With the warm Spring days upon us, it is easy to forget what has transpired a short month ago. The snow and ice are gone, but many of us are still dealing with the consequences of leaks inside the walls, damaged water heaters, and other problems. Fortunately, one month ago, Governor Abbott issued a disaster declaration for all the State of Texas counties. In doing so, he opened a rare opportunity to take advantage of the Temporary Disaster Exemption. This exemption allows homeowners with significant damage to their qualified property to receive a temporary exemption of a portion of the property's appraised value, thus lowering the property tax burden.
What is the Temporary Disaster Exemption?
Temporary Exemption for Qualified Property Damaged by Disaster is a provision in the Texas Property Tax Code Section 11.35. The exemption applies only to qualified property:
- tangible personal property used for the production of income, or
- an improvement to real property, or
- a manufactured home as that is used as a dwelling.
Exemption percentage is determined based on the level of damage to the property from the disaster. Levels are assigned as follows:
- Level I: Damage Percentage 15% to 30%. The property suffered minimal damage and may continue to be used as intended.
- Level II: Damage Percentage 30% to 60%. Property has suffered only nonstructural damage, including nonstructural damage to the roof, walls, foundation, or mechanical components.
- Level III: Damage Percentage 60% or more, but not a total loss%. Property has suffered significant structural damage requiring extensive repair due to the failure or partial failure of structural elements, wall elements, or the foundation.
- Level IV: Total loss and repair of the property is not feasible
To qualify for the exemption, you must provide documentation such as estimates or receipts for damage resulting from the disaster event. Finally, the exemption amount is prorated by the number of days in the tax year following the governor's disaster declaration. Next, let's look at a specific example.
Example
| Amount | |
|---|---|
|
Total Appraised Value
|
$300,000 |
|
Improvement Value
|
$240,000 |
|
Land Value
|
$60,000 |
|
Repair Cost
|
$40,000 |
|
Damage Percentage
Repair Cost / Improvement Value
|
16.7% |
|
Qualified?
|
YES |
|
Exemption Percentage
|
15% |
|
Proration Factor
322 days / 365 days
|
0.88 |
|
Exemption Amount
Improvement Value × Exemption Percentage × Proration
|
$31,680 |
Want to Know if your Property Qualifies?
This all sounds great, but not everyone will qualify for the exemption. Please complete the form below to receive a personalized qualification analysis based on your property value and repair cost!