Texas Tax Code

Sec. § 23.55
Change of Use of Land


(a)

If the use of land that has been appraised as provided by this subchapter changes, an additional tax is imposed on the land equal to the difference between the taxes imposed on the land for each of the three years preceding the year in which the change of use occurs that the land was appraised as provided by this subchapter and the tax that would have been imposed had the land been taxed on the basis of market value in each of those years, plus interest at an annual rate of five percent calculated from the dates on which the differences would have become due. For purposes of this subsection, the chief appraiser may not consider any period during which land is owned by the state in determining whether a change in the use of the land has occurred.

(b)

A tax lien attaches to the land on the date the change of use occurs to secure payment of the additional tax and interest imposed by this section and any penalties incurred. The lien exists in favor of all taxing units for which the additional tax is imposed.

(c)

The additional tax imposed by this section does not apply to a year for which the tax has already been imposed.

(d)

If the change of use applies to only part of a parcel that has been appraised as provided by this subchapter, the additional tax applies only to that part of the parcel and equals the difference between the taxes imposed on that part of the parcel and the taxes that would have been imposed had that part been taxed on the basis of market value.

(e)

Subject to Section 23.551 (Additional Notice to Certain Landowners), a determination that a change in use of the land has occurred is made by the chief appraiser. The chief appraiser shall deliver a notice of the determination to the owner of the land as soon as possible after making the determination and shall include in the notice an explanation of the owner’s right to protest the determination. If the owner does not file a timely protest or if the final determination of the protest is that the additional taxes are due, the assessor for each taxing unit shall prepare and deliver a bill for the additional taxes plus interest as soon as practicable. The taxes and interest are due and become delinquent and incur penalties and interest as provided by law for ad valorem taxes imposed by the taxing unit if not paid before the next February 1 that is at least 20 days after the date the bill is delivered to the owner of the land.

(f)

The sanctions provided by Subsection (a) of this section do not apply if the change of use occurs as a result of:

(1)

a sale for right-of-way;

(2)

a condemnation;

(3)

a transfer of the property to the state or a political subdivision of the state to be used for a public purpose; or

(4)

a transfer of the property from the state, a political subdivision of the state, or a nonprofit corporation created by a municipality with a population of more than one million under the Development Corporation Act (Subtitle C1, Title 12, Local Government Code) to an individual or a business entity for purposes of economic development if the comptroller determines that the economic development is likely to generate for deposit in the general revenue fund during the next two fiscal bienniums an amount of taxes and other revenues that equals or exceeds 20 times the amount of additional taxes and interest that would have been imposed under Subsection (a) had the sanctions provided by that subsection applied to the transfer.

(g)

If the use of the land changes to a use that qualifies under Subchapter E of this chapter, the sanctions provided by Subsection (a) of this section do not apply.

(h)

Additional taxes, if any, for a year in which land was designated for agricultural use as provided by Subchapter C of this chapter (or Article VIII, Section 1-d, of the constitution) are determined as provided by that subchapter, and the additional taxes imposed by this section do not apply for that year.

(i)

The use of land does not change for purposes of Subsection (a) of this section solely because the owner of the land claims it as part of his residence homestead for purposes of Section 11.13 (Residence Homestead) of this code.

(j)

The sanctions provided by Subsection (a) do not apply to a change in the use of land if:

(1)

the land is located in an unincorporated area of a county with a population of less than 100,000;

(2)

the land does not exceed five acres;

(3)

the land is owned by a not-for-profit cemetery organization;

(4)

the cemetery organization dedicates the land for a cemetery purpose;

(5)

the cemetery organization has not dedicated more than five acres of land in the county for a cemetery purpose in the five years preceding the date the cemetery organization dedicates the land for a cemetery purpose; and

(6)

the land is adjacent to a cemetery that has been in existence for more than 100 years.

(k)

In Subsection (j), “cemetery,” “cemetery organization,” and “cemetery purpose” have the meanings assigned those terms by Section 711.001 (Definitions), Health and Safety Code.

(l)

The sanctions provided by Subsection (a) of this section do not apply to land owned by an organization that qualifies as a religious organization under Section 11.20 (Religious Organizations)(c) of this code if the organization converts the land to a use for which the land is eligible for an exemption under Section 11.20 (Religious Organizations) of this code within five years.

(m)

For purposes of determining whether a transfer of land qualifies for the exemption from additional taxes provided by Subsection (f)(4), on an application of the entity transferring or proposing to transfer the land or of the individual or entity to which the land is transferred or proposed to be transferred, the comptroller shall determine the amount of taxes and other revenues likely to be generated as a result of the economic development for deposit in the general revenue fund during the next two fiscal bienniums. If the comptroller determines that the amount of those revenues is likely to equal or exceed 20 times the amount of additional taxes and interest that would be imposed under Subsection (a) if the sanctions provided by that subsection applied to the transfer, the comptroller shall issue a letter to the applicant stating the comptroller’s determination and shall send a copy of the letter by regular mail to the chief appraiser.

(n)

Within one year of the conclusion of the two fiscal bienniums for which the comptroller issued a letter as provided under Subsection (m), the board of directors of the appraisal district, by official board action, may direct the chief appraiser to request the comptroller to determine if the amount of revenues was equal to or exceeded 20 times the amount of taxes and interest that would have been imposed under Subsection (a). The comptroller shall issue a finding as to whether the amount of revenue met the projected increases. The chief appraiser shall review the results of the comptroller’s finding and shall make a determination as to whether sanctions under Subsection (a) should be imposed. If the chief appraiser determines that the sanctions provided by Subsection (a) shall be imposed, the sanctions shall be based on the date of the transfer of the property under Subsection (f)(4).

(o)

The sanctions provided by Subsection (a) do not apply to land owned by an organization that qualifies as a charitable organization under Section 11.18 (Charitable Organizations)(c), is organized exclusively to perform religious or charitable purposes, and engages in performing the charitable functions described by Section 11.18 (Charitable Organizations)(d)(19), if the organization converts the land to a use for which the land is eligible for an exemption under Section 11.18 (Charitable Organizations)(d)(19) within five years.

(p)

The sanctions provided by Subsection (a) do not apply to real property transferred to an organization described by Section 11.181 (Charitable Organizations Improving Property for Low-income Housing)(a) if the organization converts the real property to a use for which the real property is eligible for an exemption under Section 11.181 (Charitable Organizations Improving Property for Low-income Housing)(a). This subsection does not apply to the sanctions provided by Subsection (a) in connection with a change in use described by this subsection that are due to a county or school district unless the governing body of the county or school district, as applicable, waives the sanctions in the manner required by law for official action by the body.

(q)

The sanctions provided by Subsection (a) do not apply to land owned by an organization that qualifies as a school under Section 11.21 (Schools)(d) if the organization converts the land to a use for which the land is eligible for an exemption under Section 11.21 (Schools) within five years.
Acts 1979, 66th Leg., p. 2259, ch. 841, Sec. 1, eff. Jan. 1, 1982. Amended by Acts 1981, 67th Leg., 1st C.S., p. 145, ch. 13, Sec. 71, eff. Jan. 1, 1982; Acts 1983, 68th Leg., p. 4147, ch. 652, Sec. 2, eff. June 19, 1983; Acts 1983, 68th Leg., p. 4824, ch. 851, Sec. 12, eff. Aug. 29, 1983; Acts 1989, 71st Leg., ch. 796, Sec. 20, eff. Sept. 1, 1989; Acts 1995, 74th Leg., ch. 471, Sec. 2, eff. June 12, 1995; Acts 1995, 74th Leg., ch. 811, Sec. 1, eff. Aug. 28, 1995; Acts 1997, 75th Leg., ch. 165, Sec. 31.01(74), eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 345, Sec. 5, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 351, Sec. 1, eff. Sept. 1, 1997; Acts 2003, 78th Leg., ch. 288, Sec. 1.08, eff. June 18, 2003; Acts 2003, 78th Leg., ch. 1176, Sec. 1, eff. June 20, 2003.
Amended by:
Acts 2005, 79th Leg., Ch. 728 (H.B. 2018), Sec. 23.001(81), eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch. 885 (H.B. 2278), Sec. 3.69, eff. April 1, 2009.
Acts 2011, 82nd Leg., R.S., Ch. 1309 (H.B. 3133), Sec. 4, eff. June 17, 2011.
Acts 2013, 83rd Leg., R.S., Ch. 865 (H.B. 561), Sec. 1, eff. June 14, 2013.
Acts 2015, 84th Leg., R.S., Ch. 352 (H.B. 1464), Sec. 5, eff. September 1, 2015.
Acts 2019, 86th Leg., R.S., Ch. 1361 (H.B. 1743), Sec. 1, eff. September 1, 2019.
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Jun. 7, 2021