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Texas AG: Property owners can’t use coronavirus as disaster exemption for property taxes


By Bethany Blankley

Despite Gov. Greg Abbott declaring a state of disaster on March 13 due to the coronavirus health crisis, property owners can’t claim a disaster exemption to avoid paying property taxes, Attorney General Ken Paxton said.

The Attorney General’s Office issued an opinion Monday in response to a request made by state Sen. Paul Bettencourt, R-Houston. Bettencourt asked if the temporary tax exemption in section 11.35 of the Tax Code applies to property that has suffered an economic loss, but no physical damage, as a result of the COVID-19 disaster declared by the governor.

Section 11.35 of the Tax Code was adopted by the 86th Legislature in response to the physical damage Hurricane Harvey caused to property in 2017. It created a temporary tax exemption for qualified property damaged by a disaster, as declared by the governor.

The law defined “qualified property” as a “tangible personal property used for the production of income,” “an improvement to real property,” and manufactured homes, which had been “at least 15 percent damaged by the disaster.” If properties met these criteria, the owner was entitled “to an exemption from taxation by a taxing unit of a portion of the appraised value” of that property.”

The opinion analyzes the definition of the terms “damaged by disaster” and “damage.” It concludes that the legislature solely referred to physical losses, and “not to the value of real property as a whole, but instead only to ‘improvements’ that suffered damage due to the disaster.”

The opinion states: “Had the legislature intended to address economic losses or a general decrease in property value due to factors beyond the physical condition of the property, it could have used different language that encompassed those losses.

“Instead, the Legislature limited the real property exemption to improvements damaged by a disaster,” the order concludes. “Construing section 11.35 as a whole, a court would likely conclude that the Legislature intended to limit the temporary tax exemption in section 11.35 to apply only to property physically harmed as a result of a declared disaster.”

Prior to 2020, taxing jurisdictions were allowed to request disaster re-appraisals, which resulted in a county appraisal district re-establishing new values, as was the case after Hurricane Harvey.

The Harris County Appraisal District, for example, already mailed roughly 1 million letters to residential and commercial property owners advising them of their Jan. 1 taxable valuations. If recipients of the letters disagree with the valuation, they have until May 15 to protest them.

Even though the physical office is closed, employees are still working, the district says. It encourages filers “to take advantage of our online services such as iFile or iSettle for filing and settling a protest.”

Selecting iSettle allows residents to submit their opinion of value and upload documents for an appraiser to review. The protest can be resolved without coming to the HCAD building, the district says.

It also adds that, “Changes in your market value caused by the current health crisis will be taken into consideration as of January 1, 2021.”

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