Ms. Lisa Smith Bastrop County Auditor 804 Pecan Street Bastrop, Texas 78602

DearMs. Smith: 

### KEN PAXTON ATTORNEY GENERAL OF TEXAS
May 3, 2016
OpinionNo. KP-0081 Re: Whether Tax Code section 33.06 authorizes ad valorem property tax deferral on mixed-use property (RQ-0067-KP)

You ask whether Tax Code section 33.06 authorizes ad valorem property tax deferral on mixed-use property and related questions. 1 You state that the Bastrop Central Appraisal District ("District") has received requests from taxpayers seeking to defer their tax liability on property that is used partially as a residence homestead and partially for other purposes that, you assert, wouldnotqualifyfor ahomesteadexemptionunder section 11.13 ofthe Tax Code. RequestLetter at 1.2 Youexplainthatthe Districtappraisespropertybythe parcel and assigns an accountnumber to eachlot. Id. YoustatethattheDistrictis oftenunableto determine whichportionoftheproperty is being used as a residence and cannot subdivide the lots without performing a new survey. Id. You ask first whether Tax Code subsection 33.06(a)authorizes an appraisal district to grant a tax deferral for propertyusedpartially as a residence**home~tead** and partially for otherpurposes, such as commercial or agricultural purposes. Id. at 2. Second, you ask whether a tax deferral underthe subsection applies to an entire parcel in a property account that is used for both**residentia~** homestead and nomesidential homesteadpurposes. Id. We address these questions together. In construing statutes, courts attempt to ascertain and "give effect to the Legislature's intent" as expressed by the language ofthe statute. Osterberg v. Peca, 12 S.W.3d 31, 38 (Tex. 2000). Courts "construe the words ofa. statute according to their plain meaning

... and in the context ofthe statute's surroundingprovisions." In re Office of theAtt'yGen. ofTex.,456 S.W.3d 153, 155 (Tex. 2015). Subsection 33.06(a) provides: (a) An individual is entitledto defer collection ofa tax, abate a suit to collect a delinquent tax, or abate a sale to foreclose a tax lien ifthe individual:

1Ms. Lisa Smith, Bastrop Cty. Auditor, to Honorable Ken Paxton, Tex. Att'y Gen. at 2 (Nov. 4, 2015), https://www.texasattorneygeneral.govIopinion/requests-for-opinion-rqs ("Request Letter").

2Specifically, you mention commercial property, agricultural-use property pursuant to article VIII, section 1-d ofthe Texas Constitution, and open-space property pursuant to article VIII, section l-d-1. Request Letter at I.Ms. Lisa Smith

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(I) is 65 years ofage orolderoris disabledas definedby Section l l .13(m); and (2) the tax was imposed against property that the individual owns and occupies as a residence homestead. TEX. TAX CODE § 33.06(a). The requirements for entitlementto tax deferral are in subsection (b), which states that "[t]o obtain a deferral, an individual must file with the chiefappraiser for the appraisal district in which the property is located an affidavit stating the facts required to be established by Subsection (a)." Id. § 33.06(b); see also id. § 33.06(c), (c-1) (requirements for abatement ofsuit or sale). Section 11.13 ofthe Tax Code defines "residence homestead" as:
a structure (including a mobile home) or a separately secured and occupiedportionofa structure (togetherwiththe land, notto exceed 20 acres, and improvements used intheresidential occupancy ofthe structure, if the structure and the land and improvements have identical ownership) that: (A)is owned by one or more individuals, either directly or through a beneficial interest in a qualifying trust; (B) is designed or adapted for humanresidence; (C)is used as a residence; and (D) is occupied as the individual's principal residence by an owner, by an owner's surviving spouse who has a life estate in the property, or, for property owned through a beneficial interestin aqualifying trust, by atrustor orbeneficiaryofthe trust who qualifies for the exemption. Id. § 11.130)(1). Oncethe owner files the affidavitrequired under section 33.06(b), "ataxingunit may not file suitto collect delinquent taxes onthe property and the property may not be sold at a sale to foreclose the tax lien until the 181st day after the date the individual no longer owns and occupies the property as a residence homestead." Id.§ 33.06(b). 3 Section 33.06 does not address the extent of an appraisal district's discretion when it receives an affidavit for deferral. Subsection 33.06(a) has only two substantive requirements entitling an ownerto deferral-the individual must qualify by age or disability and must own and occupy the taxedproperty as a residential homestead. Id.§ 33.06(a); see also Tex. Att'y Gen. Op. No. GA-0787 (2010) at 2. The owner obtains entitlement to deferral by an affidavit attesting to the facts establishing these requirements. TEX. TAX CODE§ 33.06(b). When the requirements of

3Similarly, the Tax Code provides for tax deferral or suit abatementfor an appreciatingresidence homestead. TEX.TAX CODE§ 33.065.Ms. Lisa Smith

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section 33.06 are met, an appraisal district must allow deferral. Id. Section 33.06 does not, however, require that the district take the affidavit at face value. The plain language ofsection 33.06 requires thatthe facts entitling an individual to deferral "be established," i.e., thatthe owner and the property qualify in fact. Id. Section 33.06 impliedly authorizes a chief appraiser to evaluate an affidavit for deferral, analogous to the chief appraiser's authority to consider an application for a homestead exemption. Under section 11.45 ofthe Tax Code, a chiefappraiser is authorized and has the duty to determine an applicant's right to a homestead exemption. See id. § 11.45 ("Action on Exemption Applications"). Thus, a court would likely conclude that section 33.06 impliedly authorizes a chief appraiser receiving an affidavit to investigate or request additional information and to allow or not allow a deferral as warranted bythe law and facts. Section 33.06 also does not address the right to deferral when the affidavit identifies mixed-useproperty. But courtshaveheldthat "[w]henatax-paying landowneris actuallyresiding on aparcel ofless thantwenty acres ofland, the chiefappraisermaynotrefuse to accordresidence homestead status to the entireparcel ofland." Parker Cty. AppraisalDist. v. Francis, 436 S.W.3d 845, 848 (Tex. App.-Fort Worth 2014, no pet.) (considering a residence homestead exemption); accord Kubovy v. Cypress-Fairbanks Indep. Sch. Dist., 972 S.W.2d 130, 135 (Tex. App.- Houston [14th Dist.] 1998, no pet.) (abating post-judgment action when defendant filed a section 33.06 affidavit); see also Tex. Att'y Gen. Op. No. GA-0752 (2009) at 3 (stating that "so long as the chiefappraiser determines that contiguous lots ofless than twenty acres are being used as a residence homestead, the taxpayer would be entitled to an exemption"). Some statutorilyrecognized uses ofproperty may be fully compatible with occupancy as a residence homestead and would not defeat entitlementto deferral. See Parker Cty. AppraisalDist., 436 S.W.3d at 854 (determining on particular facts that property qualified for both homestead exemption and openspace property valuation). On the other hand, some uses ofproperty may be incompatible with occupancy ofthe entireparcel as a residence homestead. See Harris Cty. AppraisalDist. v. Nunu, No. 14-08-00528-CV, 2009 WL 2620732, at *6 (Tex. App.-Houston [14th Dist.] 2009, pet. denied) (mem. op.) (determining that a particular business use ofproperty was incompatible with a use as a residence homestead for Tax Code valuationpurposes to the extent ofthe business use). When an individual seeks deferral for an entire parcel that includes property not occupied as a residence homestead, an appraisal district would be authorized to disallow the deferral. Whether an individual occupies a parcel ofland as a residence homestead, in whole or in part, will depend on particular facts. See Zorrilla v. Aypco, Constr. II, LLC, 469 S.W.3d 143, 160 (Tex. 2015) (stating that"[w]hether a property is a homestead is a question offact"); Tex. Att'y Gen. Op. No. GA-0752 (2009) at 3 (determiningthat whether contiguous lots ofless thantwenty acres are being used as a residence homestead is a question offact). Your third question is whether an appraisal district may require an individual requesting tax deferral under subsection 33.06(a) to provide at the owner's expense a land surveyto separate property used for residential homestead purposes from property used for otherpurposes. Request Letter at 2. An appraisal district may exercise only powers that are expressly delegated to it by the constitution or statutes and those necessarily implied from such express powers. Tex. Att'y Gen. Op. No. GA-0681 (2008) at 2. Section 33.06 statesthat an owneris entitledto deferral ifthe owner and the owner's occupancy ofproperty meets certain requirements and the owner files an affidavit to that effect. TEX. TAX CODE § 33.06(a)-(b). An appraisal district "may not impose additional burdens, conditions, or restrictions in excess of or inconsistent with the statutoryMs. Lisa Smith

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provisions." Riessv. AppraisalDist. of Williamson Cty., 735 S.W.2d633, 638 (Tex. App.-Austin 1987, writ denied). Thus, while article 33.06(a) implicitly authorizes an appraisal district to investigate and disallow a tax deferral where the facts and the law warrant, it does not authorize an appraisal district to impose additional requirements for an individual to request a tax deferral. Accordingly, a court would likely conclude that section 33.06 does not authorize an appraisal district to require a property owner to provide a survey at the owner's expense in order to claim entitlementto tax deferral under subsection 33.06(a) ofthe Tax Code.Ms. Lisa Smith

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SUMMARY A court would likely conclude that section 33.06 ofthe Tax Code impliedly authorizes a district to investigate facts recited in an affidavit for deferral, request additional information, and allow or deny a deferral as warranted by the law and facts. An appraisal district may grant deferral on mixed-use property provided that all uses are compatible with occupancy as a residence homestead. Whether an owner occupies an entire parcel as a residence homestead will depend onthe particular facts. Section 33.06 of the Tax Code does not authorize an appraisal district to require a property owner to provide a survey at the owner's expense in order to claim entitlement to tax deferral under subsection 33.06(a) ofthe Tax Code.

JEFFREY C. MATEER First Assistant Attorney General BRANTLEY STARR Very truly yours,

# ~?~ KEN PAXTON Attorney General ofTexas

Deputy Attorney General for Legal Counsel VIRGINIA K. HOELSCHER Chair, Opinion Committee WILLIAM A. HILL Assistant Attorney General, Opinion Committee