Alert

Texas Winter Storms: Tax Relief Available for Qualified Property Damage

Texas property owners are eligible to receive a temporary property-tax exemption for qualified property that was damaged by the February 2021 winter storm. To receive the exemption, a qualified property must have been at least 15% damaged by the storm.

Property owners must apply for the temporary exemption by May 28, 2021, to receive the benefit. Below, learn who’s eligible for the tax relief, how to apply, and more.

Qualified Property Eligible for Exemption

Under Section 11.35 of the Texas Property Tax Code, qualified property that is eligible for this exemption includes the following:

  • Tangible business personal property used for the production of income
  • Residential buildings
  • Commercial buildings, such as office buildings and manufacturing plants
  • Multifamily buildings
  • Other real property, including certain manufactured homes

For tangible business personal property to be eligible, a property must have been filed on a 2021 personal property tax rendition filing or property statement.

How to Determine Eligibility

Property owners may be eligible for the temporary exemption if these two conditions are met:

  • Chief appraiser grants damage assessment to the property
  • Damage is at least 15% of the current appraised property valuation

If the property qualifies for and is granted the exemption, the county appraisal district will review all available information to assign a damage assessment rating.

Damage Assessment Ratings

damage assessment ratings chart

How to Determine the Exemption Percentage

The exemption percentage is determined by multiplying the building or business personal property value by the exemption percentage based on the damage assessment level shown above.

That amount is then multiplied by the annual proration factor, as defined by the disaster declaration. The proration factor for this disaster is 0.88, which was determined by dividing 322 days by 365 days.

Sample Calculation

A home that was appraised at $200,000 of value received $40,000 in damage, but it was deemed to have minimal damage and could still be used as intended.

The damage assessment would exceed the 15% threshold—$40,000 damage divided by $200,000 appraised value, which equals 20%—and the home would be granted a damage rating level I and a 15% exemption.

The home’s appraised value of $200,000 would then be multiplied by the 15% exemption percentage, which equals $30,000. That amount would then be further multiplied by the proration factor of 0.88, equaling a $26,400 exemption that would reduce the taxable value of the property for the 2021 tax year.

Filing Deadline

Property owners must apply for the temporary exemption within 105 days of the declaration of a disaster area by the governor.

Governor Greg Abbott declared the entire state of Texas a disaster area on February 12, 2021, which makes the deadline to file for the exemption May 28, 2021.

We’re Here to Help

For more information about the tax relief available to Texas property owners, contact your Moss Adams professional.