After Hurricane Harvey, Texas property owners qualified for tax breaks if their homes or commercial buildings were damaged. While Governor Gregg Abbott has declared a public health disaster, owners of commercial property should not expect a property tax break as a result of the COVID-19 pandemic.
HB497, signed during the 86th Texas Legislature, is the law that provides a tax exemption for property damaged in an officially declared disaster. Many believed that this law would help commercial properties suffering as a result of COVID-19 be tax-exempt due to economic damage.
Owners of commercial property were hopeful because the language of the bill refers to “damage” not “physical damage.” This led Senator Bettencourt, sponsor of the bill in the Senate, to request an opinion on the matter from Texas Attorney General Ken Paxton.
Representative Shine, the author of the bill in the House, sent a letter to the AG asserting that the tax exemption applies only to structures with physical damage.
Monday, April 13, Attorney General Paxton issued an opinion which included the following:
“A court would likely conclude that the Legislature intended to limit the temporary tax exemption to apply to property physically harmed as a result of a declared disaster. Thus, purely economic, non-physical damage to property caused by the COVID-19 disaster is not eligible for the temporary tax exemption provided by section 11.35 of the Tax Code.”
An Attorney General’s opinion is not binding on courts, and the matter could still be litigated. However, the AG’s opinion will likely prevail. Owners of commercial property who are facing economic hardship have other options available to them, such as applying for a loan. CLICK HERE to view our COVID-19 page which includes resources available to businesses during this unprecedented time.