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A BILL TO BE ENTITLED
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AN ACT
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relating to the exemption from ad valorem taxation of rent-to-own |
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property not held by the lessee primarily to produce income and to |
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the method to be used to depreciate taxable rent-to-own property |
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for tax appraisal purposes. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by |
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adding Section 11.253 to read as follows: |
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Sec. 11.253. RENT-TO-OWN PROPERTY LEASED FOR PERSONAL USE. |
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(a) In this section, "rent-to-own property" means tangible |
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personal property of a type intended for personal use within the |
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home that is owned by a dealer engaged in the business of leasing |
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that type of property to customers under rent-to-own contracts. |
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(b) The owner of rent-to-own property that is subject to a |
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rent-to-own contract is entitled to an exemption from taxation of |
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the property if: |
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(1) the lessee does not hold the property for the |
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production of income; and |
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(2) the property is used primarily for activities that |
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do not involve the production of income. |
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(c) For purposes of this section, rent-to-own property is |
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presumed to be used primarily for activities that do not involve the |
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production of income if the majority of the time the property is |
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used in a year it is used for non-income producing purposes. |
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(d) The comptroller by rule shall establish exemption |
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application requirements and appropriate procedures to determine |
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whether rent-to-own property subject to a rent-to-own contract |
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qualifies for an exemption under Subsection (b). |
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(e) In connection with the requirements and procedures |
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under Subsection (d), the comptroller by rule shall adopt a form to |
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be completed by the lessee of rent-to-own property for which the |
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owner of the property may apply for an exemption under Subsection |
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(b). The form shall require the lessee to provide the lessee's name |
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and address and to certify under oath that the lessee does not hold |
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the property for the production of income and that the property is |
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used primarily for activities that do not involve the production of |
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income. The comptroller shall include on the form a notice of the |
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penalties prescribed by Section 37.10, Penal Code, for making a |
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false statement on the form. |
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(f) The owner of rent-to-own property that is subject to a |
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rent-to-own contract shall maintain the form completed by the |
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lessee of the property and make the form available for inspection |
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and copying by the chief appraiser of the applicable appraisal |
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district at all reasonable times. If the owner does not maintain a |
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completed form relating to the property, the owner: |
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(1) must render the property for taxation in the |
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applicable rendition statement or property report filed by the |
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owner under Chapter 22; and |
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(2) may not file an application for an exemption under |
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Subsection (b) for the property. |
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(g) The governing body of a municipality by ordinance |
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adopted before January 1, 2008, may provide for the taxation of |
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rent-to-own property otherwise exempted under Subsection (b). If |
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the governing body of a municipality provides for the taxation of |
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rent-to-own property under this subsection: |
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(1) the exemption provided by Subsection (b) does not |
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apply to the taxation of the property by that municipality; and |
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(2) the owner must render the property for taxation by |
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that municipality in the applicable rendition statement or property |
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report filed by the owner under Chapter 22. |
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(h) In addition to the requirements of Subsections (d) and |
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(e), the comptroller by rule shall prescribe a property report form |
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to be completed by the lessor of rent-to-own property describing |
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the rent-to-own property that the lessor owns that is subject to |
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rent-to-own contracts. The property report form shall require the |
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lessor to list each item of rent-to-own property the lessor owns |
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that is subject to a rent-to-own contract on January 1, to provide a |
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description of each item, and to provide the name of the lessee, the |
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address at which the property is kept, and an indication of whether |
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the lessee has designated the property as not held for the |
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production and not used for the production of income. |
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(i) The lessor shall provide the chief appraiser with the |
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completed property report form adopted by the comptroller in the |
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manner provided by Subchapter B, Chapter 22. If the lessor is |
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required to render the property described in the completed report |
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form for taxation, the lessor may satisfy the rendition requirement |
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by providing the chief appraiser with the completed property report |
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form in lieu of a rendition statement or property report as required |
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by Chapter 22 if the completed report form complies with the |
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requirements of that chapter for a rendition statement or property |
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report. |
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SECTION 2. Section 22.07, Tax Code, is amended by amending |
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Subsection (c) and adding Subsection (c-1) to read as follows: |
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(c) The chief appraiser may request, either in writing or by |
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electronic means, that the property owner provide a statement |
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containing supporting information indicating how the value |
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rendered under Section 22.01(a)(5) was determined. The statement |
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must: |
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(1) summarize information sufficient to identify the |
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property, including: |
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(A) the physical and economic characteristics |
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relevant to the opinion of value, if appropriate; and |
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(B) the source of the information used; |
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(2) state the effective date of the opinion of value; |
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and |
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(3) explain the basis of the value rendered. |
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(c-1) Except as otherwise provided by this subsection, if |
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[If] the property owner is a business with 50 employees or less, the |
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property owner may base the estimate of value on the depreciation |
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schedules used for federal income tax purposes. If the property is |
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described by Section 23.12(g), the property owner shall base the |
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estimate of value on the depreciation method prescribed by that |
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section. |
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SECTION 3. Section 23.12, Tax Code, is amended by adding |
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Subsection (g) to read as follows: |
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(g) In appraising an inventory of tangible personal |
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property of a type intended for personal use within the home that is |
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owned by a dealer engaged in the business of leasing that type of |
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property to customers under rent-to-own contracts, the chief |
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appraiser shall depreciate the property by using the straight-line |
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method and a recovery period of three years. |
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SECTION 4. This Act applies only to the taxation and |
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appraisal of property for ad valorem tax purposes for a tax year |
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beginning on or after the effective date of this Act. |
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SECTION 5. This Act takes effect January 1, 2008, but only |
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if the constitutional amendment proposed by the 80th Legislature, |
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Regular Session, 2007, authorizing the legislature to exempt from |
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ad valorem taxation rent-to-own property not held by the person |
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renting the property primarily to produce income and to prescribe |
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the method to be used to depreciate taxable rent-to-own property |
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for tax appraisal purposes is approved by the voters. If that |
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amendment is not approved by the voters, this Act has no effect. |