Changing the Way Your Dirt is Taxed: Texas Margin Tax Pitfalls for Real Estate Practitioners

Abstract

In 2006, the Texas Legislature passed the first version of its successor to the Texas franchise tax, commonly referred to as the margin tax. Becoming effective on January 1, 2008, the margin tax will come as a surprise to many entities which previously avoided taxation under the franchise tax regime. Although touted as simpler version of its predecessor, the margin tax contains several traps for real estate clients that may not be apparent from a casual reading of the statute.