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On Tuesday, November 6, Texas voters approved Proposition 6. Proposition 6 deals with motor vehicles owned by an individual and used for both business and personal use.
Prior to the amendment, motor vehicles were used in ad valorem taxes. Ad valorem (from the Latin “based on value”) applies to property taxes based on a percentage of the county’s assessment of a property’s value. The assessed value is the standard basis for local property taxes. Some states, like California, place a “cap” on the percentage value that can be taxed. “Parcel taxes” are also used by some states and establish a flat rate per parcel.
In 2005 the 79th Legislature enacted House Bill No. 809 which stated that a person is not required to report a motor vehicle used as both a personal vehicle and for business for tax appraisal purposes. Unfortunately, taxation continued of these vehicles. In 2006 the Attorney General decided that a legislative exemption from taxation was not valid without constitutional authorization. This lead to the proposed constitutional amendment known as Proposition 6.
Since the proposition passed, starting with the 2007 tax year, residents of Texas are allowed to exempt one motor vehicle from taxes if it is used for both business and personal use.
For more information about Proposition 6 or any other questions regarding your Texas LLC, contact Texas Legal Entities. They work hard to make sure that you are making the best decision for the success of you and your business.
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