TAX CODE
SUBTITLE C. TAXABLE PROPERTY AND EXEMPTIONS
CHAPTER 11. TAXABLE PROPERTY AND EXEMPTIONS
SUBCHAPTER A. TAXABLE PROPERTY
§ 11.01. REAL AND TANGIBLE PERSONAL PROPERTY. (a) All
real and tangible personal property that this state has
jurisdiction to tax is taxable unless exempt by law.
(b) This state has jurisdiction to tax real property if
located in this state.
(c) This state has jurisdiction to tax tangible personal
property if the property is:
(1) located in this state for longer than a temporary
period;
(2) temporarily located outside this state and the
owner resides in this state; or
(3) used continually, whether regularly or
irregularly, in this state.
(d) Tangible personal property that is operated or located
exclusively outside this state during the year preceding the tax
year and on January 1 of the tax year is not taxable in this state.
Acts 1979, 66th Leg., p. 2233, ch. 841, § 1, eff. Jan. 1, 1980.
Amended by Acts 1983, 68th Leg., p. 1908, ch. 353, § 1, eff. Jan.
1, 1984; Acts 1989, 71st Leg., ch. 534, § 2, eff. Jan. 1, 1990.
§ 11.02. INTANGIBLE PERSONAL PROPERTY. (a) Except as
provided by Subsection (b) of this section, intangible personal
property is not taxable.
(b) Intangible property governed by Article 4.01, Insurance
Code, or by Section 89.003, Finance Code, is taxable as provided by
law, unless exempt by law, if this state has jurisdiction to tax
those intangibles.
(c) This state has jurisdiction to tax intangible personal
property if the property is:
(1) owned by a resident of this state; or
(2) located in this state for business purposes.
Acts 1979, 66th Leg., p. 2233, ch. 841, § 1, eff. Jan. 1, 1980.
Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 31, art. 3, part A,
§ 1, eff. Jan. 1, 1985; Acts 1999, 76th Leg., ch. 62, § 7.88,
eff. Sept. 1, 1999.
SUBCHAPTER B. EXEMPTIONS
§ 11.11. PUBLIC PROPERTY. (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) Property that is held or dedicated for the support,
maintenance, or benefit of an institution of higher education as
defined by Section 61.003, 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. If a portion of property of an institution of higher
education is used for public purposes and a portion is not used for
those purposes, the portion of the property used for public
purposes is exempt under this subsection. 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 which 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.
(i) A corporation organized under the Texas Non-Profit
Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
Statutes) that engages exclusively in providing chilled water and
steam to an eligible institution, as defined by Section 301.031,
Health and Safety Code, is entitled to an exemption from taxation of
the property the corporation owns as though the property of the
corporation were owned by this state and used for health or
educational purposes.
Acts 1979, 66th Leg., p. 2234, ch. 841, § 1, eff. Jan. 1, 1980.
Amended by Acts 1981, 67th Leg., 1st C.S., p. 127, ch. 13, § 30,
eff. Jan. 1, 1984; Acts 1983, 68th Leg., p. 4821, ch. 851, § 5,
eff. Aug. 29, 1983; Acts 1983, 68th Leg., p. 5419, ch. 1007, § 1,
eff. Jan. 1, 1984; Acts 1989, 71st Leg., ch. 796, § 14, eff. Jan.
1, 1990; Acts 1989, 71st Leg., ch. 1021, § 1, eff. Aug. 28, 1989;
Acts 1990, 71st Leg., 6th C.S., ch. 12, § 2(31), eff. Sept. 6,
1990; Acts 1991, 72nd Leg., 2nd C.S., ch. 6, § 9, eff. Sept. 1,
1991; Acts 1997, 75th Leg., ch. 843, § 1, eff. Jan. 1, 1998;
Acts 2001, 77th Leg., ch. 362, § 1, eff. May 26, 2001; Acts 2003,
78th Leg., ch. 1266, § 1.01, eff. June 20, 2003.
§ 11.111. PUBLIC PROPERTY USED TO PROVIDE TRANSITIONAL
HOUSING FOR INDIGENT PERSONS. (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 Acts 1991, 72nd Leg., ch. 762, § 13, eff. Jan. 1, 1992.
§ 11.12. FEDERAL EXEMPTIONS. Property exempt from ad
valorem taxation by federal law is exempt from taxation.
Acts 1979, 66th Leg., p. 2234, ch. 841, § 1, eff. Jan. 1, 1980.
§ 11.13. RESIDENCE HOMESTEAD. (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 a 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 the absence is:
(1) for a period of less than two years and the owner
intends to return and occupy the structure as the owner's principal
residence; or
(2) caused by the owner's:
(A) military service outside of the United States
as a member of the armed forces of the United States or of this
state; or
(B) residency in a facility that provides
services related to health, infirmity, or aging.
(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.
Acts 1979, 66th Leg., p. 2234, ch. 841, § 1, eff. Jan. 1, 1980.
Amended by Acts 1981, 67th Leg., 1st C.S., p. 127, ch. 13, § 31,
eff. Jan. 1, 1982; Acts 1983, 68th Leg., p. 4822, ch. 851, § 6,
eff. Aug. 29, 1983; Acts 1985, 69th Leg., ch. 301, § 1, eff. June
7, 1985; Acts 1987, 70th Leg., ch. 547, § 1, eff. Jan. 1, 1988;
Acts 1991, 72nd Leg., ch. 20, § 18, eff. Aug. 26, 1991; Acts
1991, 72nd Leg., ch. 20, § 19(a), eff. Jan. 1, 1992; Acts 1991,
72nd Leg., ch. 391, § 14; Acts 1993, 73rd Leg., ch. 347, §
4.08, eff. May 31, 1993; Acts 1993, 73rd Leg., ch. 854, § 1, eff.
Jan. 1, 1994; Acts 1995, 74th Leg., ch. 76, § 15.01, eff. Sept.
1, 1995; Acts 1995, 74th Leg., ch. 610, § 1, eff. Jan. 1, 1996;
Acts 1997, 75th Leg., ch. 194, § 1, eff. Jan. 1, 1998; Acts 1997,
75th Leg., ch. 592, § 2.01; Acts 1997, 75th Leg., ch. 1039, §
6, eff. Jan. 1, 1998; Acts 1997, 75th Leg., ch. 1059, § 2, eff.
June 19, 1997; Acts 1997, 75th Leg., ch. 1071, § 28, eff. Sept.
1, 1997; Acts 1999, 76th Leg., ch. 1199, § 1, eff. June 18, 1999;
Acts 1999, 76th Leg., ch. 1481, § 1, eff. Jan. 1, 2000; Acts
2003, 78th Leg., ch. 240, § 1, eff. June 18, 2003.
§ 11.14. TANGIBLE PERSONAL PROPERTY NOT PRODUCING
INCOME. (a) A person is entitled to an exemption from taxation of
all tangible personal property, other than manufactured homes, that
the person owns and that is not held or used for production of
income. This subsection does not exempt from taxation a structure
that a person owns which is substantially affixed to real estate and
is used or occupied as a residential dwelling.
(b) In this section, "manufactured home" has the meaning
assigned by Section 11.432 of this code.
(c) The governing body of a taxing unit, by resolution or
order, depending upon the method prescribed by law for official
action by that governing body, may provide for taxation of tangible
personal property exempted under Subsection (a). If a taxing unit
provides for taxation of tangible personal property as provided by
this subsection, the exemption prescribed by Subsection (a) does
not apply to that unit.
(d) The central appraisal district for the county shall
determine the cost of appraising tangible personal property
required by a taxing unit under the provisions of Subsection (c) and
shall assess those costs to the taxing unit or taxing units which
provide for the taxation of tangible personal property.
(e) A political subdivision choosing to tax property
otherwise made exempt by this section, pursuant to Article VIII,
Section 1(e), of the Texas Constitution, may not do so until the
governing body of the political subdivision has held a public
hearing on the matter, after having given notice of the hearing at
the times and in the manner required by this subsection, and has
found that the action will be in the public interest of all the
residents of that political subdivision. At the hearing, all
interested persons are entitled to speak and present evidence for
or against taxing the property. Not later than the 30th day prior
to the date of a hearing held under this subsection, notice of the
hearing must be:
(1) published in a newspaper having general
circulation in the political subdivision and in a section of the
newspaper other than the advertisement section;
(2) not less than one-half of one page in size; and
(3) republished on not less than three separate days
during the period beginning with the 10th day prior to the hearing
and ending with the actual date of the hearing.
Acts 1979, 66th Leg., p. 2236, ch. 841, § 1, eff. Jan. 1, 1980.
Amended by Acts 1987, 70th Leg., ch. 181, § 1, eff. May 26, 1987;
Acts 1989, 71st Leg., ch. 76, § 1, eff. Jan. 1, 1990; Acts 1991,
72nd Leg., ch. 391, § 15, eff. Aug. 26, 1991; Acts 1993, 73rd
Leg., ch. 347, § 4.09, eff. May 31, 1993; Acts 2001, 77th Leg.,
ch. 521, § 1, eff. Jan. 1, 2002; Acts 2003, 78th Leg., ch. 5,
§ 1, eff. Sept. 1, 2003.
§ 11.145. INCOME-PRODUCING TANGIBLE PERSONAL PROPERTY
HAVING VALUE OF LESS THAN $500. (a) A person is entitled to an
exemption from taxation of the tangible personal property the
person owns that is held or used for the production of income if
that property has a taxable value of less than $500.
(b) The exemption provided by Subsection (a) applies to each
separate taxing unit in which a person holds or uses tangible
personal property for the production of income, and, for the
purposes of Subsection (a), all property in each taxing unit is
aggregated to determine taxable value.
Added by Acts 1995, 74th Leg., ch. 296, § 1, eff. Jan. 1, 1996.
§ 11.146. MINERAL INTEREST HAVING VALUE OF LESS THAN
$500. (a) A person is entitled to an exemption from taxation of a
mineral interest the person owns if the interest has a taxable value
of less than $500.
(b) The exemption provided by Subsection (a) applies to each
separate taxing unit in which a person owns a mineral interest and,
for the purposes of Subsection (a), all mineral interests in each
taxing unit are aggregated to determine value.
Added by Acts 1995, 74th Leg., ch. 296, § 1, eff. Jan. 1, 1996.
§ 11.15. FAMILY SUPPLIES. A family is entitled to an
exemption from taxation of its family supplies for home or farm use.
Acts 1979, 66th Leg., p. 2236, ch. 841, § 1, eff. Jan. 1, 1980.
§ 11.16. FARM PRODUCTS. (a) A producer is entitled to
an exemption from taxation of the farm products that he produces and
owns. A nursery product, as defined by Section 71.041, Agriculture
Code, is a farm product for purposes of this section if it is in a
growing state.
(b) Farm products in the hands of the producer are exempt.
(c) For purposes of this exemption, the following
definitions apply:
(1) "Farm products" include livestock, poultry, and
timber.
(2) "In the hands of the producer," for livestock and
poultry, means under the ownership of the person who is financially
providing for the physical requirements of such livestock and
poultry on January 1 of the tax year and, for timber, means standing
timber or timber that has been harvested and, on January 1 of the
tax year, is located on the real property on which it was produced
and is under the ownership of the person who owned the timber when
it was standing.
Acts 1979, 66th Leg., p. 2236, ch. 841, § 1, eff. Jan. 1, 1980.
Amended by Acts 1981, 67th Leg., p. 457, ch. 192, § 1, eff. Jan.
1, 1982; Acts 1981, 67th Leg. p. 1487, ch. 388, § 3, eff. Sept.
1, 1981; Acts 1999, 76th Leg., ch. 631, § 2, eff. Jan. 1, 2000.
§ 11.161. IMPLEMENTS OF HUSBANDRY. 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 Acts 1981, 67th Leg., 1st C.S., p. 127, ch. 13, § 32,
eff. Jan. 1, 1982. Amended by Acts 1983, 68th Leg., p. 4823, ch.
851, § 7, eff. Aug. 29, 1983; Acts 1991, 72nd Leg., ch. 16, §
17.01, eff. Aug. 26, 1991; Acts 1999, 76th Leg., ch. 631, § 3,
eff. Jan. 1, 2000.
§ 11.17. CEMETERIES. A person is entitled to an
exemption from taxation of the property he owns and uses
exclusively for human burial and does not hold for profit.
Acts 1979, 66th Leg., p. 2236, ch. 841, § 1, eff. Jan. 1, 1980.
§ 11.18. CHARITABLE ORGANIZATIONS. (a) An
organization that qualifies as a charitable organization as
provided by this section is entitled to an exemption from taxation
of:
(1) the buildings and tangible personal property that:
(A) are owned by the charitable organization;
and
(B) except as permitted by Subsection (b), are
used exclusively by qualified charitable organizations; and
(2) the real property owned by the charitable
organization consisting of:
(A) an incomplete improvement that:
(i) is under active construction or other
physical preparation; and
(ii) is designed and intended to be used
exclusively by qualified charitable organizations; and
(B) the land on which the incomplete improvement
is located that will be reasonably necessary for the use of the
improvement by qualified charitable organizations.
(b) Use of exempt property by persons who are not charitable
organizations qualified as provided by this section does not result
in the loss of an exemption authorized by this section if the use is
incidental to use by qualified charitable organizations and limited
to activities that benefit the beneficiaries of the charitable
organizations that own or use the property.
(c) To qualify as a charitable organization for the purposes
of this section, an organization, whether operated by an
individual, or as a corporation, foundation, trust, or association,
must meet the applicable requirements of Subsections (d), (e), (f),
and (g).
(d) A charitable organization must be organized exclusively
to perform religious, charitable, scientific, literary, or
educational purposes and, except as permitted by Subsections (h)
and (l), engage exclusively in performing one or more of the
following charitable functions:
(1) providing medical care without regard to the
beneficiaries' ability to pay, which in the case of a nonprofit
hospital or hospital system means providing charity care and
community benefits in accordance with Section 11.1801;
(2) providing support or relief to orphans,
delinquent, dependent, or handicapped children in need of
residential care, abused or battered spouses or children in need of
temporary shelter, the impoverished, or victims of natural disaster
without regard to the beneficiaries' ability to pay;
(3) providing support to elderly persons, including
the provision of recreational or social activities and facilities
designed to address the special needs of elderly persons, or to the
handicapped, without regard to the beneficiaries' ability to pay;
(4) preserving a historical landmark or site;
(5) promoting or operating a museum, zoo, library,
theater of the dramatic or performing arts, or symphony orchestra
or choir;
(6) promoting or providing humane treatment of
animals;
(7) acquiring, storing, transporting, selling, or
distributing water for public use;
(8) answering fire alarms and extinguishing fires with
no compensation or only nominal compensation to the members of the
organization;
(9) promoting the athletic development of boys or
girls under the age of 18 years;
(10) preserving or conserving wildlife;
(11) promoting educational development through loans
or scholarships to students;
(12) providing halfway house services pursuant to a
certification as a halfway house by the pardons and paroles
division of the Texas Department of Criminal Justice;
(13) providing permanent housing and related social,
health care, and educational facilities for persons who are 62
years of age or older without regard to the residents' ability to
pay;
(14) promoting or operating an art gallery, museum, or
collection, in a permanent location or on tour, that is open to the
public;
(15) providing for the organized solicitation and
collection for distributions through gifts, grants, and agreements
to nonprofit charitable, education, religious, and youth
organizations that provide direct human, health, and welfare
services;
(16) performing biomedical or scientific research or
biomedical or scientific education for the benefit of the public;
(17) operating a television station that produces or
broadcasts educational, cultural, or other public interest
programming and that receives grants from the Corporation for
Public Broadcasting under 47 U.S.C. Section 396, as amended;
(18) providing housing for low-income and
moderate-income families, for unmarried individuals 62 years of age
or older, for handicapped individuals, and for families displaced
by urban renewal, through the use of trust assets that are
irrevocably and, pursuant to a contract entered into before
December 31, 1972, contractually dedicated on the sale or
disposition of the housing to a charitable organization that
performs charitable functions described by Subdivision (9);
(19) providing housing and related services to persons
who are 62 years of age or older in a retirement community, if the
retirement community provides independent living services,
assisted living services, and nursing services to its residents on
a single campus:
(A) without regard to the residents' ability to
pay; or
(B) in which at least four percent of the
retirement community's combined net resident revenue is provided in
charitable care to its residents; or
(20) providing housing on a cooperative basis to
students of an institution of higher education if:
(A) the organization is exempt from federal
income taxation under Section 501(a), Internal Revenue Code of
1986, as amended, by being listed as an exempt entity under Section
501(c)(3) of that code;
(B) membership in the organization is open to all
students enrolled in the institution and is not limited to those
chosen by current members of the organization;
(C) the organization is governed by its members;
and
(D) the members of the organization share the
responsibility for managing the housing.
(e) A charitable organization must be operated in a way that
does not result in accrual of distributable profits, realization of
private gain resulting from payment of compensation in excess of a
reasonable allowance for salary or other compensation for services
rendered, or realization of any other form of private gain and, if
the organization performs one or more of the charitable functions
specified by Subsection (d) other than a function specified by
Subdivision (1), (2), (8), (9), (12), (16), or (18), be organized as
a nonprofit corporation as defined by the Texas Non-Profit
Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
Statutes).
(f) A charitable organization must:
(1) use its assets in performing the organization's
charitable functions or the charitable functions of another
charitable organization; and
(2) by charter, bylaw, or other regulation adopted by
the organization to govern its affairs direct that on
discontinuance of the organization by dissolution or otherwise:
(A) the assets are to be transferred to this
state, the United States, or an educational, religious, charitable,
or other similar organization that is qualified as a charitable
organization under Section 501(c)(3), Internal Revenue Code of
1986, as amended; or
(B) if required for the organization to qualify
as a tax-exempt organization under Section 501(c)(12), Internal
Revenue Code of 1986, as amended, the assets are to be transferred
directly to the organization's members, each of whom, by
application for an acceptance of membership in the organization,
has agreed to immediately transfer those assets to this state or to
an educational, religious, charitable, or other similar
organization that is qualified as a charitable organization under
Section 501(c)(3), Internal Revenue Code of 1986, as amended, as
designated in the bylaws, charter, or regulation adopted by the
organization.
(g) A charitable organization that performs a charitable
function specified by Subsection (d)(15) must:
(1) be affiliated with a state or national
organization that authorizes, approves, or sanctions volunteer
charitable fundraising organizations;
(2) qualify for exemption under Section 501(c)(3),
Internal Revenue Code of 1986, as amended;
(3) be governed by a volunteer board of directors; and
(4) distribute contributions to at least five other
associations to be used for general charitable purposes, with all
recipients meeting the following criteria:
(A) be governed by a volunteer board of
directors;
(B) qualify for exemption under Section
501(c)(3), Internal Revenue Code of 1986, as amended;
(C) receive a majority of annual revenue from
private or corporate charitable gifts and government agencies; and
(D) provide services without regard to the
ability of persons receiving the services to pay for the services.
(h) Performance of noncharitable functions by a charitable
organization that owns or uses exempt property does not result in
loss of an exemption authorized by this section if those other
functions are incidental to the organization's charitable
functions. The division of responsibilities between an
organization that qualifies as a charitable organization under
Subsection (c) and another organization will not disqualify the
organizations or any property owned or used by either organization
from receiving an exemption under this section if the collaboration
furthers the provision of one or more of the charitable functions
described in Subsection (d) and if the other organization:
(1) is exempt from federal income taxation under
Section 501(a), Internal Revenue Code of 1986, as an organization
described by Section 501(c)(3) of that code;
(2) meets the criteria for a charitable organization
under Subsections (e) and (f); and
(3) is under common control with the charitable
organization described in this subsection.
(i) In this section, "building" includes the land that is
reasonably necessary for use of, access to, and ornamentation of
the building.
(j) The exemption of an organization preserving or
conserving wildlife is limited to land and improvements and may not
exceed 1,000 acres in any one county.
(k) In connection with a nursing home or retirement
community, for purposes of Subsection (d):
(1) "Assisted living services" means responsible
adult supervision of or assistance with routine living functions of
an individual in instances where the individual's condition
necessitates that supervision or assistance.
(2) "Charity care," "government-sponsored indigent
health care," and "net resident revenue" are determined in the same
manner for a retirement community or nursing home as for a hospital
under Section 11.1801(a)(2).
(3) "Nursing care services" includes services
provided by nursing personnel, including patient observation, the
promotion and maintenance of health, prevention of illness or
disability, guidance and counseling to individuals and families,
and referral of patients to physicians, other health care
providers, or community resources if appropriate.
(4) "Retirement community" means a collection of
various types of housing that are under common ownership and
designed for habitation by individuals over the age of 62.
(5) "Single campus" means a facility designed to
provide multiple levels of retirement housing that is
geographically situated on a site at which all levels of housing are
contiguous to each other on a single property.
(l) A charitable organization described by Subsection
(d)(3) that provides support to elderly persons must engage
primarily in performing charitable functions described by
Subsection (d)(3), but may engage in other activities that support
or are related to its charitable functions.
Text of subsec. (m) effective until January 1, 2006
(m) A property may not be exempted under Subsection (a)(2)
for more than five years.
Text of subsec. (m) effective January 1, 2006
(m) A property may not be exempted under Subsection (a)(2)
for more than three years.
(n) For purposes of Subsection (a)(2), an incomplete
improvement is under physical preparation if the charitable
organization has:
(1) engaged in architectural or engineering work, soil
testing, land clearing activities, or site improvement work
necessary for the construction of the improvement; or
(2) conducted an environmental or land use study
relating to the construction of the improvement.
Acts 1979, 66th Leg., p. 2236, ch. 841, § 1, eff. Jan. 1, 1980.
Amended by Acts 1981, 67th Leg., 1st C.S., p. 127, ch. 13, § 33,
eff. Jan. 1, 1982; Acts 1983, 68th Leg., p. 2207, ch. 412, § 1,
eff. Jan. 1, 1984; Acts 1985, 69th Leg., ch. 960, § 1, eff. Jan.
1, 1986; Acts 1987, 70th Leg., ch. 430, § 1, eff. Jan. 1, 1988;
Acts 1991, 72nd Leg., ch. 407, § 1, eff. Jan. 1, 1992; Acts 1993,
73rd Leg., ch. 360, § 5, eff. Sept. 1, 1993; Acts 1995, 74th
Leg., ch. 471, § 1, eff. Jan. 1, 1996; Acts 1995, 74th Leg., ch.
781, § 4, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 715, §
1, eff. Jan. 1, 1998; Acts 1997, 75th Leg., ch. 1039, § 7, eff.
Jan. 1, 1998; Acts 1997, 75th Leg., ch. 1411, § 1, eff. June 20,
1997; Acts 1999, 76th Leg., ch. 138, § 1, eff. May 18, 1999;
Acts 1999, 76th Leg., ch. 266, § 1, eff. Jan. 1, 2000; Acts 1999,
76th Leg., ch. 924, § 1, eff. Jan. 1, 2000; Acts 1999, 76th Leg.,
ch. 1443, § 1, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch.
1420, § 18.001(a), eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch.
288, § 1.01, eff. June 18, 2003; Acts 2003, 78th Leg., ch. 288,
§ 2.01, eff. Jan. 1, 2006.
§ 11.1801. CHARITY CARE AND COMMUNITY BENEFITS
REQUIREMENTS FOR CHARITABLE HOSPITAL. (a) To qualify as a
charitable organization under Section 11.18(d)(1), a nonprofit
hospital or hospital system must provide charity care and community
benefits as follows:
(1) charity care and government-sponsored indigent
health care must be provided at a level that 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;
(2) charity care and government-sponsored indigent
health care must be provided in an amount equal to at least four
percent of the hospital's or hospital system's net patient revenue;
(3) charity care and government-sponsored indigent
health care must be 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; or
(4) charity care and community benefits must be
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.
(b) 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 is considered to
be in compliance with the standards in Subsection (a).
(c) A hospital operated on a nonprofit basis that is located
in a county with a population of less than 58,000 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 in Subsection (a).
(d) A hospital providing health care services to inpatients
or outpatients without receiving any payment for providing those
services from any source, including the patient or person legally
obligated to support the patient, third-party payors, 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 in Subsection (a).
(e) For purposes of complying with Subsection (a)(4), 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.
(f) For purposes of this section, a hospital that complies
with Subsection (a)(1) or that is considered to be in compliance
with the standards in Subsection (a) under Subsection (b), (c), or
(d) shall be excluded in determining a hospital system's compliance
with the standards in Subsection (a)(2), (3), or (4).
(g) For purposes of this section, "charity care,"
"government-sponsored indigent health care," "health care
organization," "hospital system," "net patient revenue,"
"nonprofit hospital," and "tax-exempt benefits" have the meanings
assigned by 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 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.
(h) The providing of charity care and government-sponsored
indigent health care in accordance with Subsection (a)(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 that may be unique to the
hospital. The formulas in Subsections (a)(2), (3), and (4) shall
also not be considered determinative of a reasonable amount of
charity care and government-sponsored indigent health care.
(i) The requirements of this section 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
or 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.
(j) In any fiscal year that a hospital or hospital system,
through unintended miscalculation, fails to meet any of the
standards in Subsection (a) or fails to be considered to be in
compliance with the standards in Subsection (a) under Subsection
(b), (c), or (d), 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.
Acts 1979, 66th Leg., p. 2236, ch. 841, § 1, eff. Jan. 1, 1980.
Amended by Acts 1981, 67th Leg., 1st C.S., p. 127, ch. 13, § 33,
eff. Jan. 1, 1982; Acts 1983, 68th Leg., p. 2207, ch. 412, § 1,
eff. Jan. 1, 1984; Acts 1985, 69th Leg., ch. 960, § 1, eff. Jan.
1, 1986; Acts 1987, 70th Leg., ch. 430, § 1, eff. Jan. 1, 1988;
Acts 1991, 72nd Leg., ch. 407, § 1, eff. Jan. 1, 1992. Amended by
Acts 1993, 73rd Leg., ch. 360, § 5, eff. Sept. 1, 1993; Acts
1995, 74th Leg., ch. 471, § 1, eff. Jan. 1, 1996; Acts 1995, 74th
Leg., ch. 781, § 4, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch.
715, § 1, eff. Jan. 1, 1998; Acts 1997, 75th Leg., ch. 1039, §
7, eff. Jan. 1, 1998; Acts 1997, 75th Leg., ch. 1411, § 1, eff.
June 20, 1997; Acts 1999, 76th Leg., ch. 138, § 1, eff. May 18,
1999; Acts 1999, 76th Leg., ch. 266, § 1, eff. Jan. 1, 2000;
Acts 1999, 76th Leg., ch. 924, § 1, eff. Jan. 1, 2000; Acts 1999,
76th Leg., ch. 1443, § 1, eff. Sept. 1, 1999; Acts 2001, 77th
Leg., ch. 669, § 118, eff. Sept. 1, 2001; Acts 2001, 77th Leg.,
ch. 1420, § 18.001(a), eff. Sept. 1, 2001.
§ 11.181. CHARITABLE ORGANIZATIONS IMPROVING PROPERTY
FOR LOW-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 Acts 1993, 73rd Leg., ch. 345, § 1, eff. Jan. 1, 1994.
§ 11.182. COMMUNITY HOUSING DEVELOPMENT ORGANIZATIONS
IMPROVING PROPERTY FOR LOW-INCOME AND MODERATE-INCOME
HOUSING. (a) In this section:
(1) "Cash flow" means the amount of money generated by
a housing project for a fiscal year less the disbursements for that
fiscal year for operation and maintenance of the project,
including:
(A) standard property maintenance;
(B) debt service;
(C) employee compensation;
(D) fees required by government agencies;
(E) expenses incurred in satisfaction of
requirements of lenders, including reserve requirements;
(F) insurance; and
(G) other justifiable expenses related to the
operation and maintenance of the project.
(2) "Community housing development organization" has
the meaning assigned by 42 U.S.C. Section 12704.
(b) 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.
(c) Property owned by the organization may not be exempted
under Subsection (b) 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.
(d) A multifamily rental property consisting of 36 or more
dwelling units owned by the organization that is exempted under
Subsection (b) may not be exempted in a subsequent tax year unless
in the preceding tax year the organization spent, for eligible
persons in the county in which the property is located, an amount
equal to at least 40 percent of the total amount of taxes that would
have been imposed on the property in that year without the exemption
on social, educational, or economic development services, capital
improvement projects, or rent reduction. This subsection does not
apply to property acquired by the organization using tax-exempt
bond financing after January 1, 1997, and before December 31, 2001.
(e) In addition to meeting the applicable requirements of
Subsections (b) and (c), to receive an exemption under Subsection
(b) for improved real property that includes a housing project
constructed after December 31, 2001, and financed with qualified
501(c)(3) bonds issued under Section 145 of the Internal Revenue
Code of 1986, tax-exempt private activity bonds subject to volume
cap, or low-income housing tax credits, the organization must:
(1) control 100 percent of the interest in the general
partner if the project is owned by a limited partnership;
(2) comply with all rules of and laws administered by
the Texas Department of Housing and Community Affairs applicable to
community housing development organizations; and
(3) submit annually to the Texas Department of Housing
and Community Affairs and to the governing body of each taxing unit
for which the project receives an exemption for the housing project
evidence demonstrating that the organization spent an amount equal
to at least 90 percent of the project's cash flow in the preceding
fiscal year as determined by the audit required by Subsection (g),
for eligible persons in the county in which the property is located,
on social, educational, or economic development services, capital
improvement projects, or rent reduction.
(f) An organization entitled to an exemption under
Subsection (b) 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.
(g) To receive an exemption under Subsection (b) or (f), an
organization must annually have an audit prepared by an independent
auditor. The audit must include a detailed report on the
organization's sources and uses of funds. A copy of the audit must
be delivered to the Texas Department of Housing and Community
Affairs and to the chief appraiser of the appraisal district in
which the property subject to the exemption is located.
(h) Subsections (d) and (e)(3) do not apply to property
owned by an organization if:
(1) the entity that provided the financing for the
acquisition or construction of the property:
(A) requires the organization to make payments in
lieu of taxes to the school district in which the property is
located; or
(B) restricts the amount of rent the organization
may charge for dwelling units on the property; or
(2) the organization has entered into an agreement
with each taxing unit for which the property receives an exemption
to spend in each tax year for the purposes provided by Subsection
(d) or (e)(3) an amount equal to the total amount of taxes imposed
on the property in the tax year preceding the year in which the
organization acquired the property.
(i) If any property owned by an organization receiving an
exemption under this section has been acquired or sold during the
preceding year, such organization shall file by March 31 of the
following year with the chief appraiser in the county in which the
relevant property is located, on a form promulgated by the
comptroller of public accounts, a list of such properties acquired
or sold during the preceding year.
(j) An organization may not receive an exemption under
Subsection (b) or under Subsection (f), as added by Chapter 1191,
Acts of the 77th Legislature, Regular Session, 2001, for property
for a tax year beginning on or after January 1, 2004, unless the
organization received an exemption under that subsection for that
property for any part of the 2003 tax year.
Added by Acts 1997, 75th Leg., ch. 715, § 2, eff. Jan. 1, 1998.
Amended by Acts 2001, 77th Leg., ch. 842, § 2, 4, eff. June 14,
2001; Acts 2001, 77th Leg., ch. 1191, § 1, eff. Jan. 1, 2002;
Acts 2003, 78th Leg., ch. 1156, § 1, 2, eff. Jan. 1, 2004; Acts
2003, 78th Leg., ch. 1275, § 2(120), eff. Sept. 1, 2003.
§ 11.1825. ORGANIZATIONS CONSTRUCTING OR REHABILITATING
LOW-INCOME HOUSING: PROPERTY NOT PREVIOUSLY EXEMPT. (a) An
organization is entitled to an exemption from taxation of real
property owned by the organization that the organization constructs
or rehabilitates and uses to provide housing to individuals or
families meeting the income eligibility requirements of this
section.
(b) To receive an exemption under this section, an
organization must meet the following requirements:
(1) for at least the preceding three years, the
organization:
(A) has been exempt from federal income taxation
under Section 501(a), Internal Revenue Code of 1986, as amended, by
being listed as an exempt entity under Section 501(c)(3) of that
code;
(B) has met the requirements of a charitable
organization provided by Sections 11.18(e) and (f); and
(C) has had as one of its purposes providing
low-income housing;
(2) a majority of the members of the board of directors
of the organization have their principal place of residence in this
state;
(3) at least two of the positions on the board of
directors of the organization must be reserved for and held by:
(A) an individual of low income as defined by
Section 2306.004, Government Code, whose principal place of
residence is located in this state;
(B) an individual whose residence is located in
an economically disadvantaged census tract as defined by Section
783.009(b), Government Code, in this state; or
(C) a representative appointed by a neighborhood
organization in this state that represents low-income households;
and
(4) the organization must have a formal policy
containing procedures for giving notice to and receiving advice
from low-income households residing in the county in which a
housing project is located regarding the design, siting,
development, and management of affordable housing projects.
(c) Notwithstanding Subsection (b), an owner of real
property that is not an organization described by that subsection
is entitled to an exemption from taxation of property under this
section if the property otherwise qualifies for the exemption and
the owner is:
(1) a limited partnership of which an organization
that meets the requirements of Subsection (b) controls 100 percent
of the general partner interest; or
(2) an entity the parent of which is an organization
that meets the requirements of Subsection (b).
(d) If the owner of the property is an entity described by
Subsection (c), the entity must:
(1) be organized under the laws of this state; and
(2) have its principal place of business in this
state.
(e) A reference in this section to an organization includes
an entity described by Subsection (c).
(f) For property to be exempt under this section, the
organization must own the property for the purpose of constructing
or rehabilitating a housing project on the property and:
(1) renting the housing to individuals or families
whose median income is not more than 60 percent of the greater of:
(A) the area median family income for the
household's place of residence, as adjusted for family size and as
established by the United States Department of Housing and Urban
Development; or
(B) the statewide area median family income, as
adjusted for family size and as established by the United States
Department of Housing and Urban Development; or
(2) selling single-family dwellings to individuals or
families whose median income is not more than the greater of:
(A) the area median family income for the
household's place of residence, as adjusted for family size and as
established by the United States Department of Housing and Urban
Development; or
(B) the statewide area median family income, as
adjusted for family size and as established by the United States
Department of Housing and Urban Development.
(g) Property may not receive an exemption under this section
unless at least 50 percent of the total square footage of the
dwelling units in the housing project is reserved for individuals
or families described by Subsection (f).
(h) The annual total of the monthly rent charged or to be
charged for each dwelling unit in the project reserved for an
individual or family described by Subsection (f) may not exceed 30
percent of the area median family income for the household's place
of residence, as adjusted for family size and as established by the
United States Department of Housing and Urban Development.
(i) Property owned for the purpose of constructing a housing
project on the property is exempt under this section only if:
(1) the property is used to provide housing to
individuals or families described by Subsection (f); or
(2) the housing project is under active construction
or other physical preparation.
(j) For purposes of Subsection (i)(2), a housing project is
under physical preparation if the organization has engaged in
architectural or engineering work, soil testing, land clearing
activities, or site improvement work necessary for the construction
of the project or has conducted an environmental or land use study
relating to the construction of the project.
(k) An organization may not receive an exemption for a
housing project constructed by the organization if the construction
of the project was completed before January 1, 2004.
(l) If the property is owned for the purpose of
rehabilitating a housing project on the property:
(1) the original construction of the housing project
must have been completed at least 10 years before the date the
organization began actual rehabilitation of the project;
(2) the person from whom the organization acquired the
project must have owned the project for at least five years, if the
organization is not the original owner of the project;
(3) the organization must provide to the chief
appraiser and, if the project was financed with bonds, the issuer of
the bonds a written statement prepared by a certified public
accountant stating that the organization has spent on
rehabilitation costs at least the greater of $5,000 or the amount
required by the financial lender for each dwelling unit in the
project; and
(4) the organization must maintain a reserve fund for
replacements:
(A) in the amount required by the financial
lender; or
(B) if the financial lender does not require a
reserve fund for replacements, in an amount equal to $300 per unit
per year.
(m) Beginning with the 2005 tax year, the amount of the
reserve required by Subsection (l)(4)(B) is increased by an annual
cost-of-living adjustment determined in the manner provided by
Section 1(f)(3), Internal Revenue Code of 1986, as amended,
substituting "calendar year 2004" for the calendar year specified
in Section 1(f)(3)(B) of that code.
(n) A reserve must be established for each dwelling unit in
the property, regardless of whether the unit is reserved for an
individual or family described by Subsection (f). The reserve must
be maintained on a continuing basis, with withdrawals permitted:
(1) only as authorized by the financial lender; or
(2) if the financial lender does not require a reserve
fund for replacements, only to pay the cost of capital improvements
needed for the property to maintain habitability under the Minimum
Property Standards of the United States Department of Housing and
Urban Development or the code of a municipality or county
applicable to the property, whichever is more restrictive.
(o) For purposes of Subsection (n)(2), "capital
improvement" means a property improvement that has a depreciable
life of at least five years under generally accepted accounting
principles, excluding typical "make ready" expenses such as
expenses for plasterboard repair, interior painting, or floor
coverings.
(p) If the organization acquires the property for the
purpose of constructing or rehabilitating a housing project on the
property, the organization must be renting or offering to rent the
applicable square footage of dwelling units in the property to
individuals or families described by Subsection (f) not later than
the third anniversary of the date the organization acquires the
property.
(q) If property qualifies for an exemption under this
section, the chief appraiser shall use the income method of
appraisal as provided by Section 23.012 to determine the appraised
value of the property. In appraising the property, the chief
appraiser shall:
(1) consider the restrictions provided by this section
on the income of the individuals or families to whom the dwelling
units of the housing project may be rented and the amount of rent
that may be charged for purposes of computing the actual rental
income from the property or projecting future rental income; and
(2) use the same capitalization rate that the chief
appraiser uses to appraise other rent-restricted properties.
(r) Not later than January 31 of each year, the appraisal
district shall give public notice in the manner determined by the
district, including posting on the district's website if
applicable, of the capitalization rate to be used in that year to
appraise property receiving an exemption under this section.
(s) Unless otherwise provided by the governing body of a
taxing unit any part of which is located in a county with a
population of at least 1.4 million under Subsection (x), the amount
of the exemption under this section from taxation is 50 percent of
the appraised value of the property.
(t) Notwithstanding Section 11.43(c), an exemption under
this section does not terminate because of a change in ownership of
the property if:
(1) the property is foreclosed on for any reason and,
not later than the 30th day after the date of the foreclosure sale,
the owner of the property submits to the chief appraiser evidence
that the property is owned by:
(A) an organization that meets the requirements
of Subsection (b); or
(B) an entity that meets the requirements of
Subsections (c) and (d); or
(2) in the case of property owned by an entity
described by Subsections (c) and (d), the organization meeting the
requirements of Subsection (b) that controls the general partner
interest of or is the parent of the entity as described by
Subsection (c) ceases to serve in that capacity and, not later than
the 30th day after the date the cessation occurs, the owner of the
property submits evidence to the chief appraiser that the
organization has been succeeded in that capacity by another
organization that meets the requirements of Subsection (b).
(u) The chief appraiser may extend the deadline provided by
Subsection (t)(1) or (2), as applicable, for good cause shown.
(v) Notwithstanding any other provision of this section, an
organization may not receive an exemption from taxation by a taxing
unit any part of which is located in a county with a population of at
least 1.4 million unless the exemption is approved by the governing
body of the taxing unit in the manner provided by law for official
action.
(w) To receive an exemption under this section from taxation
by a taxing unit for which the approval of the governing body of the
taxing unit is required by Subsection (v), an organization must
submit to the governing body of the taxing unit a written request
for approval of the exemption from taxation of the property
described in the request.
(x) Not later than the 60th day after the date the governing
body of the taxing unit receives a written request under Subsection
(w) for an exemption under this section, the governing body shall:
(1) approve the exemption in the amount provided by
Subsection (s);
(2) approve the exemption in a reasonable amount other
than the amount provided by Subsection (s); or
(3) deny the exemption if the governing body
determines that:
(A) the taxing unit cannot afford the loss of ad
valorem tax revenue that would result from approving the exemption;
or
(B) additional housing for individuals or
families meeting the income eligibility requirements of this
section is not needed in the territory of the taxing unit.
(y) Not later than the fifth day after the date the
governing body of the taxing unit takes action under Subsection
(x), the taxing unit shall issue a letter to the organization
stating the governing body's action and, if the governing body
denied the exemption, stating whether the denial was based on a
determination under Subsection (x)(3)(A) or (B) and the basis for
the determination. The taxing unit shall send a copy of the letter
by regular mail to the chief appraiser of each appraisal district
that appraises the property for the taxing unit. The governing body
may charge the organization a fee not to exceed the administrative
costs of processing the request of the organization, approving or
denying the exemption, and issuing the letter required by this
subsection. If the chief appraiser determines that the property
qualifies for an exemption under this section and the governing
body of the taxing unit approves the exemption, the chief appraiser
shall grant the exemption in the amount approved by the governing
body.
Added by Acts 2003, 78th Leg., ch. 1156, § 3, eff. Jan. 1, 2004.
§ 11.1826. MONITORING OF COMPLIANCE WITH LOW-INCOME AND
MODERATE-INCOME HOUSING EXEMPTIONS. (a) In this section,
"department" means the Texas Department of Housing and Community
Affairs.
(b) Property may not be exempted under Section 11.1825 for a
tax year unless the organization owning or controlling the owner of
the property has an audit prepared by an independent auditor
covering the organization's most recent fiscal year. The audit
must be conducted in accordance with generally accepted accounting
principles. The audit must include an opinion on whether:
(1) the financial statements of the organization
present fairly, in all material respects and in conformity with
generally accepted accounting principles, the financial position,
changes in net assets, and cash flows of the organization; and
(2) the organization has complied with all of the
terms and conditions of the exemption under Section 11.1825.
(c) Not later than the 180th day after the last day of the
organization's most recent fiscal year, the organization must
deliver a copy of the audit to the department and the chief
appraiser of the appraisal district in which the property is
located.
(d) Notwithstanding any other provision of this section, if
the property contains not more than 36 dwelling units, the
organization may deliver to the department and the chief appraiser
a detailed report and certification as an alternative to an audit.
(e) Property may not be exempted under Section 11.182 for a
tax year unless the organization owning or controlling the owner of
the property complies with this section, except that the audit
required by this section must address compliance with the
requirements of Section 11.182.
(f) All information submitted to the department or the chief
appraiser under this section is subject to required disclosure, is
excepted from required disclosure, or is confidential in accordance
with Chapter 552, Government Code, or other law.
Acts 2003, 78th Leg., ch. 1156, § 3, eff. Jan. 1, 2004.
§ 11.183. ASSOCIATION PROVIDING ASSISTANCE TO
AMBULATORY HEALTH CARE CENTERS. (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 Acts 1999, 76th Leg., ch. 675, § 1, eff. Jan. 1, 2000.
§ 11.184. ORGANIZATIONS ENGAGED PRIMARILY IN PERFORMING
CHARITABLE FUNCTIONS. (a) In this section:
(1) "Local charitable organization" means an
organization that:
(A) is a chapter, subsidiary, or branch of a
statewide charitable organization; and
(B) with respect to its activities in this state,
is engaged primarily in performing functions listed in Section
11.18(d).
(2) "Qualified charitable organization" means a
statewide charitable organization or a local charitable
organization.
(3) "Statewide charitable organization" means a
statewide organization that, with respect to its activities in this
state, is engaged primarily in performing functions listed in
Section 11.18(d).
(b) An exemption under this section may not be granted
unless 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 a 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.
(c) If approved under Subsection (b), a qualified
charitable organization is entitled to an exemption from taxation
of:
(1) the buildings and other real property and the
tangible personal property that:
(A) are owned by the organization; and
(B) except as permitted by Subsection (d), are
used exclusively by the organization and other organizations
eligible for an exemption from taxation under this section or
Section 11.18; and
(2) the real property owned by the 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 the organization and other organizations eligible
for an exemption from taxation under this section or Section 11.18;
and
(B) the land on which the incomplete improvement
is located that will be reasonably necessary for the use of the
improvement by the organization and other organizations eligible
for an exemption from taxation under this section or Section 11.18.
(d) Use of exempt property by persons who are not charitable
organizations eligible for an exemption from taxation under this
section or Section 11.18 does not result in the loss of an exemption
authorized by this section if the use is incidental to use by those
charitable organizations and limited to activities that benefit the
charitable organization that owns or uses the property.
(e) Before an organization may submit an application for an
exemption under this section, the organization must apply to the
comptroller for a determination of whether the organization is
engaged primarily in performing functions listed in Section
11.18(d) and is eligible for an exemption under this section. In
making the determination, the comptroller shall consider:
(1) whether the organization is recognized by the
Internal Revenue Service as a tax-exempt organization under Section
501 of the Internal Revenue Code of 1986;
(2) whether the organization holds a letter of
exemption issued by the comptroller certifying that the
organization is entitled to issue an exemption certificate under
Section 151.310;
(3) whether the charter or bylaws of the organization
require charitable work or public service;
(4) the amount of monetary support contributed or
in-kind charitable or public service performed by the organization
in proportion to:
(A) the organization's operating expenses;
(B) the amount of dues received by the
organization; and
(C) the taxes imposed on the organization's
property during the preceding year if the property was taxed in that
year or, if the property was exempt from taxation in that year, the
taxes that would have been imposed on the property if it had not
been exempt from taxation; and
(5) any other factor the comptroller considers
relevant.
(f) Not later than the 30th day after the date the
organization submits an application under Subsection (e), the
comptroller may request that the organization provide additional
information the comptroller determines necessary. Not later than
the 90th day after the date the application is submitted or, if
applicable, the date the additional information is provided, the
comptroller shall issue a letter to the organization stating the
comptroller's determination.
(g) The comptroller may:
(1) adopt rules to implement this section;
(2) prescribe the form of an application for a
determination letter under this section; and
(3) charge an organization a fee not to exceed the
administrative costs of processing a request, making a
determination, and issuing a determination letter under this
section.
(h) An organization applying for an exemption under this
section shall submit with the application a copy of the
determination letter issued by the comptroller under Subsection
(f). The chief appraiser shall accept the copy of the letter as
conclusive evidence as to whether the organization engages
primarily in performing charitable functions and is eligible for an
exemption under this section.
Text of subsec. (i) effective until January 1, 2006
(i) A property may not be exempted under Subsection (c)(2)
for more than five years.
Text of subsec. (i) effective January 1, 2006
(i) A property may not be exempted under Subsection (c)(2)
for more than three years.
(j) For purposes of Subsection (c)(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.
(k) An exemption under this section expires at the end of
the fifth tax year after the year in which the exemption is granted.
To continue to receive an exemption under this section after that
year, the organization must obtain a new determination letter and
reapply for the exemption.
Added by Acts 2001, 77th Leg., ch. 1040, § 1, eff. Sept. 1, 2001.
Amended by Acts 2003, 78th Leg., ch. 288, § 1.02, eff. June 18,
2003; Acts 2003, 78th Leg., ch. 288, § 2.02, eff. Jan. 1, 2006.
§ 11.185. COLONIA MODEL SUBDIVISION PROGRAM. (a) An
organization is entitled to an exemption from taxation of
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) purchased the property or is developing the
property with proceeds of a loan made by the Texas Department of
Housing and Community Affairs under the colonia model subdivision
program under Subchapter GG, Chapter 2306, Government Code; and
(3) owns the property for the purpose of developing a
model colonia subdivision.
(b) Property may not be exempted under Subsection (a) after
the fifth 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 a person described by Section
2306.786(b)(1), Government Code, 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 computed from the dates on which the taxes
would have become due.
Added by Acts 2001, 77th Leg., ch. 1367, § 2.14, eff. Sept. 1,
2002. Renumbered from V.T.C.A., Tax Code § 11.184 by Acts 2003,
78th Leg., ch. 1275, § 2(121), eff. Sept. 1, 2003.
§ 11.19. YOUTH SPIRITUAL, MENTAL, AND PHYSICAL
DEVELOPMENT ASSOCIATIONS. (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.
Text of subsec. (e) effective until January 1, 2006
(e) A property may not be exempted under Subsection (a)(2)
for more than five years.
Text of subsec. (e) effective January 1, 2006
(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.
Acts 1979, 66th Leg., p. 2237, ch. 841, § 1, eff. Jan. 1, 1980.
Amended by Acts 1981, 67th Leg., 1st C.S., p. 129, ch. 13, § 34,
eff. Jan. 1, 1982; Acts 1997, 75th Leg., ch. 1039, § 8, eff. Jan.
1, 1998; Acts 1997, 75th Leg., ch. 1411, § 2, eff. June 20, 1997;
Acts 1999, 76th Leg., ch. 138, § 2, eff. May 18, 1999; Acts 2003,
78th Leg., ch. 288, § 1.03, eff. June 18, 2003; Acts 2003, 78th
Leg., ch. 288, § 2.03, eff. Jan. 1, 2006.
§ 11.20. RELIGIOUS ORGANIZATIONS. (a) An organization
that qualifies as a religious organization as provided by
Subsection (c) 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);
(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);
(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;
(6) the land that the religious organization owns for
the purpose of expansion of the religious organization's place of
regular religious worship or construction of a new place of regular
religious worship if:
(A) the religious organization qualifies other
property, including a portion of the same tract or parcel of land,
owned by the organization for an exemption under Subdivision (1) or
(5); and
(B) the land produces no revenue for the
religious organization; and
(7) the real property owned by the religious
organization that is leased to another person and used by that
person for the operation of a school that qualifies as a school
under Section 11.21(d).
(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 Subsection (a)(1) or (2) or by Subsection (h)(1) 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.
Text of subsec. (f) effective until January 1, 2006
(f) A property may not be exempted under Subsection (a)(5)
for more than five years.
Text of subsec. (f) effective January 1, 2006
(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.
Text of subsec. (h) as added by Acts 2003, 78th Leg., ch. 123, § 1
(h) Property owned by this state or a political subdivision
of this state, including a leasehold or other possessory interest
in the property, that is held or occupied by an organization that
qualifies as a religious organization as provided by Subsection (c)
is entitled to an exemption from taxation if the property:
(1) is used by the organization primarily as a place of
regular religious worship and is reasonably necessary for engaging
in religious worship; or
(2) meets the qualifications for an exemption under
Subsection (a)(5).
Text of subsec. (h) as added by Acts 2003, 78th Leg., ch. 1052, §
1
(h) A tract of land that is contiguous to the tract of land
on which the religious organization's place of regular religious
worship is located may not be exempted under Subsection (a)(6) for
more than six years. A tract of land that is not contiguous to the
tract of land on which the religious organization's place of
regular religious worship is located may not be exempted under
Subsection (a)(6) for more than three years. For purposes of this
subsection, a tract of land is considered to be contiguous with
another tract of land if the tracts are divided only by a road,
railroad track, river, or stream.
Text of subsec. (i) as added by Acts 2003, 78th Leg., ch. 123, § 1
(i) For purposes of the exemption provided by Subsection
(h), the religious organization may apply for the exemption and
take other action relating to the exemption as if the organization
owned the property.
Text of subsec. (i) as added by Acts 2003, 78th Leg., ch. 1052, §
1
(i) For purposes of Subsection (a)(6), an application or
statement accompanying an application for the exemption stating
that the land is owned for the purposes described by Subsection
(a)(6) and signed by an authorized officer of the organization is
sufficient to establish that the land is owned for those purposes.
Acts 1979, 66th Leg., p. 2238, ch. 841, § 1, eff. Jan. 1, 1980.
Amended by Acts 1981, 67th Leg., 1st C.S., p. 129, ch. 13, § 35,
eff. Jan. 1, 1982; Acts 1987, 70th Leg., ch. 640, § 1, eff. Jan.
1, 1988; Acts 1995, 74th Leg., ch. 458, § 1, eff. June 9, 1995;
Acts 1997, 75th Leg., ch. 1039, § 9, eff. Jan. 1, 1998; Acts
1997, 75th Leg., ch. 1411, § 3, eff. June 20, 1997; Acts 1999,
76th Leg., ch. 138, § 3, eff. May 18, 1999; Acts 2003, 78th Leg.,
ch. 123, § 1, eff. Jan. 1, 2004; Acts 2003, 78th Leg., ch. 288,
§ 1.04, eff. June 18, 2003; Acts 2003, 78th Leg., ch. 288, §
2.04, eff. Jan. 1, 2006; Acts 2003, 78th Leg., ch. 1052, § 1,
eff. Jan. 1, 2004.
§ 11.201. ADDITIONAL TAX ON SALE OF CERTAIN RELIGIOUS
ORGANIZATION PROPERTY. (a) If land is sold or otherwise
transferred to another person in a year in which the land receives
an exemption under Section 11.20(a)(6), an additional tax is
imposed on the land equal to the tax that would have been imposed on
the land had the land been taxed for each of the five years
preceding the year in which the sale or transfer occurs in which the
land received an exemption under that subsection, plus interest at
an annual rate of seven percent calculated from the dates on which
the taxes would have become due.
(b) A tax lien attaches to the land on the date the sale or
transfer occurs to secure payment of the tax and interest imposed by
this section and any penalties incurred. The lien exists in favor
of all taxing units for which the tax is imposed.
(c) If only part of a parcel of land that is exempted under
Section 11.20(a)(6) is sold or transferred, the tax applies only to
that part of the parcel and equals the taxes that would have been
imposed had that part been taxed.
(d) The assessor for each taxing unit shall prepare and
deliver a bill for the additional taxes plus interest as soon as
practicable after the sale or transfer occurs. The taxes and
interest are due and become delinquent and incur penalties and
interest as provided by law for ad valorem taxes imposed by the
taxing unit if not paid before the next February 1 that is at least
20 days after the date the bill is delivered to the owner of the
land.
(e) The sanctions provided by Subsection (a) do not apply if
the sale or transfer occurs as a result of:
(1) a sale for right-of-way;
(2) a condemnation;
(3) a transfer of property to the state or a political
subdivision of the state to be used for a public purpose; or
(4) a transfer of property to a religious organization
that qualifies the property for an exemption under Section 11.20
for the tax year in which the transfer occurs.
Acts 2003, 78th Leg., ch. 1052, § 2, eff. Jan. 1, 2004.
§ 11.21. SCHOOLS. (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; and
(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.
Text of subsec. (g) effective until January 1, 2006
(g) A property may not be exempted under Subsection (a)(2)
for more than five years.
Text of subsec. (g) effective January 1, 2006
(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.
Acts 1979, 66th Leg., p. 2239, ch. 841, § 1, eff. Jan. 1. 1980.
Amended by Acts 1981, 67th Leg., 1st C.S., p. 130, ch. 13, § 36,
eff. Jan. 1, 1982; Acts 1997, 75th Leg., ch. 1039, § 10, eff.
Jan. 1, 1998; Acts 1997, 75th Leg., ch. 1293, § 1, eff. Sept. 1,
1997; Acts 1997, 75th Leg., ch. 1411, § 4, eff. June 20, 1997;
Acts 1999, 76th Leg., ch. 138, § 4, eff. May 18, 1999; Acts 2003,
78th Leg., ch. 288, § 1.05, eff. June 18, 2003; Acts 2003, 78th
Leg., ch. 288, § 2.05, eff. Jan. 1, 2006.
§ 11.22. DISABLED VETERANS. (a) A disabled veteran is
entitled to an exemption from taxation of a portion of the assessed
value of a property the veteran owns and designates as provided by
Subsection (f) of this section in accordance with the following
schedule:
an exemption of for a disability rating of
up to: at least: but not greater than: $5,000 of the 10% 30%
assessed valu
ue
7,500 31 50
10,000 51 70
12,000 71 and over
(b) A disabled veteran is entitled to an exemption from
taxation of $12,000 of the assessed value of a property the veteran
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 t
