H.B. No. 261 introduces new limitations on the increases in appraised values of certain commercial real properties for ad valorem tax purposes. It amends Section 1.12(d) of the Tax Code to clarify that the appraisal ratio for properties under Sections 23.23 or 23.232 is based on the market value determined by the appraisal district, rather than the appraised value limited by these sections. The bill also adds Section 23.232, which defines "commercial real property" and establishes criteria for limiting the appraised value of properties with a market value of $10 million or less. The appraisal office is permitted to increase the appraised value, but only to a specified extent, ensuring that increases do not exceed the lesser of the market value from the most recent tax year or a calculated sum based on the previous year's appraised value and any new improvements.

Additionally, the bill mandates that property owners receive notifications regarding their property's qualification for the new limitation on appraised value and includes provisions for the appraisal process, requiring the chief appraiser to include both the market value and the calculated amount in the appraisal records. The limitation on appraised value will take effect on January 1 of the tax year following the first year of ownership and will expire when the owner no longer owns the property or it no longer qualifies as commercial real property. The bill is set to take effect on January 1, 2027, contingent upon the approval of a constitutional amendment proposed by the 89th Legislature, which would allow the legislature to limit the maximum appraised value of certain commercial real properties for tax purposes. If the amendment is not approved by voters, the bill will have no effect.

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