Relating to the determination of the capitalization rate to be used in the appraisal for ad valorem tax purposes of certain property used for low-income housing.

89(R) HB 4478 - House Committee Report version - Bill Text

89R24663 PRL-F

By: Turner, Martinez Fischer

H.B. No. 4478

Substitute the following for H.B. No. 4478:

By: Martinez Fischer

C.S.H.B. No. 4478

A BILL TO BE ENTITLED

AN ACT

relating to the determination of the capitalization rate to be used

in the appraisal for ad valorem tax purposes of certain property

used for low-income housing.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 11.1825, Tax Code, is amended by

amending Subsections (q) and (r) and adding Subsection (r-1) to

read as follows:

(q) If property qualifies for an exemption under this

section, the chief appraiser shall use the income method of

appraisal as described by Section 23.012 to determine the appraised

value of the property. The chief appraiser shall use that method

regardless of whether the chief appraiser considers that method to

be the most appropriate method of appraising the property. In

appraising the property, the chief appraiser shall:

(1) consider the restrictions provided by this section

on the income of the individuals or families to whom the dwelling

units of the housing project may be rented and the amount of rent

that may be charged for purposes of computing the actual rental

income from the property or projecting future rental income; and

(2)
except as provided by Subsection (r-1),
use the

same capitalization rate that the chief appraiser uses to appraise

other rent-restricted properties.

(r) Not later than January 31 of each year, the appraisal

district shall give public notice in the manner determined by the

district, including posting on the district's website if

applicable, of the capitalization rate to be used in that year to

appraise property receiving an exemption under this section
, other

than property described by Subsection (r-1). The appraisal

district shall post on the district's website the capitalization

rate adopted by the Texas Department of Housing and Community

Affairs to be used in the applicable year to appraise property

described by Subsection (r-1) as soon as practicable after the rate

is submitted to the district
.

(r-1)

Not later than January 31 of each year, the Texas

Department of Housing and Community Affairs shall adopt the

capitalization rate that must be used by the chief appraiser of each

appraisal district in this state to appraise property receiving an

exemption under this section that also receives financial

assistance administered under Subchapter DD, Chapter 2306,

Government Code. The department shall give public notice, in the

manner determined by the department, of the capitalization rate

adopted under this subsection and shall post the rate on the

department's website and submit the rate to the chief appraiser of

each appraisal district in this state. The department may not give

public notice of the capitalization rate until the department has

provided the public a reasonable opportunity to comment on the rate

adopted by the department and its applicability to the areas of this

state in which the rate will be used. When determining the

capitalization rate under this subsection, the department must

consider data available to the department with regard to income

received and expenses incurred by similar rent-restricted

properties.

SECTION 2. This Act applies only to an ad valorem tax year

that begins on or after the effective date of this Act.

SECTION 3. This Act takes effect January 1, 2026.