H.B. No. 273 introduces a limitation on the increases in the appraised value of certain commercial real properties for ad valorem tax purposes. The bill amends the Tax Code to define "commercial real property" and establishes criteria for appraising such properties. It allows appraisal offices to increase the appraised value to the lesser of the market value from the most recent tax year or a calculated sum that includes a 10% increase from the previous year's appraised value, along with the market value of any new improvements. This limitation specifically applies to properties with a market value of $10 million or less. Additionally, the bill modifies existing sections of the Tax Code to clarify the appraisal process and property owners' rights to protest appraisals, including provisions for notifying property owners about their eligibility for the new limitations.

The bill also amends various sections of the Tax Code and Government Code to clarify the valuation of properties subject to appraisal limitations, particularly for residence homesteads and commercial real property. It updates Section 42.26(d) to include new sections (23.231 and 23.232) for determining market value in legal suits and modifies the definition of "taxable value" in Section 403.302(d) to reflect these changes. Importantly, the bill stipulates that these provisions will only apply to the appraisal of commercial real property for tax years beginning on or after January 1, 2026, contingent upon the approval of a constitutional amendment proposed by the 89th Legislature. If the amendment is not approved, the provisions will have no effect, aiming to enhance clarity and fairness in property tax assessments.

Statutes affected:
Introduced: Tax Code 23.23 (Tax Code 23)