Back in 2018 we pulled a permit for adding a bath and rearranging interior walls to fit (no new sq ft). They said it qualified as a major remodel, removed our homestead cap, and upgraded our condition on the house to being the same as all the new construction in the neighborhood. The resulting tax bill was based on a valuation at least a hundred thousand above the cost of the remodel even if I hadn't done the vast majority of the work. That made our taxes almost more than our mortgage. All for a little 1300 sq ft starter house.
I didn't know the tax code above so we just got fucked until we moved (to a new house where our homestead started higher...yay!). Its definitely a strategy and they're deliberately going after money they shouldn't, hoping they don't get called out on it.
Now if they'd just value commercial halfway intelligently, they wouldn't have to do any of this shit. As it stands this is just one of the reasons Austin is un-fucking-affordable.