Texas Requires Use of All Comparable Properties, Enacts Changes to Tax Appraisal Process

Texas Requires Use of All Comparable Properties, Enacts Changes to Tax Appraisal Process

Under a new law that went into effect on Jan. 1, chief appraisers of Texas’s central appraisal (assessment) districts are prohibited from excluding foreclosure sales and properties as comparables that have lost value due to the declining market. House Bill 1038 prohibits exclusion of properties in the same neighborhood as the property being appraised solely because the property was sold at a foreclosure sale within the last three years, or has a value that has declined because of a declining market.

Several changes were also recently made to the ad valorem tax process in Texas. The passage of Proposition 2 by voters in November 2009 will require that residential property is appraised only based upon its use as a homestead regardless of whether the residential use of the property by the owner is considered to be the highest and best use of the property. Additionally, passage of Proposition 3 will allow the state Legislature to dictate the standards and procedures for the appraisal of property for ad valorem tax purposes. Prior to the passage of Proposition 3, this was the responsibility of county governments.

The passage of House Bill 1038, along with the passage of Proposition 2 and 3, is intended to improve the fairness and accuracy of the appraisal process and will help ensure that appraisal districts are following uniform appraisal practices and procedures. According to Gov. Rick Perry’s office, “The intent of these measures is to increase transparency and accountability in the appraisal process.”

To view a copy of H.B. 1038, visit www.capitol.state.tx.us/tlodocs/81R/billtext/pdf/HB01038F.pdf . To view a copy of the legislation that authorized the consideration of Propositions 2 and 3 visit, www.capitol.state.tx.us/tlodocs/81R/billtext/pdf/HJ00036F.pdf .