In the last legislative session, as part of the property tax legislation, a bill known as the “Circuit Breaker” was approved.

What is the Circuit Breaker?

You are probably familiar with the 10% Homestead Cap rule in Texas. The Circuit Breaker is to Non Homestead property as the 10% Homestead Cap is to Residential Homesteads. An important difference is that the Circuit Breaker uses a 20% year to year cap on assessed value instead of 10%.

Which Property Types Qualify for the Circuit Breaker?

· All Land and Commercial Property which a taxpayer acquired on or before January 1, 2023 and which had a Market Value of $5M or less in 2023.

· Any Residential Property that does not have a homestead exemption (rentals and second homes for example).

· What is the limitation or cap? As with Residential Homesteads, there is no limit on the Market Value but, for qualifying property, any increase in the Assessed value is capped at 20% from 2023.

· The value notice from the appraisal district should state whether the cap applies. It may not be noted as the “Circuit Breaker”. Some actually show it as a Homestead Cap.

What Else?

· Importantly, the Circuit Breaker is a temporary and experimental law. It sunsets or expires automatically on December 31, 2026. Unless the legislature acts to extend or modify it, it has no force after December 31, 2026.

· Unintended Consequences – we are seeing some appraisal districts increasing commercial valuations far in excess of any percentage seen in the past. Some have suggested that this is their chance to raise values substantially with the expectation that if the Market Value far exceeds the Capped Value, the owner may not bother with a protest.

What do I need to do?

· Check your communications from PropertyTax.io (PropertyTAX.io is part of Goodrich Realty Consulting and handles all of our residential cases and the admin work for Goodrich Realty Consulting). You will see if your value is capped by comparing the 2024 Market Value with the 2024 Appraised Value.

· NOT ALL COMMERCIAL PROPERTY RECEIVED AN INCREASE OF OVER 20%. If your Market Value increase from 2023 is less than 20% or if your property has a Market Value of >$5M, you are not affected this year.

· If you are affected, we will be in contact with you regarding options.

Note: We are not attorneys and the above should not be construed as Legal Advice. This law is new in 2024 and interpretation by appraisal districts may vary.