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Texas Property Tax Exemptions: Nonresidential Properties
As a Texas real estate attorney, I have assisted many clients with applying for tax exemptions on their nonresidential properties. In most cases, the client was understandably unaware of the exemptions currently available in Texas. As such, I created the following overview to assist property owners with determining whether their property qualifies for a tax exemption. The overview consists of the most common exemptions currently available. If you find an exemption within this overview which you believe may apply to your situation, it is recommended you read the applicable statute for more detailed information on how to apply. In most cases, getting an exemption simply requires filing the specified paperwork by the statutory deadline. However, if your property has multiple uses, or if its qualification is questionable, it is recommended you consult with a real estate attorney who handles such cases.
Under TX Property Tax Code §11.20, property owned by a religious organization may be exempted from taxation if the property is used as a regular place of worship. The organization which owns the property must be operated primarily for religious worship or spiritual development. The organization’s articles of incorporation or bylaws must pledge a religious purpose and on dissolution, the assets of the organization must be transferred to another exempt entity. Furthermore, the organization may not produce distributable profit or pay excessive salaries to its staff.
Youth Development Organizations
Under TX Property Tax Code §11.19, property owned by organizations whose primary purpose is the spiritual, mental, and physical development of children or young men and women is exempt from taxation. To qualify for the exemption, the organization must be dedicated to development in all three areas—spiritual, mental, and physical.
Under TX Property Tax Code §11.21, property which is used exclusively for educational functions may be exempted from taxation so long as the school located on the property has a regular faculty, curriculum, and body of students in attendance. In addition, the school's charter must pledge the use of its assets for school purposes and must pledge that upon dissolution its assets will be transferred to another exempt entity. It is important to note that day care facilities do not qualify for an exemption.
Under TX Property Tax Code §11.24, property that is designated as a recorded Texas Historical Landmark by the Texas Historical Commission and by the governing body of a taxing unit may be exempted from taxation. In addition, property that is designated by a taxing unit as a historically significant site in need of tax relief to encourage its preservation may be exempted from taxation.
Public Charitable Organizations
Under TX Property Code §11.18, certain institutions which are engaged primarily in public charitable functions may qualify for a property tax exemption. To qualify, the organization's charter, bylaws, or articles must pledge the use of its assets for a charitable purpose and must pledge that its assets will be transferred to another exempt entity. Generally speaking, the organization must use its property exclusively for charitable work. However, engaging in incidental non-charitable work will not void the exemption. The following is a list of the most common organizations whose property may qualify for a tax exemption.
- Hospitals or medical organizations which provide medical care regardless of the patient’s ability to pay may qualify for an exemption. If only a portion of the property is used for charitable purposes, that portion alone may qualify.
- Organizations that provide support to orphans, delinquents, handicapped children, battered children, battered spouses, the impoverished, and victims of natural disasters, regardless of a recipient’s ability to pay
- Organizations that help support the elderly or handicapped, regardless of a recipient’s ability to pay
- Organizations that preserve historical landmarks or sites
- Organizations promoting or operating a museum, zoo, library, theater, symphony orchestra, or choir
- Organizations that provide for the humane treatment of animals
- Organizations that provide a public water supply may
- Nonprofit water supply and waste water companies that provide a public water supply
- Volunteer Fire Departments
- Organizations that promote youth athletic development
- Organizations dedicated to preserving or conserving wildlife
- Organizations that provide educational loans or scholarships
- Halfway houses
- Homeless shelters
- Nursing homes that provide services regardless of a recipient’s ability to pay
- Organizations that promote or operate an art gallery, museum, or collection that is open to the public
- Organizations that conduct scientific research for the public good
Organizations that provide housing for low income families, handicapped individuals, and the elderly
The information in this article is for general information purposes only. Nothing on this or associated pages, comments, answers, or other communications should be taken as legal advice. The information provided is not intended to create, and viewing of this information does not constitute, an attorney-client relationship.
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