Burst Pipes = Texas Property Tax Relief

Brusniak Turner Fine LLP

For many Texans, the recent winter storm plunged us into a place we had never been before: no water, no electricity, limited ability to travel, and limited ability to find supplies to keep warm as our homes sank into the 40’s at night. Others faced dread as we watched water begin to pour from the ceiling, or heard our kids ask, “Why is the floor all wet?”

Fast forward a few weeks later and here we are: electricity back on, water running, and no more fighting for bottled water at Costco. But many of us are dealing with the scars left behind by winter storm Uri. Some experts estimate that the total damage left behind will rival hurricanes like Katrina and Harvey, with estimates ranging from $20 billion to $295 billion in damage. Much of this damage is caused by burst water pipes that flooded homes, apartment complexes, and commercial buildings. While plumbing and restoration companies work around the clock to help rebuild the damage left behind, property owners in Texas are left holding the bill on deductibles that cost thousands. Fortunately, the Texas Legislature has provided relief for situations just like this.

In response to Hurricane Harvey, the Legislature adopted a law that provides tax relief in the event of a disaster. Section 11.35 of the Tax Code allows a “qualified property” to receive a temporary exemption of a portion of the taxable value of property damaged in a disaster. In other words, if your property was damaged in a disaster, you can claim a tax exemption (tax discount) on your property. The amount of the exemption depends on the severity of the damage, and properties are assigned damage ratings based on a damage assessment performed by each county. For example, a $300,000 house that sustains significant structural damage may be entitled to a 60% reduction in the taxable value of the home. In that example, rather than paying taxes on a $300,000 house, the owner would only pay taxes on a $120,000 house – which would translate into significant tax savings for the property owner. In some cases, the tax savings may even be enough to cover a homeowner’s deductible for the flood damage claim on the home.

With so many Texans still recovering from the economic blow of the pandemic, this type of tax relief could help keep people and businesses on their feet. However, owners must move quickly and apply for this tax exemption before the deadline of May 28, 2021.

Please visit the Texas Comptroller’s website for additional information and the form needed to claim your tax exemption.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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