Understanding Texas Property Tax Increases
Property taxes are a significant expense for Texas homeowners, and many find themselves facing substantial increases each year. Texans face some of the highest property tax burdens in the nation, making it crucial to understand your rights when it comes to challenging unfair increases. When property values rise, tax bills follow, but that doesn’t mean you have to accept an inflated assessment without question.
The Texas property tax system gives homeowners multiple avenues to protest their assessments and potentially lower their tax burden. Understanding these rights can save you thousands of dollars over the years of homeownership. With the proper knowledge and approach, you can effectively challenge tax appraised values that may be excessive.
Key Property Tax Protections in Texas
Texas law provides several important protections for property owners. These safeguards help ensure that the tax system remains fair and that homeowners aren’t overburdened by excessive taxation.
One of the most important protections is the right to protest your property’s tax appraised value. Every property owner in Texas has the legal right to challenge their tax appraised value through a formal protest process. This protection exists because appraisal districts can make mistakes, use inaccurate data, or fail to account for factors that might lower your property’s market value.
Additionally, Texas law provides various exemptions that can reduce your tax burden. The homestead exemption is the most common, but there are also exemptions for seniors, veterans, and people with disabilities. These exemptions can significantly lower your taxable value, resulting in substantial savings on your tax bill.
The Homestead Exemption
The homestead exemption is one of the most valuable tax breaks available to Texas homeowners. If you own and live in your home as your primary residence, you qualify for this exemption. All school districts are required to offer a $100,000 homestead exemption for your primary residence, which means $100,000 of your home’s value is exempt from school district taxes. Other taxing units, like cities and counties, can offer an additional percentage-based homestead exemption of at least 20% of your home’s value.
Starting in 2024, Texas implemented new recertification requirements for homestead exemptions. County appraisal districts must now verify the validity of homestead exemptions every five years. It’s crucial to respond promptly with the requested documentation (such as proof of residency and ownership) to maintain your exemption. Failure to provide proper documentation could result in losing your exemption and facing a significant increase in your property tax bill.
To claim the homestead exemption, you need to file an application with your county appraisal district. Once approved, the exemption remains in place until you move or your eligibility changes, subject to the new periodic recertification requirements. This exemption alone can save homeowners hundreds or even thousands of dollars annually.
The 10% Homestead Cap Protection
For homeowners who have secured their homestead exemption, Texas provides an important limitation on how much your taxable value can increase each year, regardless of market conditions. This protection works alongside the protest process to help keep your property taxes manageable, even in rapidly appreciating markets.
For properties that qualify for the homestead exemption, Texas law caps the increase in assessed value at 10% per year, regardless of how much the market value has increased. This cap helps protect homeowners from dramatic tax increases when property values are rising rapidly.
For example, if your home’s assessed value was $300,000 last year, the maximum assessed value for this year would be $330,000 (a 10% increase), even if the market value has increased to $375,000. This cap applies only to the assessed value used for taxation—not to the market value that the appraisal district determines.
It’s important to note that this cap applies only to homes that qualify for the homestead exemption, and it doesn’t apply to new improvements made to your property. Also, if your property’s value increases by less than 10%, you’ll be assessed on the actual value. The cap isn’t a guaranteed 10% increase—it’s a ceiling that protects against larger increases.
Senior and Disabled Persons Exemptions
If you’re 65 or older or have a disability, you qualify for additional property tax exemptions in Texas. School districts must provide an additional $10,000 exemption for homeowners age 65 or older and those with disabilities (note that homeowners cannot claim both of these exemptions). Other taxing units may offer additional exemptions as well.
Perhaps even more valuable is the school tax ceiling that accompanies the senior exemption. Once you qualify for the age 65 or older exemption, your school district taxes are frozen at that amount and cannot increase as long as you own and live in the home.
If property values drop in the following two years and your taxes decrease, your ceiling will be set at the lowest amount during those two years. The ceiling amount remains fixed at this level, providing significant protection against rising tax bills as property values increase over time.
Disabled Veterans Exemptions
Texas provides generous property tax exemptions for disabled veterans. The amount of the exemption depends on the veteran’s disability rating from the Veterans Administration. Veterans with a 100% disability rating or those who are considered unemployable due to service-connected disabilities qualify for a total exemption from property taxes on their primary residence.
Veterans with lower disability ratings receive partial exemptions based on the percentage of their disability. These exemptions recognize the sacrifice of those who have served our country and help ease their financial burden.
The Property Tax Protest Process
The protest process is your primary tool for challenging an unfair property tax increase. Understanding this process is essential for effectively exercising your rights as a homeowner.
When you receive your Notice of Appraised Value, typically in April or May, you have until May 15 or 30 days after the notice was mailed (whichever is later) to file a protest with your county’s Appraisal Review Board (ARB). This deadline is crucial—missing it means losing your right to protest for that tax year.
The protest process includes several important steps that can help you secure a fair valuation for your property and potentially lower your tax bill. By following these steps carefully and presenting strong evidence, you increase your chances of a successful outcome.
Filing Your Protest
Filing your protest is the first step in challenging your property’s appraised value. You can file a protest using the form provided with your Notice of Appraised Value or by writing a letter that includes important information like your name, property description, and the reason for your protest. Many appraisal districts also offer online protest filing options.
When filing your protest, you’ll need to specify the grounds for your appeal. Common reasons include:
- The appraised value is too high compared to similar properties
- The appraisal district’s value exceeds market value
Be specific about why you believe the assessment is incorrect. This helps focus your case and increases your chances of success. Many successful property tax protests start with clearly articulated reasons for challenging the assessment.
Gathering Evidence
Strong evidence is crucial for a successful protest. The burden is on you to prove that the appraisal district’s valuation is incorrect, so gathering compelling documentation is essential.
Useful evidence might include:
- Recent sales of comparable properties in your neighborhood
- Repair estimates for major issues affecting your property’s value
- Recent independent appraisals
- Documentation of environmental factors that decrease value
When selecting comparable sales, look for properties that are similar to yours in terms of size, age, condition, and location. Sales that occurred closer to the January 1 assessment date are given more weight. Remember that the appraisal district values your property based on its condition on January 1 of the tax year.
Photos of property issues can be included to support repair estimates, but they should not be your primary evidence. Detailed repair estimates from contractors will carry more weight with the ARB than photos alone.
Informal Meetings with the Appraisal District
Before your formal ARB hearing, most appraisal districts offer an opportunity for an informal meeting with an appraiser. This is your chance to present your evidence and potentially resolve your dispute without a formal hearing.
During this meeting, be prepared to explain why you believe your property’s value should be lower and present your supporting evidence. The appraiser may agree with your assessment and adjust your property’s value on the spot. If you reach an agreement, you’ll sign a settlement form, and your protest will be resolved.
These informal meetings resolve many protests. They’re usually less intimidating than formal hearings and can save you time and stress. However, it’s important to be well-prepared and to understand that you’re not obligated to accept any offer made during this meeting.
Formal ARB Hearings
If you can’t resolve your protest through the informal process, your next step is a formal hearing before the Appraisal Review Board. The ARB is an independent group of citizens authorized to resolve disputes between property owners and the appraisal district.
At the hearing, both you and a representative from the appraisal district will present evidence and make arguments regarding your property’s value. The ARB will consider all evidence presented and make a determination. The hearing follows a specific procedure:
- The ARB chairperson explains the procedures and swears in all witnesses
- You (the property owner) present your evidence and arguments
- The appraisal district representative presents their evidence and arguments
- You may cross-examine the appraisal district’s witnesses
- The appraisal district may cross-examine your witnesses
- Both sides make closing statements
- The ARB deliberates and makes its decision
Be concise and focused in your presentation. ARB hearings are typically scheduled for 15-30 minutes, so you need to make your points clearly and efficiently. Organize your evidence logically and practice your presentation beforehand.
Strategies for Effective Protests
First, understand that preparation is key. The more thoroughly you prepare, the better your chances of success. Start gathering evidence well before the protest deadline, and organize it in a way that makes it easy to present your case clearly and efficiently.
Second, focus on facts, not emotions. While it’s natural to feel frustrated about tax increases, ARB members are interested in factual evidence that supports your claim, not emotional appeals. Present your case objectively, using concrete data and specific examples.
Using Comparable Sales Effectively
One of the most powerful pieces of evidence in a property tax protest is comparable sales data. These are sales of properties similar to yours that suggest your property’s market value is lower than the appraisal district’s assessment.
However, you cannot simply compare raw sales data without making proper adjustments for differences between properties. Property tax professionals adjust sales comps by more than 40 qualifiers to ensure the comps are truly comparable. Simply comparing your property to your neighbor’s sale price without these adjustments can actually harm your case. It’s also important to note that popular real estate websites won’t provide the necessary information and are often inaccurate.
When selecting comparable properties, look for homes that:
- Are in your neighborhood or a very similar area
- Have sold recently, preferably within the past year
- Are similar in size, age, and condition to your home
- Have similar amenities (number of bedrooms/bathrooms, garage size, pool, etc.)
Present this information in an organized format, perhaps in a table that shows each comparable property’s address, sale date, sale price, square footage, and relevant features. Calculate the price per square foot for each comparable and compare it to the per-square-foot value the appraisal district has assigned to your home.
Remember that the appraisal district’s value is supposed to reflect your property’s market value as of January 1, so sales closer to that date are generally more persuasive. Also, be aware that the appraisal district may have access to sales data that isn’t publicly available, so be prepared to discuss any discrepancies.
Highlighting Property Defects
Another effective strategy is to document any defects or needed repairs in your home that could lower its market value. Obtain written estimates from licensed contractors for the cost to repair significant issues like:
- Foundation problems
- Roof damage
- Plumbing issues
- Structural damage
- Major water damage
These professional estimates serve as your primary evidence for valuation reductions. While photos can supplement these estimates to show the existence of the issues, the ARB will give more weight to the professional assessment of repair costs than to visual evidence alone.
Remember that cosmetic issues like outdated décor typically don’t affect appraised value significantly, so focus on substantial structural or functional problems that impact the property’s market value.
Leveraging Professional Appraisals
While not always necessary, a professional appraisal can be a compelling piece of evidence in your protest. If you’ve recently refinanced your home or had it appraised for another reason, this documentation can be valuable if it supports a lower value than the appraisal district’s assessment.
A professional appraisal provides an expert opinion on your property’s value and typically includes detailed analysis of comparable sales and property characteristics. While the ARB isn’t required to accept the appraiser’s opinion, it can be persuasive evidence, especially if the appraisal was conducted near the January 1 assessment date.
Keep in mind that a professional appraisal typically costs $350-$600, so you’ll need to weigh this expense against your potential tax savings. If you’re protesting a significant increase in value, the cost of an appraisal might be justified by the potential savings over several years.
When to Seek Help from Licensed Property Tax Protest Professionals
While many homeowners successfully protest their property taxes on their own, licensed property tax professionals can deliver significant advantages that often result in greater savings. These experts bring specialized knowledge, experience with local appraisal districts, and proven strategies that can maximize your results while eliminating the stress and time investment of handling the process yourself.
When selecting a property tax professional, pay close attention to their fee structure, as it reveals much about their business model and commitment to your case:
- Upfront Fee + Modest Percentage Model: The most reputable firms charge a small upfront fee (often $30-50) plus a modest percentage of your tax savings (typically around 30%). This model ensures they’ll work every case thoroughly, regardless of potential savings size. The upfront fee covers the cost of processing your protest through the entire system, while the percentage aligns their interests with maximizing your savings.
- Percentage-Only Model: Some companies advertise “no fee unless you save,” charging a much higher percentage of any savings (often 40-50%). While this seems appealing, it can lead to companies cherry-picking only cases with obvious big savings potential and abandoning protests when the work required exceeds their projected commission. You’ll never know if they truly fought for your best interests.
Consider partnering with property tax professionals if:
- Your property has unique features or is in a specialized market that makes accurate valuation challenging
- You’re uncomfortable navigating the technical aspects of the protest process or presenting your case in a formal hearing
- Previous self-handled protests have yielded disappointing results
- You value your time and would prefer experts to handle the entire process from start to finish
- You want to ensure you’re receiving every dollar of savings you’re entitled to, not just the easy wins
The best property tax professionals work systematically through every step of the protest process, even when the potential savings might be modest. They understand that small reductions compound over time, as each year’s lower valuation serves as the starting point for the next year’s assessment. When selecting a protest professional, verify their credentials, success rate, and their commitment to taking your case through the entire process rather than abandoning more challenging cases.
After the Protest: Next Steps
Once the ARB has made its decision, you’ll receive a written order by certified mail. If you’re satisfied with the outcome, no further action is needed. If you’re dissatisfied, you have several options for appeal.
- First, you can request binding arbitration if your property qualifies as your residence homestead (with no value limit) or if your non-homestead property is valued at $5 million or less. According to Texas Tax Code Section 41A.01, property owners can appeal through binding arbitration if “(1) the property qualifies as the owner’s residence homestead under Section 11.13; or (2) the appraised or market value, as applicable, of the property as determined by the order is $5 million or less.” This involves having an independent arbitrator review your case. You must request arbitration within 60 days of receiving the ARB’s order. There is a deposit required, which is refunded if you prevail.
- Second, you can appeal to district court. This is a more formal and expensive process that typically requires an attorney. You must file your appeal within 60 days of receiving the ARB’s order.
- A third option is to appeal to the State Office of Administrative Hearings (SOAH). This option is available only for properties valued at more than $1 million, and you must request this type of appeal within 30 days of receiving the ARB’s order.
Regardless of the outcome, remember that property tax protests are an annual opportunity. Even if you’re unsuccessful this year, you can protest again next year with potentially different evidence or circumstances.
Taking Control of Your Property Taxes
Understanding and exercising your rights under Texas property tax laws is essential for ensuring you’re not paying more than your fair share. By knowing the exemptions available to you, understanding the protest process, and preparing a strong case with compelling evidence, you can effectively challenge unfair increases and potentially save thousands of dollars over time.
Remember that the property tax system relies on your participation to function fairly. Appraisal districts handle thousands of properties, and mistakes or inequities can occur. By protesting every yearok, you’re not only potentially saving money but also helping ensure the system works as intended.
If navigating the complex world of property taxes seems overwhelming, Home Tax Shield can help. Our team of experienced professionals understands the intricacies of Texas property tax law and can guide you through the protest process, ensuring you have the strongest possible case and the best chance of success. Don’t pay more than your fair share—take action today to protect your rights and your wallet.