HBA-SEP H.B. 2306 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2306
By: Chisum
Financial Institutions
3/22/2001
Introduced



BACKGROUND AND PURPOSE 

Current law does not extend residence homestead ad valorem tax exemptions
to a homestead owned by a family-owned business or protect these businesses
from forced sale.  Exempting principal residences that are converted to
family-owned businesses from this tax and protecting them from forced sale
may encourage family business entrepreneurship.  House Bill 2306 provides
this exemption and protection.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 2306 amends the Tax and Property codes relating to the extension
of residence homestead ad valorem tax exemptions and protection from forced
sale to a homestead owned by a family-owned business.  The bill modifies
the definition of "residence homestead" to include a residence that is
owned through an interest in a family-owned business and is occupied by an
owner of the interest. As long as the owner or the owner's spouse
continues to reside in such a residence, the limitation of school tax on
homesteads of the elderly does not expire.  Conveyance of a residence
homestead by its owner to a familyowned business in which the owner owns an
interest, as long as the owner or the owner's spouse continues to reside in
the property, does not cause the limitation on the appraised value of a
residence homestead to expire, nor does the conveyance constitute a change
of ownership of the homestead, thus the homestead exemption, once allowed,
need not be reclaimed.  If the claimant has not acquired another homestead
and the homestead is exempt from creditor's claims, such a conveyance does
not change the homestead's character.    

EFFECTIVE DATE

This Act takes effect on the date on which the constitutional amendment
proposed relating to the extension of homestead ad valorem tax exemptions
and protection from forced sale to a homestead owned by a family-owned
business is approved by the voters.  If the amendment is not approved, this
Act has no effect.