Relating to the authority of the chief appraiser of an appraisal district to require a person allowed an exemption from ad valorem taxation of a residence homestead to file a new application or confirm the person's current qualification for the exemption.
ModeratePlan for compliance
Low Cost
Effective:2025-05-24
Enforcing Agencies
County Appraisal Districts (Chief Appraisers)
01
Compliance Analysis
Key implementation requirements and action items for compliance with this legislation
Implementation Timeline
Effective Date:May 24, 2025 (Immediate effect due to supermajority vote).
Compliance Deadline:Immediate. Any correspondence received from an Appraisal District on or after this date must adhere to the new standards.
Agency Rulemaking: While no formal rulemaking is mandated, the State Comptroller may update model forms. The "regulatory gray zone" exists immediately as 254 different CADs interpret what constitutes a valid "specific reason" for an audit.
Immediate Action Plan
1.Halt Auto-Responses: Issue a directive to tax teams and mailrooms to pause responses to any CAD homestead inquiries that do not explicitly state a specific reason for the inquiry.
2.Audit ID Consistency: Immediately verify that all executives or principals claiming a homestead exemption have updated their Texas Driver’s License to match the property address.
3.Challenge Non-Compliance: If a generic "confirm your status" letter is received, draft a standard response citing HB2730, Section 11.43(c-1), demanding the specific reason for the inquiry before providing data.
4.Update Client/Executive Briefings: Inform high-net-worth clients that while the government cannot arbitrarily audit them, any inquiry they *do* receive is now serious and based on specific adverse evidence.
Operational Changes Required
Contracts
Tax Consultant MSAs: Review agreements with third-party property tax agents. Ensure you are not paying hourly rates for agents to respond to generic, non-compliant CAD audit letters.
Lease/Occupancy Agreements: For properties held in trust or by Family Offices, ensure occupancy agreements explicitly align with homestead definitions to withstand specific scrutiny.
Hiring/Training
Mail Triage Protocols: Train administrative staff to stop automatically processing "Application for Residence Homestead Exemption" forms. These must now be flagged for legal review to ensure the CAD provided the statutory "specific reason."
Data Hygiene: Staff must verify that the principal’s Texas Driver’s License or ID card address matches the homestead address exactly, as CADs will likely use DPS database mismatches as their primary "specific reason" to trigger audits.
Reporting & Record-Keeping
Notice Retention: You must retain the initial notice from the CAD. If an exemption is later revoked, this document is your primary evidence to challenge the revocation based on procedural non-compliance (i.e., failure to state a specific reason).
Fees & Costs
Cost Impact:Positive/Neutral. This legislation should reduce administrative costs associated with routine compliance. There are no new statutory fees.
Strategic Ambiguities & Considerations
Definition of "Specific Reason": The statute does not define the threshold for a "reason to believe" an owner is unqualified.
*Risk:* CADs may attempt to use automated triggers (e.g., "returned mail" or "change in mailing address") as a default "specific reason."
*Watch Item:* Monitor how your local CAD treats mailing addresses that differ from the physical property address (common for executives using corporate mail drops).
"Attempt to Determine": The law implies the Chief Appraiser must attempt to verify validity *before* contacting the owner, but sets no standard for this diligence. Expect inconsistent application across counties (e.g., Harris County vs. Travis County) until the courts or Comptroller clarify the minimum standard of investigation.
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The 88th Legislature passed S.B. 1801, which required each appraisal district to periodically confirm that recipients of residence homestead exemptions qualify for those exemptions, and under current law, appraisal districts can claw back the unpaid taxes owed by homeowners who make fraudulent homestead exemption claims. However, as the bill author has informed the committee, after the bill's passage certain central appraisal districts sought to fulfill the bill's requirements by shifting the burden of confirming qualification for the exemption to the taxpayers by sending out mass mail to all of the homeowners in the counties informing them that they were required to confirm their homestead exemption. However, the bill author further informs the committee that some appraisal districts remove an exemption if the homeowner fails to respond to the letter instead of waiting for evidence of fraud. H.B. 2730 seeks to clarify the process by which CADs carry out the goal of S.B. 1801 to restore millions of dollars to the tax rolls removed through erroneously granted exemptions. H.B. 2730 seeks to do this by providing the circumstances under which a chief appraiser of an appraisal district may not require a person allowed a residence homestead property tax exemption to file a new application or confirm the person's current qualification for the exemption.
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. 2730 amends the Tax Code to prohibit the chief appraiser of an appraisal district from requiring a person allowed a residence homestead property tax exemption to file a new application or confirm the person's current qualification for the exemption unless the chief appraiser has reason to believe the person no longer qualifies for the exemption and delivers written notice to the person, accompanied by an appropriate application form, stating the chief appraiser's belief that the person may no longer qualify and the specific reason for that belief.
H.B. 2730 establishes that it is the intent of the 89th Legislature, Regular Session, 2025, that the amendments made by the bill be harmonized with another act of the 89th Legislature, Regular Session, 2025, relating to nonsubstantive additions to and corrections in enacted codes.
Honorable Morgan Meyer, Chair, House Committee on Ways & Means
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB2730 by Darby (Relating to the authority of the chief appraiser of an appraisal district to require a person allowed an exemption from ad valorem taxation of a residence homestead to file a new application or confirm the person's current qualification for the exemption.), As Introduced
No significant fiscal implication to the State is anticipated.
The bill would prohibit a chief appraiser from requiring a person with a homestead exemption to file a new application or confirm the person's current qualification for the exemption unless the chief appraiser 1) has reason to believe the person no longer qualifies for the exemption; and 2) delivers written notice, accompanied by an appropriate application form, to the person stating chief appraiser believes the person may no longer qualify for the exemption and the specific reason for the chief appraiser's belief.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies:
304 Comptroller of Public Accounts
LBB Staff:
JMc, KK, SD, BRI
Related Legislation
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HB2730 immediately prohibits County Appraisal Districts (CADs) from conducting arbitrary "mass audits" or requiring routine re-applications for Residence Homestead Exemptions without cause. The burden of proof has shifted: Chief Appraisers must now possess and articulate a specific reason to believe an owner is unqualified before demanding a new application. This directly impacts Family Offices, Tax Consultants, and HR Relocation departments managing executive property portfolios, reducing the administrative burden of defending valid exemptions.
Q
Who authored HB2730?
HB2730 was authored by Texas Representative Drew Darby during the Regular Session.
Q
When was HB2730 signed into law?
HB2730 was signed into law by Governor Greg Abbott on May 24, 2025.
Q
Which agencies enforce HB2730?
HB2730 is enforced by County Appraisal Districts (Chief Appraisers).
Q
How urgent is compliance with HB2730?
The compliance urgency for HB2730 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
Q
What is the cost impact of HB2730?
The cost impact of HB2730 is estimated as "low". This may vary based on industry and implementation requirements.
Q
What topics does HB2730 address?
HB2730 addresses topics including property interests, property interests--homestead, taxation, taxation--property-appraisals & appraisal districts and taxation--property-exemptions.
Legislative data provided by LegiScanLast updated: November 25, 2025
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