H.B. No. 240 proposes amendments to the Texas Tax Code regarding the appraisal of real property for ad valorem tax purposes, specifically limiting increases in appraised values. The bill modifies Section 1.12(d) to clarify that the appraisal ratio for real property is based on the market value determined by the appraisal district, rather than the appraised value limited by Section 23.23. Additionally, the heading of Section 23.23 is changed to reflect that it applies to "real property" instead of just "residence homestead." The bill also introduces new subsections that outline conditions under which the limitation on appraised value expires, including transfers of ownership to a spouse or surviving spouse and ownership changes among multiple persons.

The bill further defines "new improvement" and clarifies that it includes manufactured homes qualifying as residence homesteads. It also amends various sections to ensure that the limitations on appraised values apply broadly to real property rather than being restricted to residence homesteads. The act is set to take effect on January 1, 2027, contingent upon the approval of a related constitutional amendment by voters, which would allow the legislature to limit the maximum appraised value of real property for ad valorem tax purposes to 105 percent or more of the previous year's appraised value. If the amendment is not approved, the act will have no effect.

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