H.B. No. 4478 amends the Tax Code to establish a new process for determining the capitalization rate used in appraising low-income housing properties for ad valorem tax purposes. The bill modifies Subsections (q) and (r) of Section 11.1825 and introduces a new Subsection (r-1). Under the amended law, the chief appraiser must use the income method of appraisal and apply the same capitalization rate used for other rent-restricted properties, except for properties that receive financial assistance under specific government programs, which will have a separate rate determined by the Texas Department of Housing and Community Affairs.

The Texas Department of Housing and Community Affairs is required to adopt the capitalization rate for these properties by January 31 each year and must provide public notice and post the rate on its website. The department is also mandated to consider relevant data on income and expenses from similar properties when determining this rate. The changes will take effect on January 1, 2026, and will apply to ad valorem tax years beginning on or after that date.

Statutes affected:
Introduced: Tax Code 11.1825 (Tax Code 11)
House Committee Report: Tax Code 11.1825 (Tax Code 11)