HB1244

Regular Session

Relating to the eligibility of land to continue to be appraised for ad valorem tax purposes as qualified open-space land following a transfer to a person who uses the land in materially the same way as the former owner and to late applications for such appraisal filed by the new owner of the land.

ModeratePlan for compliance

Low Cost

Effective:2026-01-01

Enforcing Agencies

County Appraisal Districts • Chief Appraisers

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: January 1, 2026.
Compliance Deadline: Immediate for any land transfer occurring on or after January 1, 2026.
Agency Rulemaking: While no formal rulemaking deadline is set, County Appraisal Districts will likely develop internal policies defining "materially the same" use by Q1 2026. Expect variance in enforcement between counties until the State Comptroller issues guidance.

Immediate Action Plan

1. Update Post-Closing Checklists: Add a specific "HB1244 Eligibility Review" step for all land transfers scheduled for 2026 or later.
2. Audit Pending Restructures: For any internal reorganizations (e.g., moving land from a Family Partnership to an LLC), ensure operational personnel contracts are assigned to the new entity to preserve continuity.
3. Establish "Same Use" Baselines: Document current agricultural intensity metrics now so you have a comparison baseline for future transfers.
4. Protest Protocol: Prepare a template protest letter citing HB1244 to challenge any late-filing penalties assessed on eligible transfers after Jan 1, 2026.

Operational Changes Required

Contracts

Asset Purchase Agreements (APAs): For land transfers intended to retain Ag status, insert clauses requiring the Seller’s operational personnel (ranch managers, lessees) to remain in place for a defined period post-closing to satisfy the "same individual" statutory requirement.
Lease Agreements: Ensure agricultural leases survive the transfer of the underlying land. The lessee is often the "individual" conducting the use; losing the tenant upon transfer could void this specific penalty relief.

Hiring/Training

Tax Teams: Train staff to calculate the new extended deadline for eligible transfers: the later of the tax delinquency date (usually Feb 1) or the one-year anniversary of the transfer.
Accounts Payable: Instruct staff to flag any 2026+ tax bill containing a 10% late-filing penalty on transferred land. These penalties are now illegal under HB1244 conditions and must be protested.

Reporting & Record-Keeping

Proof of Continuity: You must generate and retain evidence that the *same individuals* are overseeing the land. Maintain pre- and post-transfer personnel rosters, management contracts, or affidavits from lessees.
Usage Logs: Document the "intensity of use" (e.g., head of cattle, crop acreage) before and after the transfer to prove operations are "materially the same."

Fees & Costs

Penalty Waiver: The mandatory penalty equal to 10% of the difference between the tax imposed and the tax that would have been imposed (Sec. 23.541(b)) is eliminated for eligible transfers.
Budget Impact: Positive. Reduces reserve requirements for potential tax liabilities during entity restructuring.

Strategic Ambiguities & Considerations

"Materially the Same Way": The statute does not define "materially." If a new owner reduces cattle stocking rates by 30% or shifts from cattle to hay, Appraisal Districts may argue the use is not "materially the same" and deny the penalty waiver.
"Overseen or Conducted by the Same Individuals": It is unclear if this refers to the entity owner or the on-ground operator.
*Guidance:* Assume strict interpretation. If the ownership entity changes *and* the ranch manager changes simultaneously, you likely fall outside the protection of this bill.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsAgriculture Taxation Taxation--property-appraisals & Appraisal Districts Taxation--property-exemptions Open-space Land

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

H.B. 1244

By: Guillen

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

Texas law allows certain agricultural and open-space land to be appraised at a lower value for property tax purposes. However, when ownership of such land is restructured under the same individual owners, for example by forming an LLC, the new owner, in this example the LLC, must reapply for this special appraisal. The bill author has informed the committee that missing the application deadline can lead to financial penalties that may be burdensome for individuals who continue to use the land under the new ownership structure in the same way as they did under the previous ownership structure. H.B. 1244 ensures that landowners who restructure the ownership of qualified open-space land but don't alter the makeup of the ownership or the use of the land can continue to receive the same tax treatment if they use the land in materially the same way as under the previous ownership structure. It also allows a new owner, in this example the LLC, to file a late application up to one year after acquiring the land without incurring penalties.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

H.B. 1244 amends the Tax Code to establish that the ownership of qualified open-space land that was appraised as agricultural land in the preceding tax year is not considered to have changed for purposes of eligibility for appraisal in subsequent years without a new application if after the ownership of the land is transferred from the former owner to the new owner:

·the new owner uses the land in materially the same way as the former owner used the land during the preceding tax year; and

·the use is overseen or conducted by the same individuals who oversaw or conducted that use during the preceding tax year.

H.B. 1244 requires the chief appraiser to accept and approve or deny an application for appraisal of qualified open-space land after the deadline for filing the application has passed if the following conditions are met:

·the land that is the subject of the application was appraised as agricultural land in the preceding tax year;

·the new owner uses the land in materially the same way as the former owner used the land during the preceding tax year; and

·the application is filed not later than the first anniversary of the date ownership of the land was transferred from the former owner to the new owner.

The bill exempts such an application, if approved, from the late application penalty of 10 percent of the difference between the amount of tax imposed on the property and the amount that would be imposed if the property were taxed at market value.

EFFECTIVE DATE

January 1, 2026.

House Authors

Rep. Ryan GuillenRepublican · Primary Author

Coauthors (2)

Senate Sponsor

Sen. Paul BettencourtRepublican · Primary Sponsor

Bill Text(with markup)

H.B. No. 1244

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the eligibility of land to continue to be appraised for
	ad valorem tax purposes as qualified open-space land following a
	transfer to a person who uses the land in materially the same way as
	the former owner and to late applications for such appraisal filed
	by the new owner of the land.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 23.54(e-1), Tax Code, is amended to read
	as follows:
	(e-1) For purposes of Subsection (e), the ownership of [~~the~~]
	land that was appraised under this subchapter in the preceding tax
	year is not considered to have changed if:
	(1) the ownership of the land is transferred from the
	former owner to the surviving spouse of the former owner; or
	(2) after the ownership of the land is transferred
	from the former owner to the new owner:
	(A) the new owner uses the land in materially the
	same way as the former owner used the land during the preceding tax
	year; and
	(B) the use described by Paragraph (A) is
	overseen or conducted by the same individuals who oversaw or
	conducted that use during the preceding tax year.
	SECTION 2. Section 23.541, Tax Code, is amended by adding
	Subsection (a-2) and amending Subsection (b) to read as follows:
	(a-2) Notwithstanding Subsection (a), the chief appraiser
	shall accept and approve or deny an application for appraisal under
	this subchapter after the deadline for filing the application has
	passed if:
	(1) the land that is the subject of the application was
	appraised under this subchapter in the preceding tax year;
	(2) the new owner uses the land in materially the same
	way as the former owner used the land during the preceding tax year;
	(3) the use described by Subdivision (2) is overseen
	or conducted by the same individuals who oversaw or conducted that
	use during the preceding tax year; and
	(4) the application is filed not later than the later
	of:
	(A) the delinquency date for the taxes on the
	land for the year for which the application is filed; or
	(B) the first anniversary of the date the
	ownership of the land was transferred from the former owner to the
	new owner.
	(b) If appraisal under this subchapter is approved when the
	application is filed late, the owner is liable for a penalty of 10
	percent of the difference between the amount of tax imposed on the
	property and the amount that would be imposed if the property were
	taxed at market value. The penalty prescribed by this subsection
	does not apply to a late application filed under Subsection (a-1) or
	(a-2).
	SECTION 3. This Act takes effect January 1, 2026.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 18, 2025

TO:	Honorable Morgan Meyer, Chair, House Committee on Ways & Means

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	HB1244 by Guillen (Relating to the eligibility of land to continue to be appraised for ad valorem tax purposes as qualified open-space land following a transfer to a person who uses the land in materially the same way as the former owner and to late applications for such appraisal filed by the new owner of the land.), As Introduced

No significant fiscal implication to the State is anticipated.

The bill would provide that ownership of qualified open-space land would not be considered changed after the land is transferred from the former owner to the new owner if the new owner uses the land in materially the same way as the former owner used the land during the preceding tax year and the use is overseen or conducted by the same individuals who oversaw or conducted the use during the preceding tax year.

The bill would require the chief appraiser to accept and approve or deny a late application for qualified open-space land if the land was appraised as qualified open-space land in the previous year, the new owner uses it in materially the same way, and the application is filed not later than the first anniversary of the date of the ownership change. In this specific case, penalties for late filings would not be applicable.

Under current law, a change in ownership requires a new owner to file an application to keep the special appraisal provided a change in use of the land has not occurred and the land continues to be eligible. The bill would require a chief appraiser to accept certain late applications without penalty from the new owner.

Local Government Impact

Accepting a late application without penalty would be a cost to local taxing units; however, it is not expected to be significant.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JMc, KK, SD, BRI

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Frequently Asked Questions

Common questions about HB1244

What does Texas HB1244 do?

HB1244 creates a statutory safety net for entities holding "Open-Space" (1-d-1) agricultural land, specifically targeting internal restructures and transfers where operations remain unchanged. Effective January 1, 2026, the law waives the mandatory 10% late-filing penalty and extends the appraisal application deadline for new owners, provided the land use and overseeing personnel remain materially the same. Implementation Timeline Effective Date: January 1, 2026.

Who authored HB1244?

HB1244 was authored by Texas Representative Ryan Guillen during the Regular Session.

When was HB1244 signed into law?

HB1244 was signed into law by Governor Greg Abbott on May 24, 2025.

Which agencies enforce HB1244?

HB1244 is enforced by County Appraisal Districts and Chief Appraisers.

How urgent is compliance with HB1244?

The compliance urgency for HB1244 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of HB1244?

The cost impact of HB1244 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does HB1244 address?

HB1244 addresses topics including agriculture, taxation, taxation--property-appraisals & appraisal districts, taxation--property-exemptions and open-space land.

Legislative data provided by LegiScanLast updated: November 25, 2025

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