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On February 12, Texas Governor Greg Abbott issued a disaster declaration in response to the recent winter storm.  Under Section 11.35, once the governor issues a disaster declaration, taxpayers may be eligible for a portion of their appraised value to be exempt from taxation on a pro-rata basis for the year in which the declaration was issued.

 

After Hurricane Harvey devastated much of the Houston area, the Texas Legislature went to work and wrote Section 11.35 to the Texas Property Tax Code effective January 1, 2020,” said Glenn Goodrich, founder of Propertytax.io. “The intent of this section was to amend how Texans can apply to have the taxable value adjusted due to property damage as a result of a disaster declaration by the governor.”

 

How it works:

 

  1. Damage loss must be at least 15% of the value as reported by the chief appraiser for 2021 (notices are mailed in April). The 15% applies to the improvement component of the value and not the total market value.

 

  1. If the damage is equal to or greater than 15% of the value of the improvement component for 2021, 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 Percentage

I

=>15% <>

Minimal, may continue to be used as intended

15%

II

=>30% <>

Nonstructural damage including damage to the roof, walls, foundation, or mechanical components.

30%

III

=>60% <>

Significant structural damage requiring extensive repair due to at least a partial failure of the foundation, structural or wall elements.

60%

IV

100%

Total Loss: repair is not feasible

100%

 

 

  1. The exemption percentage is modified by the pro-rata factor for the days remaining in the tax year from when the governor declared the disaster. In the case of the 2021 winter storm in Texas, the disaster was declared on February 12, 2021 so that percentage is 88%.

 

Example: Suppose a residential account has a total value of $375,000 with $75,000 to the land and $300,000 to the improvements. After extensive damage to the improvements, per the insurance claim or quoted bids, the cost to repair winter storm related damage is $50,000. Since $50,000 is equal to or greater than 15% of the value of the improvements, the taxpayer would qualify for an exemption. Further, the damage assessment level likely falls into the Level I damage rating. Assuming it is Level I, the exemption for 2021 is calculated as follows:

 

Improvement Value X 15% X 88%

$300,000 X 15% X 88% or $39,600 is exempt from taxation

 

What does this do to the tax bill?  Combined tax rates are generally close to 2.5% of the value, so 2.5% of a $39,600 tax exemption is a $990 reduction in taxes owed.

 

“The exemption is meant to cover cases where the damage is more than just some ruined carpet and small damages to surfaces,” said Goodrich. “For this $375,000 house to qualify at all, the damages would have to be 15% of $300,000 which is $45,000.”

 

To qualify, property owners or their authorized agent must apply online by completing Form 50-132 at https://comptroller.texas.gov/forms/50-312.pdf. Required documentation includes insurance claims, FEMA documents, repair estimates, photos, or other information to determine the level of damage. The deadline to apply is May 28, 2021.

 

Additional information can be found here.

 

Glenn Goodrich is the founder and architect of the software used by Propertytax.io, a web application designed to help the public protest their property taxes. He can be reached at Glenn@Propertytax.io. For more information about Propertytax.io please visit www.propertytax.io

 

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