Texas property tax law changes every few years. See the latest posts for the most up-to-date information.
Texas relies heavily on property tax to fund public services, including schools, fire departments, roads, and local government departments. In fact, property taxes were the biggest revenue source in Texas at 49.43% in the latest Biennial property tax report. As long as you own a residential property, you’re required to pay homeowner taxes in Texas.
Knowing all the information surrounding homeowner taxes is crucial as it can be the difference between saving thousands of dollars and paying more property tax than is fair.
In today’s quick guide, we help you understand; what property taxes are, how they are calculated, how to lower your property tax, and all the vital deadlines concerning homeowner taxes.
How Do Homeowner Taxes in Texas Work?
Homeowner taxes are also known as property taxes. These taxes are levied on residential properties within Texas. Typically, property taxes are calculated based on the property valuation and the set tax rate. This rate will differ from county to county and district to district. For example, the 2021 tax rate in Denton County is 0.23%, while homeowners in Delta Lake Irrigation District pay 0.56%.
There are no state-wide property tax rates, but the state provides oversight by setting caps on the tax rate, and property appraisal value increases.
Below is a breakdown of how homeowner taxes in Texas work.
- The chief district appraiser makes home appraisals using current market value and last year’s valuation as a base (January 1)
- The appraisal district processes applications for exemptions (January 1— April 30)
- The district sends you the appraised value of your property (April-May)
- The Appraisal Review Board(ARB) reviews and makes decisions on protested property appraisals (May-July)
- The local appraisal districts adopt tax rates (August— September)
- The taxing authority sends out tax bills (October 1)
- Pay your taxes within 30 days of receiving the tax bill
When Do You Receive Your Homeowner Property Tax Appraisal?
You will usually receive your property valuation through mail around April or the first week of May. After receiving the valuation, you have two options. In the first option, you can accept the valuation and proceed to pay taxes once you receive the tax bill. Remember, the amount to pay will be (property appraisal valuation * the tax rate in your district).
If you feel the appraisal is too high to reflect the value of your home, your second option is to protest the property taxes. You only have 30 days since receiving the valuation notice to file your protest notice.
What Happens if You Don’t Pay Property Taxes on Time?
Paying your property taxes on time will save you frustrations and constant worrying. By failing to pay property taxes in Texas, you could experience a tax foreclosure and risk losing your home altogether.
If your taxes remain unpaid by January 1, the tax authorities will place a lien on your property. This lien takes priority over all other liens placed on the property. The tax authority will then file a suit against your property, where the court can rule your property to be sold so the tax authority can recover the taxes. The tax authority will notify you of the suit and possible sale before it happens.
As a residential homeowner, you have up to two years to redeem the property back. Redeeming involves paying back all taxes associated with the property, penalties, fees, and costs related to the tax foreclosure.
Are there circumstances where missing the tax payment deadline does not lead to a penalty?
The best decision is to always pay property tax on time. However, there are a few situations where you may be exempted from this.
- You failed to receive the appraisal notice as long as you appeal before the deadline
- The county appraiser agreed to a meeting to adjust the appraisal
- If your homestead property is appraised 25% more than the market value
- If the appraisal contains administrative errors
Calculating Property Taxes in Texas
Calculation of homeowner taxes in Texas is pretty easy. As long as you have access to the tax rate and the property appraisal value, you are good to go.
For example, if a property in Denton county is valued at $200,000, and the current rate is 2.3%, your tax bill will add up to:
$200,000 * 2.3% = $4,600
The property value may change yearly based on the current real estate market, economic reasons, and even the occasional pandemic.
Property appraisals are made per district by the chief district appraiser. That said, appraisal districts are limited by how much they can increase the appraisal value. In Texas, appraisers can not increase the value of your property by more than 10%. Even if the housing market shows a year-over-year value increase of 20%, appraisal districts are still limited by the 10% cap.
On the other hand, tax rates are set by the elected officials in the local districts, sometimes with input from the public. This rate is also prone to fluctuations.
RELATED: HOW IS TEXAS PROPERTY TAX CALCULATED?
5 Main Rules Governing Texas Homeowner Taxes
The Texas Tax Codes provide five key rules that apply when taxing properties in the state. Below is a quick overview:
ALL PROPERTY IS TAXABLE
Both residential and commercial property are taxable in Texas. However, there are a few exemptions provided by federal and state laws.
PROPERTY TAXATION MUST BE EQUAL AND FORMAL
Every property should pay taxes based on the actual value of the property. The appraisal should also be uniform by all means. If your home is valued at half the value of your neighbors, taxation should still be based on the unique value of your home and not the neighborhood.
PROPERTY SHOULD BE TAXED BASED ON CURRENT PROPERTY VALUE
The current value refers to the price a buyer and seller would agree on when there’s no pressure to buy or sell. However, there are exemptions for agricultural land and timberland. In the case of these two, the current value is based on what it produces instead of its sale value.
EACH PROPERTY MUST RECEIVE A SINGLE APPRAISED VALUE
The different local governments you pay taxes to can not appraise your property with different values. Texas prevents multiple appraisals by using county appraisal districts instead of numerous local authorities.
EVERY PROPERTY OWNER HAS A RIGHT TO REASONABLE NOTICES
These notices cover any increase in property valuations and the notice of appraisal value at the end of April or the start of May.
Exemptions of Homeowner Taxes in Texas
While all properties are taxable in Texas, the state and federal government makes some exceptions. In an exemption, the homeowner is not obligated to pay taxes for the whole or part of their property value (Tex. Tax Code § 11.13).
A certain percentage or fixed amount is removed from the property’s appraised value in the partial exemption. On the other hand, a full exemption means you won’t pay taxes for the exempted property.
Most of the exemptions from property tax require an application, where the chief district appraiser solely determines if you qualify for an exemption or not. Making an application for the exemption should be rigorous since the appraisal district may reject your exemption if :
- Documents filed do not support the exemption
- You filed for an exemption late(After May 1)
- If an exemption has already been granted to another property within the residence
- Documents filed with an exemption do not match the property address
The appraisal district processes exemption applications between January and April before sending the property tax valuation in late April or early May.
Here are the most common situations where one is exempted from paying homeowner taxes in Texas:
- The resident homestead of a totally disabled veteran (partial exemption)
- Donated residential homestead of a partially disabled veteran (partial exemption)
- Residential homestead of the surviving spouse of a Member of Armed Services who lost their lives in Action (total exemption)
- Residential homestead of the spouse of a First Responder who lost their life in the line of duty (total exemption). In both this and the previous example, the spouse should not be remarried to be eligible for the exemption
- When the tangible personal property has a value of less than $500
- Homeowners who are aged 65 years and over
- Temporary exemption for disaster damage when the damage is at least 15% of the improvement value of the damaged structure.
Keep in mind exemptions such as those for the spouse and disabled veterans may require additional documents when filling the exemption form. These documents will typically prove physical conditions, age, family relations, military services, etc.
Protesting Property Tax in Texas
Different studies show protesting property taxes in Texas is not something many homeowners think of doing. However, protesting can save you hundreds or even thousands in dollars of property taxes.
If you decide to protest homeowner taxes in Texas, preparation is key. You will need to gather facts, document repairs, provide comps for appraisal, and ensure to file the protest 30 days after receiving your initial property appraised value. Alternatively, you can hire a property tax protest company to do everything for you every year. All you have to do is provide them with basic personal and property information, and they take care of the rest.
Related: Is Texas Tax Protest Legit?
If you decide to go at it alone, here is what to do once you decide to protest the property taxes:
- Once you receive the appraised property value, file your protest within 30 days through form 50-132 Notice of Protest
- The district appraiser may reach out over the phone to discuss your appraisal
- If you don’t agree with the district appraiser, you will need to attend a formal hearing with the Appraisal Review Board(ARB) by phone, in person, or by submitting an affidavit
- The Appraisal Review Board then decides if your property is appraised fairly or whether adjustments need to happen
Presenting strong facts, evidence in the form of pictures, repair quotes, and comp and market value appraisals is the only way to get your taxes reduced.
The whole process can take three to four months of back and forth, and here’s where working with professional property tax experts can come in handy.
Protesting taxes, in most instances, produces a 3-5% reduction on average. Although this doesn’t sound like much, a reduction means you start at a lower property appraisal value the following year.
Don’t Pay a Dollar More in Property Taxes Than You Should
If you’ve never protested property taxes in Texas before, there’s a high chance you’re paying more than you should. Yes, protesting property taxes takes time and a lot of effort, but working with a professional property tax expert takes the frustration away.
Home Tax Shield is a property tax expert service that helps you protest taxes every year with minimal effort and money from your side. Case in point: using the services of Home Tax Shield will set you back only $30 per year. In turn, you get to reduce your property taxes, keep your expenses low, and your home attractive to buyers should you decide to sell.
Start saving on your property taxes today by filling out this one-step form.