Temporary Property Tax Exemption for Disaster Damage (Deadline To Apply is May 28, 2021)

In response to Hurricane Harvey, the last session of the Texas legislature created a new property tax exemption for qualified property located in Texas which sustains substantial damage due to a disaster in a governor-declared disaster area. Due to incoming winter storm Uri, Governor Abbott declared the entire state of Texas a disaster area on February 12, 2021.

This temporary exemption applies to qualified properties that sustain at least 15% in damage (based on the appraised value of the property). That means for those properties that suffered a broken pipe or two without significant damage caused by the water, they will probably not be able to meet the 15% threshold. However, the 15% threshold may be met for those properties that sustained significant damage from the recent winter storm.

Note that the damage to the property can be determined based on the gross amount of damage rather than the net loss to the taxpayer, after insurance reimbursement. Also note that some Tax Appraisal Districts have already indicated that they will use only the appraised value of the improvements to the property (rather than the appraised value of the land and improvements) to determine if the 15% threshold has been met.

The property owner must apply for the exemption. The deadline for the exemption to be filed is 105 days after the disaster declaration, which in this case will be May 28, 2021. Taxpayers should contact their local county Tax Appraisal District to obtain the appropriate exemption form. Collin County just released their exemption application form last week and other counties have released or should release their forms soon. Taxpayers will also need to submit proof of the amount of the damage to the property with the exemption application as well as all of the supporting documentation for the damage amount which might include photos, insurance forms, contractor estimates and contracts, receipts and anything that the owner believes supports their case.

If approved by the county Appraisal District, the exemption amount will be a pro-rated portion of the appraised value of the property for the remainder of the year from February 12, 2021.

Qualified property for this exemption includes improvements to real property, certain manufactured homes and tangible personal property used for income production. Types of property included in this definition are residences, commercial buildings, industrial buildings, and multi-family housing along with income-producing business personal property.

If you have any questions contact your HM&M advisor.

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