Texas is no stranger to large-scale natural disasters, with 103 significant disasters occurring in the last 20 years alone. Hurricanes, tropical storms, severe floods, and tornadoes can rip homes down to the studs or make houses unlivable. Even more minor disasters—hail storms that shatter windows and damage roofs, torrential rainfall that causes water damage and shreds landscaping, and more—can result in significant home repair costs and dampen property market interest.
While homeowners across the state know how sudden and expensive natural disasters and bad weather events can be, the connection between natural disasters and property taxes is a little less clear. However, with some planning and support from tax experts, you can use the likelihood of natural disasters—and lingering damage from past disasters—to ensure you’re paying a fair property tax rate. In this article, we’ll explore the following:
- What goes into your property tax valuation each year
- The different ways that natural disasters can, directly and indirectly, affect your property taxes
- How you can use this knowledge to protest your property taxes and the value of property exemptions
How Can Natural Disasters Change Your Property Taxes?
Natural disasters are incredibly stressful, and you may be too overwhelmed to think about the tax implications of the event until long after the situation has settled down. But there can be a wide range of impacts on your property taxes (both positive and negative) that are important to know about before they affect your taxes or your property valuation gets set in stone.
The Effect on Property Tax Deadlines
If there is a natural disaster, the governor can declare the affected area a disaster area. This designation may make homeowners eligible for property tax extensions. These are determined case-by-case for individual taxpayers who file for an extension. The Comptroller’s Office details the general procedure homeowners should follow to file for an extension, and you can also reach out to your local tax jurisdiction office for specific details.
The Effect on Property Values
Having a property in an officially declared disaster area or a home severely impacted by a natural disaster can lead to damage significantly affecting the property value. Broken windows and doors, foundation damage, roof damage, and severe water damage from a flood can all measurably reduce your home’s value.
However, this information may not be available to your local appraisal district office and may not be reflected in your Notice of Appraised Value the following year. In this situation, you can protest your property valuation and provide documentation about the severe damage done to your property. The appraiser can weigh this information and offer you a reduced valuation, or you can present the evidence to your review board during an official protest hearing.
Over time, severe or recurring disasters can significantly dampen the increase of your and your neighbor’s property valuations. This can even cause a bit of a feedback loop. If you and your neighbors each protest your property taxes, this can lower each home’s valuation and property tax bill. When property values are reassessed or recalculated the following year, those numbers will consider the lower property values. This pattern can repeat over and over again.
Related: What Is the Difference Between the Appraised Value and the Market Value of Homes?
Suppose your home is in a location that makes it particularly vulnerable to natural disasters, such as in a strip of Texas that frequently has tornadoes or a floodplain. In that case, it can also affect your property value over time. Being in a floodplain may make your home less valuable on the market, especially if there’s a severe flood risk. Over time, this will affect the sales prices of homes throughout the area and suppress the values calculated by the county, particularly if your local tax appraiser uses the sales evaluation method.
The Effect on Property Tax Rates and Local Budgets
Property values are only one-half of the property tax calculation. It can also be important to consider the effect of natural disasters on property tax rates. Property taxes are locally managed in Texas—that is, your local county or city will set the rate of tax levies in your area, and the funds collected will primarily go toward the local budgets.
Unfortunately, that spending may need to increase in areas with large disasters, if state funding is not enough to recover. Cities and counties must repair roads, fix any damage to municipal water systems and utilities, and more. Emergency service providers may work overtime or need additional staff, and government buildings (schools, hospitals, etc.) will require other resources.
While the state may provide some resources and funding—especially if there’s an officially declared disaster area—the local government will increase spending and, eventually, need to increase tax collections to account for that.
As a result, you may see property tax rates increase after a disaster. The increase will be capped: Texas law prevents local governments from increasing the revenue raised through property taxes by more than 3.5% per year without getting approval from voters. But the increase may still significantly affect your property tax bill.
The Effect on Exemptions and Tax Protections
According to TexasLawHelp.org, a damaged property in an officially-declared disaster area can qualify for an exemption of between 15% and 100%. However, the property must qualify for the exemption by being in the right location and having significant damage. Consult with your local government to learn more about the qualifying requirements and the process for receiving a temporary exemption.
Under Tax Code Section 11.35, the chief appraiser in your area can determine if your home qualifies for a Level I, II, III, or IV temporary exemption based on the damage done. The Travis County Appraisal District outlines these levels and the amount of damage needed for a property in a disaster area in their jurisdiction to qualify:
- Level I (15% temporary exemption): Minimal damage, but 15-30% of the structure is damaged.
- Level II (30% temporary exemption): There is nonstructural damage between 30-60%, and any waterline at the property remained below 18″ above the floor.
- Level III (60% temporary exemption): There is significant property damage across the majority of the structure, and the waterline from a flood rose above 18″
- Level IV (100% temporary exemption): The home cannot be repaired.
Related: Falling Property Values: When Do They Impact Property Taxes?
However, it’s not just property taxes that may see a bit of relief after a natural disaster. If your home is damaged in a Texas region declared a disaster area by the governor, the repair services you pay for to repair residential property will be exempt from Texas’s 6% state-level sales or use taxes. Businesses that perform these services can simply bill residential customers for the services performed and adequately document the sale and invoice.
Is Your Home in an Area Affected by Floods?
Many homeowners file for a homestead exemption. If you qualify, you’ll see general benefits, such as:
- A partial exemption on school district taxes, which shelters $40,000 of your home’s value from school district tax calculations
- A 10% cap on how much your property value can increase each year (not including increases due to improvements and renovations)
- Additional benefits for disabled homeowners, homeowners over 65 years old, and disabled veterans
One often overlooked advantage of a homestead exemption is a $3,000 exemption for county taxes designated toward flood control. Individual tax jurisdictions or taxing units can also offer an exemption of no less than $5,000 and no more than $20,000. Check your particular tax jurisdiction or local government for more details.
How Can You Use This Information Right Now?
If your home has been damaged in a natural disaster or a severe weather or artificial event, take these steps as soon as safely possible:
- Photograph the damage. Pay particular attention to the damage that can affect your home’s structural stability, insurability, and sellability. For example, if the roof has significant wind, hail, or tree damage, take photographs of the damage inside and out.
- Collect documentation about damage, repair quotes, and “comps” (or appraisals of comparable local properties). This information can be evidence to support your claim if you protest your property taxes.
- Tell your neighbors! While every homeowner can protest their property taxes individually, your entire neighborhood can benefit when everyone takes steps to protest their property taxes and ensure property valuations fairly reflect damage.
- Talk to your local government about qualifying for a temporary exemption.
Now That You Know the Effects of Natural Disasters on Your Property Taxes, What Can You Do?
There are some steps that every homeowner can take to ensure they’re receiving a fair property tax valuation and tax bill. Advocate for your right to tax relief and appropriate taxes with these actions.
Protest Your Property Tax Valuation
Every homeowner has the right to file a protest form if they believe the county appraiser inaccurately calculated the value of their home. In this process, you can make a counter-valuation, explain why you think the initial value is wrong, and either reach an agreement with the county appraisal district or present your case in a formal hearing. This would be an excellent practice for all homeowners, even if your home wasn’t damaged in a governor-declared disaster area.
Apply for Your Homestead Exemption
If you live in an area with frequent flood maintenance and repairs, you may be eligible for an exemption of up to $3,000 on county taxes focused on flood control. File for a homestead exemption as soon as possible if you qualify.
Turn to Home Tax Shield for Help Navigating the Property Tax Protest Process
Natural disasters are scary experiences, and trying to back up your routine after your home is damaged in a disaster is a challenge. At Home Tax Shield, we can step in to help you manage the property tax protest process. Our team can file the protest form on your behalf, arrange a third-party assessment of your home’s value, and present evidence to support your claim for a lower property valuation. Contact us today to learn more, or sign up to get started.