Temporary Disaster Exemption for 2021 Freezing Weather

On February 12, ahead of the record breaking winter storm that hit Texas, Gov. Abbott made a Disaster Declaration for all 254 counties in Texas. As a result, many resources were made available for Texans affected by the storm. One of which is a Temporary Property Tax Exemption, under Property Tax Code 11.35, available to all Texas property owners.

What Does This Temporary Exemption Do?

This exemption, which must be filed with your local appraisal district, allows anyone with an improved property (building structure of some sort including manufactured homes) to file for a reduction of their taxable improvement value based on damages from the storm, without having to file a formal protest. This also applies to tangible business personal property (property and equipment used for income purposes).

There is, however, a 15% threshold for this exemption, meaning you must be able to show that your damages will result in a cost of 15% or more of the value of that improvement or business personal property. For example, if the appraisal district has your property valued at $300,000, of which $250,000 is allocated to the improvement (building structure), you must be able to show that at least $37,500 in damages resulted directly from the weather, extreme temperatures, or loss of power, water, or gas as a result of the storm.

Once the threshold minimum value is passed, there is a proration factor that will determine the dollar amount of exemption that will be deducted from the improvement value of your property. Those calculations are based on a Damage Rating Tier that the appraisal district will be able to discuss with you. Some appraisal districts have calculators available to help estimate the exemption amount.

Additionally, Comptroller Form 50-312 which is a the application for the Temporary Exemption must be filed with the appraisal district before May 28, 2021. Please keep in mind that damages to land or secondary improvements not part of the main structure (pool, spa, outside kitchen feature, etc) will likely not be calculated as part of the damage total.

Who Should Apply?

This exemption is meant to help those who suffered damage as a result of a disaster. But the exemption is really meant for those with heavy losses. If you just lost all of your groceries as a result of power failure, this exemption is not for you. If you suffered a broken pipe that was easily fixed with minimal drywall damage, while that is a major inconvenience, it probably isn’t worth your time to file for this exemption. If you suffered extensive damage due to multiple pipe bursts that resulted in flooding, wall or ceiling collapses, or flooring and insulation removal, you should look into this exemption.

The best thing to do is calculate your damages from insurance reports, repair bids or estimates, and receipts for construction materials that you have purchased but not installed yet. Use that sum to compare to your property’s improvement value from 2020 as recorded with the appraisal district. If that amount doesn’t easily pass the 15% mark, think hard before applying.

Be sure throughout this process to keep all documentation you have in regards to the damage including insurance claims and reports, estimates and bids to repair, and photos. Even if you can’t use them as part of the Temporary Exemption, you may still be able to use them as part of your annual property tax protest.

Final Thought

One thing that isn’t made explicitly clear with this Temporary Exemption is that filing the application will almost certainly trigger a before-and-after onsite inspection from the appraisal district. And they will likely want to see all of the damage, outside and inside the improvement. This is something that you should weigh when deciding whether to file the application; could the appraiser see something that may result in a higher valuation of your property later down the road? Ultimately if your damage is severe it will probably be worth filing for this exemption for this year. If your damage is pretty limited, you may not be eligible for the exemption in the first place. Even if you are over the 15% threshold, if your home has been updated in ways that the appraisal district may not know about, it may still not be worth it.