The bill introduces a limitation on the increases in appraised values for ad valorem tax purposes specifically for certain leased residential properties, establishing a new section, Section 23.232. This section defines eligible properties as single-family residential units leased as primary residences at rents not exceeding the fair market rent set by the U.S. Department of Housing and Urban Development. The bill specifies that the appraised value increase cannot surpass the lesser of the market value determined by the appraisal office or a calculated amount based on the previous year's appraised value plus any new improvements made to the property.

Furthermore, the bill amends existing sections of the Tax Code to incorporate references to this new limitation and clarifies the appraisal process for affected properties. It allows property owners to protest appraisal office determinations regarding their eligibility for the limitation and requires them to apply for the limitation annually, detailing the necessary information for the application. The bill is set to take effect for tax years beginning on or after January 1, 2026, contingent upon the approval of a constitutional amendment proposed by the 89th Legislature, which would authorize the legislature to limit the maximum appraised value for certain leased residential properties. If the amendment is not approved by voters, the bill's provisions will not take effect.

Statutes affected:
Introduced: Subchapter B, Chapter , Tax Code 23.23 (Subchapter B, Chapter , Tax Code 23)