H.B. No. 261 introduces significant changes to the appraisal process for certain commercial real properties regarding ad valorem tax assessments. The bill 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. It also adds Section 23.232, which defines "commercial real property" and sets criteria for limiting the appraised value of properties with a market value of $10 million or less. The bill allows appraisal offices to increase the appraised value of commercial properties, but restricts this increase to a maximum of 20% from the previous year's appraised value, plus the market value of any new improvements.

Furthermore, the bill mandates that property owners be notified about their eligibility for the new appraisal limitations and outlines the appraisal process to ensure that both market value and the computed amount under the new limitations are included in appraisal records. It specifies conditions for classifying improvements as "new improvements" and notes that certain disaster recovery programs may influence this classification. The bill will take effect for tax years starting on or after January 1, 2027, contingent upon the approval of a constitutional amendment proposed by the 89th Legislature, which seeks to authorize the legislature to limit the maximum appraised value of certain commercial real properties. If the amendment is not approved by voters, the provisions of this bill will not take effect.

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