Tax Benefits Incentives

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Tax Benefitsand Incentives for RenewableWater Rainwater Catchmentin aGreen Homeor Business

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The Texas Legislature has passed a number ofbills and some local entities have adopted rules providing tax exemptions for rainwater harvestingsystems.

Property Taxes The Texas Legislatureallows taxing units of governmentthe option to exempt from taxation all or part of the assessed value of aproperty on which water conservation modifications have been made. Homeownersplanning to install a rainwater harvesting system should check with theirrespective countyappraisal district for guidance on exemptions from county property taxes.

Sales Tax Exemption (State-wide) Senate Bill 2 exempts rainwater harvesting equipment and supplies from sales tax. Senate Bill 2 amended Subchapter H of the Tax Code by adding Section 151.355, which states: “Water-related exemptions. The following are exempted from taxes imposed by this chapter: (1) rainwater harvesting equipment or supplies, water recycling and reuse equipment or supplies, or other equipment.”

Applications:Office of the State Comptroller, application for sales tax exemption.

Office of the State Comptroller, application for water conservation initiatives property tax exemption.

Property tax exemption for commercial installations (State-wide exemption) A constitutional amendment passed as Proposition 2 by Texas voters in November 1993 exempted pollution control equipment, including water conserving equipment at nonresidential buildings, from property taxes.

Rainwater harvesting equipment at commercial installations is considered water-conserving equipment. The intent of this amendment to Article VIII of the Texas Constitution was to ensure that capital expenditures undertaken to comply with environmental rules and regulations did not raise a facility’s property taxes, by adding Section 11.31 to Chapter 11, and Section 26.045 to Chapter 26 of the Texas Tax Code.

The Texas Commission on Environmental Quality (TCEQ) established procedures and mechanisms for use determination under Texas Administrative Code (TAC) Title 30, Chapter 17. To qualify for the property tax exemption,

1. A facility must first receive a determination from the TCEQ that the property is used for pollution control purposes,

2. The applicant then submits this use determination to the local tax appraisal district to obtain the property tax exemption.

The Application and Instructions for Use Determination for Pollution Control Property and Predetermined Equipment List, as well as instructions for applying for Property Tax Exemptions for Pollution Control Property, are downloadable from the TCEQ web.

For further information about Renewable Water and Renewable Energy in this area of Texas contact

Terry Jensen 972 251-1532 or 817 443-2553 Email

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