COVID-19 and Section 11.35

On Monday, April 13th, Texas Attorney General Ken Paxton published an opinion (KP-0299) regarding the application of Texas Tax Code § 11.35 to income-producing properties impacted by COVID-19.  In the opinion, the Attorney General claimed that the temporary exemption only applies to properties affected by physical damage and does not apply to properties that have been damaged only economically.  As we discussed in our previous update, the opinion focused on the distinction between damage caused by natural disasters and damage caused by the reduction of income due to the current COVID-19 quarantine efforts.  

Although this is a blow to owners of income properties seeking property tax relief during these difficult times, it is important to note that this opinion is not determinative for the issue and that the exemption may still apply if 1) the legislature changes the law to specifically include economic disasters; 2) courts disagree with the attorney general’s reasoning; or 3) property owners can prove physical damage that has been incurred due to COVID-19.

Currently, the next regular session for the Texas Legislature is in 2021.  Although the Governor could call a special session for the Texas Legislature to meet in 2020, it seems unlikely while mass gatherings remain prohibited or discouraged.  Should that be the case, the earliest opportunity for property tax relief from the legislature would be in 2021, if it comes all.

For the complete opinion by the Texas Attorney General, click here.