Circuit Breaker Limitation on Non-Resident Homestead Property Value Increases
Beginning in 2024, real property valued at $5 million or less will benefit from a 20 percent limitation on the net appraised value of the property used to calculate property taxes. Each property that qualifies will receive a Notice of Appraised Value, typically in April, that specifies the market value of the property as of January 1.
Tax Code Section 23.231 sets a limit on the amount of annual increase to the appraised value of real property other than a residence homestead to not exceed the lesser of:
- the property’s market value; or
- the sum of:
- 20 percent of the property’s appraised value for the preceding year;
- the property’s appraised value for the preceding year; and
- the market value of all new improvements to the property.
The circuit breaker limitation applies only to real property that is not a residence homestead and is:
- valued at $5,160,000 or less; and
- not real property that qualifies for special appraisal as:
- agricultural land;
- timberland;
- recreational, park and scenic land;
- public access airport property; or
- restricted-use timberland.
A new improvement is an improvement to real property made after the most recent appraisal that increases the property’s market value and was not included in the its appraised value in the preceding tax year. It does not include repairs to or ordinary maintenance of an existing structure, the grounds or another property feature.
A replacement structure for one rendered uninhabitable or unusable by a casualty, wind or water damage does not qualify as a new improvement under certain circumstances.
The circuit breaker limitation takes effect on Jan. 1 of the tax year following the first year the owner owns the property on Jan. 1. It expires on Jan. 1 following the year the property owner no longer owns the property.
You must own the property for at least one full calendar year (January through December) before you are eligible for a 20 percent limitation. Properties already receiving a homestead exemption are not eligible and will continue to receive the standard 10 percent limitation on their net appraised value. Should you sell your property, the limitation will be removed and the tax base will increase to the property’s current market value until the new owner is eligible for the same benefit.
The Texas Legislature has currently only authorized the circuit breaker limitation for the 2024, 2025, and 2026 tax years.
You are not required to submit an application to receive a circuit breaker limitation. The appraisal district will automatically apply and calculate these benefits every year.
Tax Code Section 23.231
