For most Texas homeowners, recent property appraisal notifications showed an increase in the market value of their primary residence. That’s great news if you’re trying to sell your home. It’s not so good when calculating your property taxes.
- Northern Texas can expect a 10% to 20% increase in a home’s market value over 2022.
- Central Texas is seeing an average increase of 14% to 15%.
- In southern Texas, homeowners in Bexar County are looking at increases in the 14% to 20% range.
With rising inflation and economic uncertainty, now is not the time to receive a hefty increase in your home’s market value—unless you’re selling it.
There are two ways to lower your property taxes.
- Protest the Notice of Appraised Value
- File Exemption Requests
Protesting can reduce the market value of your home, resulting in a lower taxable base. Filing exemptions can further decrease your taxable value if you qualify by exempting a percentage of the property’s market value from taxation.
Protesting the Notice of Appraised Value
Protesting the appraised value is the first step in reducing your property taxes. If you can lower the market value, appraisers will use that number the following year. For example: the Notice of Appraised Value lists your home’s market value at $435,000. Your protest reduces the value to $413,250. Not only is the lower value used to calculate the current year’s taxes, but it is also the base that is used for the subsequent year. That equates to a $22,588 difference in the property’s base value if the market value for the second year is a 5% increase. ($456,500 – $413,250 = $22,588).
The state’s website contains information on filing a protest, beginning with filing Form 50-132, Notice of Protest (PDF), with the Appraisal Review Board.
As part of a protest, you’ll need to start with the following documents to support your appeal (this is not a complete list):
- Sales documentation, blueprints, deed records, or repair estimates for systems or structures.
- Independent appraiser or builder statements.
- Supporting paperwork to correct errors in lot size, home attributes, number of bedrooms and bathrooms, and home size.
- Lack of desirability features, such as no upgrades since purchased in 1998, located next to major highway, or roof needs replaced.
Individuals can protest their valuation or contact professionals experienced in the process for assistance.
Related: Top 5 Reasons to Protest Your Property Taxes in Texas This Spring
Filing Exemption Requests
Protesting a home’s market value requires documentation. Exemption requests also need supporting documentation, but what is required depends on the exemption. Each exemption has different qualifying criteria, so property owners must understand what information must be included with each request to avoid a denial.
Identifying Exemptions
Section 11.13 of the Texas Tax Code contains the residence homestead exemptions available to residents. These exemptions fall into the following categories:
- General Residence Homestead
- Manufactured and Cooperative Housing
- Uninhabitable Residence
- Disaster Damage
Texas does not have a state-levied property tax. Cities, counties, and school districts control property tax rates. As a result, property taxes vary based on location; however, the state legislature can establish laws regarding how exemptions are implemented.
Determining Qualifications
Property qualifies as a homestead if it is the owner’s primary residence. It may include up to 20 acres and associated improvements. Manufactured housing and cooperative units may also qualify, provided the appropriate documentation is submitted. If a residence qualifies, the school district in which the property owner resides must grant a mandatory exemption as established by state law. A recent change increased the mandatory exemption to $40,000.
The following exemptions account for factors such as age, disability, and veteran status:
- Anyone over 65 may receive an added exemption of $10,000.
- Disabled individuals may receive an added exemption of $10,000.
- Disabled veterans receiving donated housing may have a percentage of their property tax exempted.
- Disabled veterans can file for an exemption based on the rate of disability.
- Veterans with 100% disability can have 100% of their property value exempted.
- Surviving spouses of US Armed Services members killed in the line of duty can have 100% of their property value exempted.
- Surviving spouses of First Responders killed or fatally injured in the line of duty can receive a 100% exemption.
Property owners over 65 who are disabled can only file a single exemption, even if they technically qualify for additional options.
Following the Process
With no state-wide property tax, local jurisdictions define the process and set the schedule for filing exemption requests; however, most jurisdictions send tax notifications in the fall, with payment due the following January. Unexpected hikes in market value can significantly impact property tax bills.
Homeowners with mortgages have property taxes included in their monthly payments. The monthly amount is held in escrow until property taxes are due. Increases in market value usually result in larger monthly mortgage payments because the property tax increased. Filing exemptions can help lower a home’s taxable value.
Whether you have a mortgage or own your residence, you must ensure you have followed the process outlined by your local authority to avoid a request rejection.
Why Exemption Requests Are Denied
Property owners need to remember it is a process when filing exemption requests. There are forms to file, documentation to collect, and meeting deadlines. Missteps can result in denial, and it’s crucial to understand common denial reasons to avoid them.
- Failure to Meet Qualifying Criteria
Homestead exemptions only apply to a primary residence. Texas property owners with multiple homes, even in another state, can only claim an exemption if the primary residence is in Texas. Applicants must evaluate the criteria to ensure their Texas property qualifies as a primary residence.
Anyone living in a governor-declared disaster area can request a temporary exemption. In these instances, property owners must prove their home resides in a disaster area and include the damage assessment from a reputable professional. Similar documentation is required to qualify a manufactured or cooperative home.
These are two just two examples. Property owners should review the qualifying criteria carefully or look for professional advice. No one wants to go through the process only to be denied because they don’t meet the qualifying criteria—the most common reason for denial is that the State ID (Driver’s License) address does not match the property address.
Related: The Impact of Natural Disasters on Property Taxes in Texas
- Lack of Required Documentation
Applying for a general residence exemption requires completing Form 50-114 (PDF). Many appraisal districts have applications on their website. Some may allow online completion, while others require a printed application. Regardless of the application process, property owners must provide a valid Texas driver’s license or ID card with the property’s address, a legal description of the property, and the percentage of ownership. Proof of ownership, such as a deed or recorded document, must include the property owner’s name.
Property owners often overlook a crucial piece of information when collecting and submitting the information. As mentioned above, something as simple as a missing driver’s license can result in a denial. Other exemptions that require added documentation only increase the likelihood of omitting vital data.
For example, age or disability exemption requests need confirmation of a property owner’s age or the percentage of disability. Knowing the degree of disability is essential to determining the exemption amount. If the required documentation is unavailable, the request will be denied.
- Missed Deadlines
Local authorities set deadlines, although there are instances where the state determines when information must be submitted. For example, applicants requesting a temporary exemption must file within 105 days after the location is declared a disaster. That means having repair estimates and proof that the property rests within the disaster area.
Individuals have an opportunity to present their case. Yet, many people do not appear, resulting in an immediate denial. Sometimes, filers don’t prove a compelling case. Depending on the location, a local review board may have hundreds of applications, each needing time to present their case.
Review boards limit the length of each case to ensure everyone has an opportunity to state their reasons for the request. People need to fine-tune their senses to make the strongest argument for exemption. A rambling discussion or an extensive history means the crucial points are never heard. The process happens in weeks, not months, so accurate property tax bills are mailed to ensure January payments.
- Failure to Complete Process
Many people simply stop midway through the process. They run into obstacles collecting documentation or forget to meet a deadline. Property owners decide the exemption isn’t worth the effort, but lowering taxes means more money in your pocket.
Suppose a property owner lives in a school district with a rate of 1.6%. The market value of the home is $279,000. Without an exemption, the homeowner has a tax bill of $4,464. Applying the general residence exemption lowers the market value by $40,000 to $239,000 for a tax bill of $3,824. Saving that $640 may not seem like much, but it adds up. In ten years, that’s $6,400, assuming no increase in market value.
Get Help With Your Protest
Everyone can use a few extra dollars, especially during inflationary times. Rather than giving up, homeowners should look for professionals who provide cost-effective and thorough assistance.