The bill amends the Texas Tax Code to establish a limitation on increases in the appraised value of real property for ad valorem tax purposes, effective January 1, 2027. It 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. The heading of Section 23.23 is changed from "Residence Homestead" to "Real Property," and the language throughout the section is updated to apply to real property generally, rather than being restricted to residence homesteads. Notably, the bill allows appraisal offices to increase the appraised value of real property by a maximum of five percent of the previous year's appraised value, along with the market value of new improvements.

Additionally, the bill introduces new provisions regarding the expiration of the appraisal limitation, particularly in cases of property transfer between spouses and ownership changes among multiple owners. It also defines "new improvement" and clarifies that the term "real property" includes manufactured homes qualifying as residence homesteads. The bill will only take effect if a related constitutional amendment, which seeks to authorize the legislature to limit the maximum appraised value of real property to 105 percent or more of the previous year's appraised value, is approved by voters. If the amendment is not approved, the bill will have no effect.

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