Texas AG Denies Tax Exemption


Texas AG does not Think that Property Tax Disaster Exemption Applies to COVID-19

Its property tax season again in Texas. Most counties have now sent out their 2020 appraised values. And unsurprisingly, the changes that have taken place with COVID-19 were not reflected in the appraised values. As you know, under Texas law, appraised values are set as of January 1 of the taxable year. The appraisal districts, therefore, argue that COVID-19 complications are not taken into account for 2020 values.

That is, obviously, not very helpful for property owners that are in crisis right now.

One potential area of relief for property owners is in the Texas Tax Code. The Code provides a temporary exemption for property that is damaged during a disaster. See Texas Tax Code Sect. 11.35.

Under that Section of the Code, a property owner is entitled to a property tax exemption if it has a property located in a disaster area (as declared by the Governor) that has been at least 15 percent damaged by that disaster. Once the property owner submits the application for the exemption, the Chief Appraiser then assigns the property to one of four levels of property damage. And depending on that level of damage, the owner can get a reduction in the appraised value for its property.

Unfortunately, on Monday April 13, Attorney General Ken Paxton issued an opinion that the disaster exemption does not apply to the COVID-19 disaster. In his opinion, Paxton determined that the phrase “damaged by the disaster” in the statute specifically only applies to physical damage to the property. It does not apply to economic or other intangible damage. As a result, AG Paxton does not believe property owners damaged by COVID-19 can benefit from the tax exemption that the legislature passed.

While the AG’s opinion is certainly influential, it is not determinative. This issue is likely to be resolved in lawsuits filed by property owners. As a result, we encourage all of our clients to file for this exemption and let us fight for them.


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