Texas Property Tax Consultant Practice Exam

What is the maximum duration for which inventory must be temporarily located in Texas to qualify for exemption?

1. Less than 150 days

2. Less than 175 days

3. Less than 200 days

4. Less than 90 days

The correct answer is: Less than 175 days

In Texas, to qualify for the temporary inventory exemption, the maximum duration for which inventory can be located in the state is less than 175 days. This exemption is designed to encourage businesses to hold inventory in Texas without being subject to property taxes for that inventory during a limited period. Legislation specifies this timeframe to ensure that only inventory genuinely in transit or temporarily held for sale is exempt, preventing businesses from using this exemption as a long-term tax avoidance strategy. Any inventory that remains in Texas for longer than the specified duration would typically be subject to property taxation, aligning the exemption with the purpose of fostering a business-friendly environment while still adhering to tax regulations. Understanding the limits of this exemption is crucial for property tax consultants, as it directly impacts their clients' tax liabilities and compliance with state laws.