(Note – this blog post is written with a slant toward residential property, but Sec. 11.35 of the Texas Property Tax code applies to commercial properties and Business Personal Property as well.)
We have written before about those tasks that pay $500/hr. rate (like filing your homestead exemption). Get ready for another one!!
The recent near zero-degree weather we experienced in Texas was brutal. While some made it through with minor power and water outages, others experienced ruptured pipes and water flowing like a fire hose though the house. This can cause major damage to a structure and after Hurricane Harvey devastated much of the Houston area, the Texas Legislature went to work in the 2019 session and wrote Section 11.35 to the Texas Property Tax Code effective January 1, 2020. The intent of this section was to amend how Texans can apply for a reduced property tax bill due to property damage as a result of a disaster declaration by the governor.
Under Section 11.35, once the governor issues a Disaster Declaration for your area, taxpayers could be eligible for part of their Market Value to be exempt from taxation on a pro-rata basis for the year in which the Declaration was issued. Here’s the nuts and bolts of this part of the tax code.
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Your damage loss must be equal to or greater than 15% of the value of the improvement part of the market value as reported by the chief appraiser for 2021 (you will get the notice of value in mid-April).
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If you damage is equal to or greater than 15% of the value of the improvement component of the value for 2021, then the chief appraiser will assign a damage assessment rating and Exemption Percentage using a table like the following.
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If you damage is equal to or greater than 15% of the value of the improvement component of the value for 2021, then the chief appraiser will assign a damage assessment rating and Exemption Percentage using a table like the following.
| Damage Rating |
Damage Assessment |
Damage Description |
Exemption Amount |
|---|---|---|---|
| I | >=15% <30% | Minimal, may continue to be used as intended | 15% |
| II | >=30% <60% | Nonstructural damage including damage to the roof, walls, foundation, or mechanical components. | 30% |
| III | >=60% <100% | Significant structural damage and waterline 18” + above floor if flooded. | 60% |
| IV | 100% | Total Loss: repair is not feasible | 100% |
Example: Suppose a residential account has a total value of $375,000 with $75,000 to the land and $300,000 to the improvements. Further suppose that, per the insurance claim or quoted bids, the cost to repair the damage due to frozen pipes bursting is $70,000. Since the $70,000 damage amount is equal to or greater than 15% of the value of the improvements (which were valued at $300,000), then this taxpayer does qualify for an exemption. Further, the damage assessment level likely falls into the Level I Damage rating. The exemption for 2021 is calculated as follows:
Improvement Value ($300,000) X 15% X 88% = $39,600.
What does this do to the tax bill? Combined tax rates are generally close to 2.5% of the value so 2.5% of $39,600 exempted from tax is $990.
As you can see, the exemption is meant to cover cases where the damage is more than just some ruined carpet and small damages to surfaces. The minimum about of damage for this $375,000 house to qualify at all, the damages would have to be 15% of $300,000 or $45,000.
Key Takeaways
- This exemption is probably only for those properties that sustained damage due to pipes bursting and flooding (must reach a minimum 15% of the improvement value to qualify)
- How do I apply? Fill out Form 50-132 from the State Comptroller’s Office.
- Deadline? You must apply within 105 days from Feb 12 or by May 28, 2021.
- Since the damage occurred after January 1st of 2021, you will not be able to use the damage caused by the winter storm in your property tax appeal. The only way to lower your tax bill from the damage is through the disaster exemption.