Texas Property Tax Consultant Practice Exam

What type of goods is exempt from taxation as per Section 11.251 of Texas Property Tax Code?

1. Freeport goods

2. Non-income producing goods

3. Obsolete goods

4. Work in progress

The correct answer is: Freeport goods

The exemption of Freeport goods from taxation as per Section 11.251 of the Texas Property Tax Code is based on the principle that certain types of personal property, specifically inventory that is in transit or not yet sold, should not be taxed. Freeport goods are defined as items that are temporarily stored in Texas for the purpose of being shipped out of state. This is designed to encourage businesses to keep inventory and carry out operations in Texas without the burden of local property taxes. The rationale behind this exemption is to promote economic development and trade by providing an incentive for businesses to store their goods in Texas, knowing they will not incur property tax on these items. This creates an environment that can foster growth and attract new business investments while still allowing localities to tax other types of property. Other options, such as non-income producing goods, obsolete goods, and work in progress, typically do not have the same specific provisions for taxation exemptions. The focus of the tax code is to encourage commerce and movement of goods, making the Freeport exemption a crucial element in Texas's property tax framework.