How to Lower Property Taxes in Texas

Property Taxes 101

With property taxes at an all-time high in Texas, you need to understand how to lower property taxes in Texas and seek professional help where necessary to ensure that you pay only a reasonable amount of your hard-earned money. How is this tax calculated and how are taxpayers affected by a gradual rise in taxes in Texas?

If you are wondering why your property tax bill might have skyrocketed lately, it may help to learn how it is calculated before you can attempt to fight for lower property taxes. The two most important figures in this calculation are the tax rate and the present value of your home. Texas has shown a significant increase in tax rates over the past few years, and it is currently one of the highest in the USA. There are several reasons for this upsurge, the most important being that Texas is highly reliant on property taxes to keep the state running.

Rising Property that Makes Lower Property Taxes in Texas Harder

Due to the absence of state income taxes and a substandard sales tax of approximately 8.25%, most of the revenue earned by the state has to be generated through property taxes. This money is used in paying for and providing important services to Texas residents, such as schools, libraries, emergency services, road repair, and community safety.

Texas’ overall average property tax rate is more than 1.83%, compared to the national average of 1.08 percent to 1.21%. Within these counties, tax rates differ per city. It’s no wonder why so many Texans want lower property taxes.

Furthermore, the highest property tax rates in Texas are found in larger regions that might cover many counties. For example, El Paso has a staggering property tax rate of around 2.67%, one of the highest in the nation, while Austin currently sits at an average tax rate of 2.22%.

This is in line with the states that pay the highest property taxes, such as New Jersey which sits at 2.49%, and Illinois which hovers over the 2.27% mark. However, for some perspective, other states like Hawaii pay a fractional 0.28%. Colorado and Alabama also sit around the 0.40 to 0.50% range. Not to mention states like Florida and Nevada that do not pay property taxes at all.

Property tax reform would almost certainly result in spreading the tax burden by instituting a state income tax or imposing a higher sales tax. Doing so could mean a reduction or an increase in your yearly property taxes, depending on where you live. However, property prices are currently on a rise and show no signs of halting their ascent. This increase could actually be good for you if you decide to sell your home, but it can be a major inconvenience in terms of annual property taxes.

It’s important to understand that these taxes are all decided on the local governmental level. The amount on your property tax bill is determined by your local government, not by the state of Texas. While this is beneficial in some respects since it leaves the authority to adjust taxes to your own community, it also means that the government is unable to control or influence taxation in any major way. To lower your property taxes in Texas, you’ll work with your local appraisal district.

Assessing the Value of Housing

How Is Property Tax Calculated?

The property tax on your house is evaluated by multiplying its assessed value by your local tax rate. The regularity with which taxation authorities reset their rates is determined by state legislation; some do it yearly, whereas others do so in smaller increments, such as every five years. Municipalities choose their tax rates, sometimes referred to as the mill rate, depending on the amount of money they believe they need to pay for essential services.


Who Are the Main Stakeholders in Deciding the Tax Rate?

The Appraisal District

The appraisal district’s main obligation is to appraise all properties within its authority at fair market value, which is defined by the Texas Property Tax Code as the property’s worth in cash under current market conditions, assuming that there is a certain demand for it. They are also in charge of administering exemptions and creating assessment rolls for taxation authorities.

Taxing Units

Counties, cities, school districts, and special taxation districts are all included in this category. These taxing authorities are in charge of determining a tax rate that will be applied to the value of your property to determine your tax bill. Using your votes efficiently can ensure lower property taxes in Texas.

The Tax Assessor-Collector

The appraisal district sends a certified assessment roll to the tax assessor-collector, who then adds the regional tax rate to the property’s valuation to create a tax charge. Depending on the circumstances, this analysis may be done in person or remotely. The same agency is also in charge of collecting the property taxes that have been levied.

What Are the Three Methods of Calculation?

Sales Method

This is a value that is assigned to your property based on similar properties in terms of region and area. By comparing market data from different properties with similar characteristics, a price is allotted to your property. The difference adjustments also take into account properties that are sold versus those that are appraised.

Income Method

This is a value assigned to your property based on what an investor in the current day might pay for it. It is evaluated through income and expenses data that is publicly available, to account for how much of a revenue stream the appraised property would generate for the real estate investor.

Cost Method

This is a value assigned based on how much it would cost, in raw materials and labor, to build a comparable house to yours and replace it. After this, the value is adjusted for depreciation in your time using it to gain a complete picture of what a property may be worth right now.

Who Decides Your Property’s Value?

After a local government-hired assessor evaluates the market value of your property – which comprises both land and the structure – you will get an assessment. The assessor may visit your home, but in most situations, an assessor may do property evaluations utilizing software and updated tax records from afar. Your property tax bill is based on this assessment and is sent to you by your municipal tax office.

Tax Reduction Strategies

Property Tax Exemptions

The Homestead Exemption

The homestead exemption allows you to use up to $25,000 as tax relief if the property in question is your primary residence. This local exemption cannot be less than $5,000, and areas that already collect farm-to-market or flood control taxes are eligible for a $3,000 homestead exemption too. 

Alternatively, Tax Code Section 11.13(n) also allows for a homestead exemption that is equivalent to 20% of the property’s appraised value. The only requirement to become eligible for this exemption is stating that you are not already availing of this homestead exemption anywhere else in Texas or outside the state. This could be a sizable amount of money when it comes to lowering your property taxes when in Texas.

Senior Citizens and Disabled Individuals Exemption

This exemption allows you to avail $10,000 on top of your homestead exemption if you are above 65 years of age or are a person with a disability. In the case of the person passing away, as per Tax Code Section 11.13, the spouse may avail the same exemption given that he or she lives in the same house and is above 55 years of age.

Disabled Veterans’ Exemption

The disabled veterans’ exemption allows you to avail up to $12,000 as property tax exemption if you are a veteran with a service-related disability. The exact exemption depends on the person’s precise condition and as part of Tax Code Section 11.12, this can be claimed by the surviving spouse so long as he or she resides in the same homestead and has not remarried after the qualifying disabled partner’s death.

Other Exemptions

These exemptions vary vastly but can be claimed if one’s primary residence as a homestead is being powered by renewable energy sources such as solar power and wind energy. However, doing so requires the filing of Form 50-123 to avail of this exemption. Similarly, if you are the owner of a charitable organization, you are eligible for numerous tax exemptions that are specified in the Texas Property Tax Exemptions Document.

Related: Over 65 Exemptions Explained

Property Tax Card and Researching Neighbors

Few people are aware that they may get a copy of their respective property tax cards from the county assessor’s office by visiting the town hall. The tax card gives you access to information the municipality has accumulated over time about your property.

The layout of the house, the exact measurements of the rooms, and the quantity and kind of fixtures in your house are all listed on this card. A section on unique features or remarks on additions made to the current structure should be included as well.

You can compare your own property tax cards with neighbors or other house owners with similar property values to determine if your property is being overvalued or undervalued. This is one of the primary pieces of evidence in your case to help lower property taxes.

By virtue of property tax records being publically available, you can avoid the awkward tax discussion with your neighbors by looking up these statistics in public records to compare. To get the most accurate benchmark, look for houses in your locality that are comparable in age, square footage, and construction to your residential property.

Walk Around the Home with the Assessor

You will have the option to either have your home assessed by a realtor by visit or not let them into the premises altogether.

Not letting them into the premises makes them presume the highest numbers possible for that specific type of property. It is up to you to dispute the evaluation from the county, but that means more hassle, so it’s better to provide access to the realtor to your home interiors. After all, if you disagree with their evaluation of the value, you can always hire a licensed appraiser to evaluate your property and compare it with similar houses.

Doing so is worth the upfront cost since it can help you save thousands of dollars due to a chance to lower property taxes. However, you need to be extra alert and careful, as due to the transactional nature of independent appraisers serving mortgage lenders, they might use an appraisal process that will evaluate your house higher than that of the appraisal standards of the county.

Build with Caution

Your tax payment can go up if you make structural improvements to your house or property. Any permanent feature added to your houses, such as a deck, a pool, or a huge shed, is expected to raise its overall value. Before starting construction, homeowners should figure out how much a new addition would cost them in property taxes. It is helpful to make a phone call to the local tax and building agencies.

Appeal Your Tax Bill

If none of the earlier options seem to work for you, it is helpful to file a tax appeal to the Appraisal Review Committee. More and more people are now protesting their increased property taxes in Texas, with as much as 8.5% of taxpayers doing it individually while an additional 8.5% of people doing it with the help of an agent.

An agent will conveniently appear to the district on your behalf every year at the hearing so that you don’t have to. This saves you the time and energy spent in going through this lengthy process every single year. You can greatly increase the likelihood of winning your case for a lower property tax in Texas without the additional effort.

File a Written Notice of Your Protest

To testify before the Appraisal Review Committee, you must submit a written objection to your local appraisal authority by April 30 (ARB). Official forms are available, however, they are not mandatory. Any written notification that contains the following information is sufficient: the property owner’s name, the address of the property under protest, and a statement of disagreement with the appraisal district’s judgment. The ARB will advise you of the schedule, time, and location of your hearing between 15 days of receiving your notice.

Discuss or Appear before the Appraisal Board

In certain situations, you may be able to address your problem with the appraisal office even before taking the case to your ARB hearing. To learn more about their process, contact them directly. Prepare facts, numbers, and examples ahead of time. This is when the information supplied to you by the independent appraiser in the assessment becomes useful. You should have images and quotations from qualified service contractors on hand if you want to discuss the state of your house not being similar to others.

Related: Property Tax Appeal Deadlines

Lowering Property Taxes in Texas Doesn’t Have to Be Hard

We hope that this guide has helped you gain an understanding of how to lower property taxes in Texas. If you need to hire an experienced tax professional to take care of all your property reduction needs, look no further than HomeTaxShield to make sure that you only pay a fair amount of taxes. You’ll save time and have peace of mind that an expert is working on your behalf.

Sign up to book your consultation at HomeTaxShield and save money by reducing the valuation and taxes on your residential, commercial, or investment properties.

Nov 29th 2021

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