as a new improvement and subject to taxation. If replacement buildings meet the requirements of a disaster recovery program run by the General Land Office or a politically sponsored federal subdivision, they are not regarded as new improvements.
Disaster-Automated School Tax Rate Approval
A school district’s registered voters must decide whether to approve the adopted tax rate in an election if it exceeds the voter-approval tax rate, as described in Tax Code Sections 26.08(a) and 26.042(e). If a school district is forced to increase expenditures due to a natural disaster and the Governor has requested federal disaster assistance for the school district’s area, no election is required to approve the tax rate for the tax year following the disaster.
Automatic Election to Ratify Unit Taxes After a Disaster
Tax Code Section 26.07(b) permits registered voters of the taxing unit to approve the set tax rate in an election if the governing body pursues one of the following two alternatives:
- A special taxing unit or municipality with 30,000 or more residents raises its tax rate over the voter-approval rate.
- a municipality with a population under 30,000, whether special or not, adopts a tax rate that exceeds its voter-approval rate or de minimis rate.
If the Governor declares any part of the taxing unit’s area a disaster area and these taxing units need to increase expenses as a result of a natural disaster, an election is not required to approve the tax rate for the following fiscal year.
Installment Payments For Disaster Or Emergency Property Damage
Tax Code Section 31.032 permits homeowners, other specified residential property owners, and small enterprises to pay their taxes in four payments if their property was destroyed in a natural disaster or emergency. This comprises real and personal property owned or leased by a small firm with gross revenues under a level set by the Comptroller’s office yearly.
Installment payments cover property taxes imposed by all taxing entities on the tax bill before the natural disaster or emergency’s first anniversary. The property owner is required to pay the initial total and notify the tax authority that they will pay the remaining taxes in three equal installments prior to the due date of February 1. The remaining payments are due on April 1, June 1, and August 1 without any penalty or interest. If the default is not Feb. 1, further deadlines apply. If property owners miss the installment payment, the owner is liable to a 6% penalty plus 1% interest for each month late.
Certain Property That Was Not Damaged In A Disaster Or Emergency Installment Payments
The governing body of a taxing unit in a natural disaster or emergency region is authorized by Tax Code Section 31.033 to offer installment payment options to specific firms that own or lease non-damaged real and personal property. The installment payment plan is available to businesses with gross revenues under a level set by the Comptroller’s office yearly.
The property taxes imposed by all taxing entities on the tax statement prior to the first anniversary of the natural disaster or emergency are covered by installment payments. The property owner must make the first payment and notify the office that they will pay the remaining taxes in three equal installments by February 1. The remaining payments are payable on April 1, June 1, and August 1, with no penalty or interest. Delinquency deadlines are subject to change, provided that they do not fall on February 1. Failure to make an installment payment will result in a six percent penalty on taxes and a one percent interest rate per month.
Installment tax payments on non-damaged disaster or emergency property.
Tax Code Chapter 31.033(c) lets taxing authorities choose an installment schedule for real and personal property owned or leased by a business entity with gross revenues under a Comptroller’s office-adjusted level. The property must be located in a disaster or emergency zone and not have been directly affected by the natural disaster or emergency.
The installment payments are for taxes levied on property by all taxing agencies included on the tax bill before the first anniversary of the natural disaster or emergency. The property owner must pay the first payment by the delinquency date (typically February 1) and give notification that the remaining taxes will be paid in three equal installments. The remaining installments are due by April 1, June 1, and August 1, with no penalties or interest. Deadlines apply if the due date is not February 1. If property owners miss the installment payment, the owner is liable to a 6% penalty plus 1% interest for each month late.
Gross Receipts Limitations for Business Property Installment Payments
The limit on total receipts for business property installment payments is $5 million for the 2009 tax year, as stipulated in Tax Code Section 31.032(h). The Comptroller’s office adjusts this limit annually for inflation. The adjusted limit must be employed by collectors to ascertain the eligibility of business property.
Temporarily Pausing Agriculture Use During Drought
Provided that the landowner intends to recommence agricultural use at the conclusion of the drought, Tax Code Section 23.522 guarantees that land’s eligibility for open space appraisal remains unaffected in the event of a drought declared by the Governor that extends the normal agricultural production period.