Texas property tax law changes every few years. See the latest posts for the most up-to-date information.
According to Rocket Mortgage, Texas has the seventh-largest property tax rate in the United States. The state depends on property taxes to fund state operations as opposed to income tax on its residents. These taxes provide the largest source of revenue for the state government to support services, including education, infrastructure, emergency response, policing, and fire protection.
Texas laws and Tax Codes establish the process followed by local officials in determining the value of the property, ensuring that the values are equal and uniform. Since there is no state property tax, the constitution and statutory laws authorize local governments to collect the tax. But that doesn’t always mean your tax rate or tax bill is fair.
How Texas Property Taxes Work
Residential property in Texas is appraised annually by the county appraisal district. Hence, the state is not responsible for setting tax rates, collecting taxes, and settling any disputes arising between residents and the local government. The appraising districts are responsible for determining the current market value of all the properties within the county and on which the tax payments are based. Any disagreements that may arise are brought to an appraisal review board comprising local citizens.
There are some important dates to remember. At the beginning of every year, the county appraises homes, and the appraisal review board hearings commence at the end of May. The county’s tax assessor-collector then sends out the tax bails commencing October with a due date of January 31 the following year.
As a Texas property owner, you might qualify for a reduction in the taxable appraised value of your property, thereby reducing your tax bill. These Texas property tax reductions are referred to as property tax exemptions and are often the common way for property owners to reduce their tax burden.
Determining Texas Property Tax Rates
Property taxes are levied as a percentage of each home’s appraised value under the Texas Constitution and Texas Code. Each county appraisal district is required to determine the value of properties within its district at least once every three years. The same methods and techniques must be used for appraising the same property. Any mass appraisals performed must conform to the Uniform Standards of Professional Appraisal Practice to ensure equal treatment for all properties.
For individual property owners, the tax amount is based on the market value of your property. The county district will perform the real estate appraisal by comparing your property to other properties within your neighborhood. For instance, they will take the existing market value of the sold homes to set the value. The value is then multiplied by the tax rate to determine the tax bill.
H3: Related: How Is Property Tax Calculated?
Besides comparing the value of your property against the market rate, your property may be assessed through construction costs (as if it were built from the ground up). The appraiser also accounts for depreciation and the value of the land. For commercial properties, the value is mainly based on the value of the property or business income.
The set tax rate for every taxing entity is principally based on the district revenue and the annual budget. Hence, the tax authorities can calculate the property tax based on the established property value.
Property Tax Exemptions Available in Texas
Texas offers a variety of partial or total absolute tax exemptions from appraised property values used to determine local property taxes. According to the state comptroller, a partial exemption removes a percentage or fixed amount from taxation, while a total exemption excludes the entire property’s appraised value from taxation.
The state requires taxing units to offer certain mandatory exemptions and have the option to decide locally whether or not to offer them. In most cases, you need to apply for tax exemption with the appraisal district within which the property is located. Among the various property tax exemptions that Texan property owners can use include:
1. Tax protest
Texas homeowners pay huge amounts of property tax. However, every citizen is entitled to lower property taxes if their rates are unfair. If you believe the appraisal district has set the appraisal above the market value or that the appraisal done is not equal to similar properties in your area, you can protest your property tax. You will be required to file an appeal through the Notice of Protest (PDF) with the ARB.
Every home value is different; hence if you expect to reduce your tax burden, you will need the help of a property tax company to assist in the protest. An experienced property tax company will conduct an in-depth custom analysis of your home, a comprehensive analysis of your neighborhood and comparable properties within your area, and a strategy for the burden of proof for the property when meeting with the central appraisal district. Furthermore, they will advocate for lowering the value to reduce your tax bill liability.
H3: Related Video: Need to Learn More About Property Taxes?
Why you should protest
Property values aren’t always correct for a variety of reasons, such as:
- Your home has never been individually appraised: Oftentimes, the proposed value of your home is based on a mass appraisal. It is likely that the appraisal district does not have the manpower or time available to appraise each and every home, so they take the average value of all of the surrounding homes.
- Assessed home values are sensitive to economic growth and decline: due to economic growth, your local appraisal district increases v