89S21054 LHC-D     By: Miles S.B. No. 58       A BILL TO BE ENTITLED   AN ACT   relating to the treatment of a replacement structure for a   structure that was rendered uninhabitable or unusable by a   casualty, a natural disaster, or wind or water damage as a new   improvement for ad valorem tax purposes.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 11.26, Tax Code, is amended by amending   Subsection (o) and adding Subsection (o-1) to read as follows:          (o)  Notwithstanding Subsections (a) and (b), an improvement   to property that would otherwise constitute an improvement under   Subsection (b) is not treated as an improvement under that   subsection if the improvement is a replacement structure for a   structure that was rendered uninhabitable or unusable by a   casualty, a natural disaster declared by the president of the   United States or the governor, or [by] wind or water damage. For   purposes of appraising the property in the tax year in which the   structure would have constituted an improvement under Subsection   (b), the replacement structure is considered to be an improvement   under that subsection only if:                (1)  the square footage of the replacement structure   exceeds that of the replaced structure as that structure existed   before the casualty, disaster, or damage occurred; or                (2)  the exterior of the replacement structure is of   higher quality construction and composition than that of the   replaced structure.          (o-1)  Notwithstanding Subsection (o)(2), a replacement   structure is not considered to be an improvement if:                (1)  the materials used for the construction and   composition of the exterior of the replaced structure are no longer   available; and                (2)  the materials used for the construction and   composition of the exterior of the replacement structure are the   materials most comparable in quality to the materials used for the   exterior of the replaced structure.          SECTION 2.  Section 11.261, Tax Code, is amended by amending   Subsection (m) and adding Subsection (m-1) to read as follows:          (m)  Notwithstanding Subsections (b) and (c), an improvement   to property that would otherwise constitute an improvement under   Subsection (c) is not treated as an improvement under that   subsection if the improvement is a replacement structure for a   structure that was rendered uninhabitable or unusable by a   casualty, a natural disaster declared by the president of the   United States or the governor, or [by] wind or water damage. For   purposes of appraising the property in the tax year in which the   structure would have constituted an improvement under Subsection   (c), the replacement structure is considered to be an improvement   under that subsection only if:                (1)  the square footage of the replacement structure   exceeds that of the replaced structure as that structure existed   before the casualty, disaster, or damage occurred; or                (2)  the exterior of the replacement structure is of   higher quality construction and composition than that of the   replaced structure.          (m-1)  Notwithstanding Subsection (m)(2), a replacement   structure is not considered to be an improvement if:                (1)  the materials used for the construction and   composition of the exterior of the replaced structure are no longer   available; and                (2)  the materials used for the construction and   composition of the exterior of the replacement structure are the   materials most comparable in quality to the materials used for the   exterior of the replaced structure.          SECTION 3.  Section 23.23, Tax Code, is amended by amending   Subsection (f) and adding Subsection (f-1) to read as follows:          (f)  Notwithstanding Subsections (a) and (e) and except as   provided by Subdivision (2), an improvement to property that would   otherwise constitute a new improvement is not treated as a new   improvement if the improvement is a replacement structure for a   structure that was rendered uninhabitable or unusable by a   casualty, a natural disaster declared by the president of the   United States or the governor, or [by] wind or water damage. For   purposes of appraising the property under Subsection (a) in the tax   year in which the structure would have constituted a new   improvement:                (1)  the appraised value the property would have had in   the preceding tax year if the casualty, disaster, or damage had not   occurred is considered to be the appraised value of the property for   that year, regardless of whether that appraised value exceeds the   actual appraised value of the property for that year as limited by   Subsection (a); and                (2)  the replacement structure is considered to be a   new improvement only if:                      (A)  the square footage of the replacement   structure exceeds that of the replaced structure as that structure   existed before the casualty, disaster, or damage occurred; or                      (B)  the exterior of the replacement structure is   of higher quality construction and composition than that of the   replaced structure.          (f-1)  Notwithstanding Subsection (f)(2)(B), a replacement   structure is not considered to be an improvement if:                (1)  the materials used for the construction and   composition of the exterior of the replaced structure are no longer   available; and                (2)  the materials used for the construction and   composition of the exterior of the replacement structure are the   materials most comparable in quality to the materials used for the   exterior of the replaced structure.          SECTION 4.  This Act applies only to ad valorem taxes imposed   for a tax year beginning on or after the effective date of this Act.          SECTION 5.  This Act takes effect January 1, 2026.