Case Information

*1 Opfnion No. H- 9 Honorable Franklin L. Smith County Attorney of Nueces County Re: Questions relating

Corpue Christi, Texas 78401

Constitutional Amendment Honorable James H. Whitcomb passed on November 7th, County Attorney of Colorado County 1972 concerning the Home- Columbus, Texas 18934 stead Exemption for

persons over sixty-five Honorable Joe Resweber years of age.

County Attorney of Harris County

Houston, Texas

Gentlemen:

Prior to November of 1972 there was no constitutional authority for any political subdivision of the State of Texas to grant any exemption from taxation for a homestead. An effort by the City of Wichita Falls to grant such an exemption was held unconstitutional in City of Wichita Falls v. Cooper, 170 S. W. 2d 777 (Tex. Civ. App. Ft. Worth, 1943, error l-b(a) of Article 8 of thd Constitution of Texas provides:

“Three Thousand Dollars ($3,000) of the assessed taxable value of all residence homesteads as now defined by law shall be exempt from all taxation for all State purposes. ‘I Subsection (b) was added in 1972, providing, that, from and after January 1, 1973, the governing body of any political subdivision of the State may provide an exemption “not less than Three Thousand Dollars ($3,000)” of the assessed value of “residence homesteads personr (65) years of age older” from all ad valorem levied by that subdivision. Alternatively. it provides that, upon taxes petition of twenty percent of the votcrs,~who voted in the last preceding election held by the political .subdivision, an election shall be called determine “by majority vote, ‘I whether such an exemption shall be provided. There are other conditions not pertinent to your questions. *2 Honorable Franklin L. Smith, page 2,

Each of you has asked several questions concerning ,the meaning and effect of this amendment.

If certain’basic facts concerning homesteads are understood, then the answers to your questions are less difficult. l-b(a) of Article 8 of the Constitution speaks in terms of

a residence homestead “as now defined by law”.

“Homestead” is defined in Article 3833, Vernon’s Texas Civil The statute refers to it as “the homestead of a family.” Statutes.

The courts have held that the homestead is given by our Constitution family, not to the husband or to’ the wife. Crowder v. Union National Bank of Houston, 114 Tex. 34, 261 S. W. 375 (1924).

The term “family” is not defined. However it is held that home- stead is not a mere privilege accorded the head of a family. It is an estate created for the protection of each constituent member of the family, including, for instance. an adult, unmarried daughter. Reconstruction Finance Corp. v. Burguess. 155 S. W. Zd 977, (Tex. Civ. App. Waco, 1941. error

Thus, there is only one homestead per family and the husband and wife cannot each have his own separate homestead. Crowder v. Union National Bank of Houston, supra.

The mere living together without a lawful marriage. either ceremonial or at common law, does not create the necessary family and does not give rise to a homestead. Barber v. Lee, 337 S. W. 2d 637 (Tex. Civ. App. Eastland, 1960. no writ history).

Attorney General Opinion No. C-725(1966) discusses in much greater detail the precise question of whether and to what extent a family relationship is necessary.

Article 16, Section 52 of the Constitution Texas provides that. upon the death of the husband or wife, the survivor may elect continue to occupy the homestead as homestead. And thus the death *3 Honorable Franklin L. Smith, page 3,

of a husband leaving a wife does not terminate character of their home. Cox v. Messer. 469 S. W. 2d 611 (Tex. Civ. App. Tyler, 1971, no writ history).

The Constitution, however, makes no provision for a divorced spouse. Bush Royalty Co. v. Rieley, 475 S.-W. Zd 566 (Tex. 1972). Where the marriage was childless, a divorce destroys homestead rights. Steitz v. Steitz, 262 S. W. 2d 262 (Tex. Civ. App. Dallas, 1963, error dism. ). Where there are children 6nd thus a family remaining) the homestead may continue even after divorce. White v. Edzards, 399 S. W. 2d 935 (Tex. Civ.App. Texarkana, 1966, error ref. n. r. e. ).

It is not necessary that the interest in the land comprising homestead be of any particular type. The homestead may be in separate property of either the husband or the wife or it may be in community property. Crowder v. Union National Bank of Houston, supra. A tenant in common may acquire a homestead in land he owns in common with others. Powell v. Ott, 146 S. W. 1019 (Tex.

Civ.A#p. Texarkana, 1912, no writ history). Homestead may exist in rented premises. Davis v. Laund. 41 S. W. 2d 57 (Tex. Comm. App. 1931). A life tenant may acquire homestead rights in his life tenancy. Sullivan v. Barnett, 47i S. W. 2d 39 (Tex. 1971); Moorhouse v. Crew; 273 S. W. 2d 654 (Tex. Civ. App. San Antonio, 1954. error

Article 8, Section 1 of the Constitution of Texas requires that “Taxation shall be equal and uniform. ” Tax exemptions are subject to strict construction since they are the very antithesis of the equality and uniformity otherwise required. Hiltop Village Inc. v. Kerrvilla Ind. Sch. Dist., 426 S. W. 2d 943 (Tex. 1968). l-b(a) of Article 8 of the Constitution of Texas, added in

November 1948, created a favored class of taxpayers-- possessors homesteads. Similarly the exemption permitted by subsection (bl of Article 8, Section l-b, creates a favored class. Whether this violates the Equal ProtectioaClause of the Fourteenth Amendment Constitution of the United States depends upon the criteria employed in determining the class. A state may classify its citizens into reasonable classes and apply different laws to each class or it may apply its laws differently according to class without violatiq thr Equal Protection Clause. Bjorgo v. Bjorgo, 402 S. W. 2d 143 (Tex.

1956).

Honorable Franklin L. Smith, page 4.

The Fourteenth Amendment does not prohibit or prevent classi- fication, provided classification ia reasonable for the purpose of the legislation; is based on proper and justifiable dirtinctions. conridering the purpose of the law; is not clearly arbitrary; and ir not a subterfuge to shield one class and unduly burden another or to oppreea unlawfully in its administration. 16 AmJur. 2d. Constitutional Law,Scc. 494, p, 860 et seq. ; Carrington v. Rash, 380 U.S. 89, 13 L. Ed. 2d 675, 05 S. Ct. (1965).

Exempting persona years of age or older from the burdens of taxation, in part. would appear to be a reasonable axerciee of sovereign discretion. Many such persona are unable to work or produce income. Many are on pensions or amall fixed incomes, making it difficult for them to cope with the iirring costs of existence. A measure which relieves them of Borne financial reapon,ribility for taxes may have the effect aleo of relieving the political subdivision of the need to care for them acr public charges.

The exemption permitted by Article 8, Section l-b(b) ia a personal one ,to be claimed only by a pereon of sixty-five years age or older and only to the extent of hia taxable interest in the property which conatituteo hie residence homestead. Were thin not ao, ,and if it could be claimed by others, it might prove difficult to eetablinh the reasonable- ness of the classification.

However, is not merelya permona one. Homcmtead rights can rile no higher than the interest of the claimant, and cannot affect interests of other8 in the property if those are not intercrts subordinated to the homertead claim.

It ir our opinion, therefore, that the,exemption permitted by Article 8, § 16(b) applier to property in the l cnse that the total of all taxable interentr in any piece of property are subject to the maximum allowed by law. but no more, regardless of the number of persons over it&)+-five who claim it as theic ramidence homestead.

On the other .hand, it ia personal in that it may only be claimed by and for the benefit of a perron over rixty-five yearr of age to the extent of tax liability, whether asveral joint. him personal

Honorable Franklin L. Smith, page 5, (H-91

Turning then’ to the specific questions each of you has asked, first asked by Mr. Whircomb is whether a couple is entitled to the if the husband is sixty-five as of January 1, the wife is under sixty-five and the property is community property. Since the homestead belongs to the family and it is a residence homestead of a pereon sixty- five or older, we answer that question “yes”. This also answers Mr. Reswebar’s third question.

Mr. Whitcomb then asks if the result would differ if the wife w~rr: sixty-five and the husband under sixty-five, or if the property is separate , if the property was the separate property of the one over sixty-five of the one under sixty-five. Our answer to each of these is “no”. to the extent that the one over sixty-five has any tax liability.

The second question asked by both Mr. Whitcomb and Mr. Smith and fourth is whether a surviving spouse under sixty-five years of age would be entitled to keep the exemption if the spouse over died after the exemption had been granted. Our answer is that. even though the property would retain its character as homestead upon the election of the surviving spouse, it would not a residence homestead of a person sixty-five years of age or older and therefore would terminate.

Mr. Whicomb’s third question and Mr. Resweber’s fifth ask whether the surviving spouse keeps the entire exemption if both are eligible for the eiemption on January 1st but one later’dies. By Article 7151, Vernon’s Texas Civil Statutes , property is listed for taxation with reference quantity held or owned on January 1st each year for which it is listed or rendered. Therefore if the exemption applies on January 1st it will continue for that tax year. A surviving spouse who is not si.xty-five will have the advantage of the exemption for that period of time but will lost it for the next tax ysar. However a surviving spouse who is sixty-five is entitled entire exemption in any event.

The fifth question asks whether exemption would apply where one or both of the spouses owns the property as an undivided interest with a person under sixty-five who is not living on the property. A tenant in common may have homestead rights in property he owns in common wilh others. If he does and if he is over sixty-five, then he may be entitled to the exemption.

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Honorable Franklin L. Smith, page 6.

Mr. Whitcomb’r sixth question ask8 if the exemptioxwould apply to a person owning a life estate. There may be a homestead in a life estate. Therefore our answer would be that, to the extent a pereoti’ owning a life estate has a homestead, if he is over sixty-five, he may also claim the exemption.

Mr. Smith’s first question is whether or not both husband and wife must be over age sixty-five to claim the exemption. Our answer is “no”. Either would suffice.

Mr. Smith’s third question asks what proof tax assessor should require to establish that the taxpayer ia over sixty-five. There is no definitive answer. Basically he should require whatever proof or will eatirfy him, within rearon. Certainly a birth certificate similar official document should suffice. But there may be other means of proof which also, should be adequate.

Mr. first question asks whether a person can qualify for the exemption if he becomes sixty-five on January 1st of the tax year. Article 7151, Vernon’s Texas Civil Statutes, provides that the listing of for taxation shall be with reference to the quantity held or owned on the first day of January. Property acquired on the first of January is to be listed by the person acquiring it. The same rule would apply to a person becoming age rixty-five on January 1. He would qualify for the exemption. Resweber’r second question deals with a person who,becomee iin January second. Such a person would not be entitled for the year in which he became sixty-five.

Mr. Rcrweber’e sixth question asks whether, if the survivor rdle the homestead, b&oh&e wSU entitled to the exemption if he buyn a home at a later date. We have already indicated that, whether the survivor retains an in the @ame homestead will depend upon whether survivor is over ,sixty-five. The same will be true if the survivor sells and later reinvests the proceeds. He or she will be the exemption in the new homestead entitled only if he she is over sixty-five.

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Honorable Franklin L. Smith, page 7, (H-9) seventh question asks whether the exemption

would be retained if the person owning the homestead is in a rest home. Our answer’ would have to be that he would retain This is if the homestead facttially qualified as his re,sidence homestead. a question fact and we are in no position to answer for all the possi- bilities.

Mr. Resweber in his tenth question asks about the situation where both the husband and wife are over sixty-five and are entitled to an If they later divorce, is the person retaining of the homestead. If the ownership of the homestead entitled to continue the exemption? remains homestead, as for instance if there are minor children This would living with the spouse, then the exemption would continue. a question of fact. -SUMMARY-

The exemption from ad valorem ta,xes provided by Section l-b(b) of Article 8 of the Texas Constitution will apply if the property constitutes the residence homestead of a person years of age or older, regardless the age of any other person interested in the homestead, and will terminate when there no longer is any person sixty-five years of age older protected by it. Very truly yours, Attorney General of Texas APPROVED

&ret Assistant

DAVID W. KENDALL, Chairman

Opinion Committee