February 03, 2021

Temporary Property Tax Exemptions for Disaster Damage.

Temporary exemption for disaster damage

In the unfortunate event that your property incurs damage due to natural disasters like storms, flooding or winds, you may be eligible for temporary exemption on the appraised value of your property. If a property incurs at least 15% physical damage due to a disaster in a governor-declared disaster area, it is eligible for a temporary exemption of a portion of the appraised value of the property.

If it qualifies, this exemption can be claimed on:

  • Tangible personal property used for income production.
  • Improvements to real property.
  • Certain manufactured homes.

Damage assessment rating

In Texas, the chief appraiser determines if the property qualifies for the temporary exemption and assigns a damage assessment rating of Level I through IV. The damage assessment rating determines the percentage of the appraised value of the qualified property to be exempted.

The county emergency management authority, the Federal Emergency Management Agency (FEMA) or other appropriate sources help make this determination.

Calculating the amount of exemption received

The amount of the exemption is determined by multiplying the property value after applying the damage assessment rating to a fraction- 365 divided by the number of days remaining in the tax year after the date the governor declares the disaster.

Travis CAD has put up a disaster exemption calculator. Not just Travis CAD homeowners, any homeowner in Texas can use this calculator to estimate their disaster exemption.

What conditions must an owner fulfil to receive this exemption?

The owner must begin active construction of the replacement structure or site preparation no later than five years after ceasing to occupy the principal residence to continue receiving this exemption. This exemption may not be claimed for more than five years.

When should I apply for disaster damage exemption?

A property owner must apply for the temporary exemption no later than 105 days after the Governor declares a disaster area. In 2022, several Texas counties were affected by storms, winds and flooding. The Governor issued a declaration on 23rd August notifying 23 counties as disaster affected. Property owners in these counties have until December 6th (ie., 105 days from the declaration), to apply for disaster damage exemption, if their properties were affected. Application for disaster damage exemption is to be made on form 50-312 and submitted to your county appraisal district. The chief appraiser must send written notice of the approval, modification or denial of the application to the applicant no later than five days after making the determination.

The temporary disaster area exemption expires on January 1 of the first tax year in which the property is reappraised.

Tax exemption for uninhabitable or unstable residences

In the unfortunate event that your primary residence is damaged badly due to storms or flooding, and if the house becomes unsuitable for living, you can continue to claim your homestead exemption on that property until you re-build and re-occupy it.

In case you establish a different principal residence, then you can claim homestead exemption on one of them only. Ref: Texas Property Tax Code Sec 11.135(a)

You can continue to claim homestead exemption on the damaged property for a period of two years. If the property is in a Governor declared disaster area, then you can claim the exemption for up to five years.

How does a property qualify as uninhabitable or unstable?

A residential structure may be rendered uninhabitable or unstable due to wind or water damage. Factors may include severe dampness, unsafe layout, lack of ventilation etc. A condition in the property that materially affects the physical health or safety of the residents qualifies a property as uninhabitable or unstable.

The property must be qualified as the owner's principal residence to claim the exemption. Learn more about the conditions to be met here.

What conditions does an owner have to fulfil to receive this exemption?

  • Exemption for the structure, the land and improvements used in the residential occupancy of the structure are received while the owner constructs a replacement qualified residential structure on the land.
  • The owner cannot establish a different principal residence for which the owner receives an exemption during that period.
  • The owner must also intend to return and occupy the structure as the principal residence.
  • The owner must begin active construction of the replacement qualified residential structure or other physical preparation of the site on which the structure is to be located not later than one year after he ceases to occupy the principal residence.
  • The owner may not receive the exemption for more than two years.

How can an owner prove the site for the replacement structure's construction is 'under physical preparation'?

The site of a replacement qualified residential structure is considered under physical preparation if the owner has engaged in architectural or engineering work, soil testing, land clearing activities or site improvement work necessary for the construction of the structure. It is also considered to be 'under physical preparation' if the owner has conducted an environmental or land-use study relating to the construction of the structure.

A house in Texas damaged due to winter storm

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Disclaimer

Articles presented here are for general information and education only. It is provided as a courtesy to the general public. SQD Taxtech LLC does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of SQD Taxtech LLC. Please cite source when quoting.

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