Even If the Real Estate Market Is Cooling, Your Tax Bills Might Still Go Up—Here’s What to Do About It
Just a year ago, the median property tax bill in Texas was $2,275 across the state (and over $6,000 in popular counties like Collin, Fort Bend, and Travis). Property tax bills have been on a strong upward trajectory for years, finally resulting in an increase to the homestead exemption in late 2023 to a total of $100,000. But even this move has left homeowners across the state uncertain about whether strong market forces will continue to ratchet up their tax bills or whether the policy changes and a cooling market will bring enough tax relief.
Despite that uncertainty, there are steps every homeowner can take to better understand what tax bills will look like over the next few years and what to do to reduce property taxes as much as possible. One of the most important strategies—protesting your property taxes every year—is vital whether the real estate market goes up or down.
Factors That Affect Your Property Tax Bill
Texans receive their final property tax bills around October of every year. That final number is influenced by a lot of different factors:
- Your county and city tax rates: Texas property taxes are a local tax, not a state tax, so the municipal activity in your area has a direct effect on your property tax bills. However, there are several checks in place to make sure local governments can’t increase their budget too steeply in any given year.
- Tax relief you’re entitled to: Qualifying homeowners can get exemptions on their property that reduce their home’s taxable value for different levies. For example, the homestead exemption, one of the most commonly held exemptions, removes $100,000 of a home’s value from school district tax calculations. It also caps any potential increases in the home’s taxable value to a maximum of 10% each year.
- Your property’s appraisal value: This is the most dynamic piece of the puzzle, and it’s based on market value. County appraisers evaluate the value of your home, taking into consideration the land and structure based on the values of surrounding homes.
- Whether or not you protested your home’s appraisal value: Long before you receive your final property tax, your county will establish the new appraised value of your home. They may update their website, or if your home’s value goes up, they must send you a notice of appraised value in the spring. You have a small window of opportunity to protest that valuation if you believe it’s inaccurate. When you successfully argue down your home’s appraisal value, this lowers the number that county tax officials work with when they’re calculating your home’s taxable value and total property tax bill. If you miss this opportunity, your taxes will be determined by whatever value the county appraisers decide without your input.
What Control Do Homeowners Have?
Some of these factors are largely beyond your control, but most of them allow homeowners an opportunity for input and a degree of control. Three strategies that you can use are:
- File for your homestead exemption and any other exemptions you qualify for. These will directly affect your taxable property value for different city and county taxes.
- Protest your property taxes every year. County appraisers make mistakes, and they don’t individually appraise every home every year. Intervene so your property’s value doesn’t skyrocket just because of nearby market forces.
- Vote on tax-related measures: This has a relatively small impact on your taxes, but voting on local funding measures and bonds gives you a voice regarding whether tax rates go up or down to cover potential city and county projects.
Turbulent Housing Prices Can Also Affect Your Bill
Skyrocketing property prices in Texas have been the driving factor in most homeowners’ concerns about property taxes. In the Dallas area, property values increased 31.1% between 2020 Q3 and 2023 Q3. This increase radically affected local home values and taxes, even for people who never even considered selling their homes.
That same report shows a 1.1% depreciation in the last year—and it’s still unclear whether that’s because the market went down or simply because less expensive homes were more prevalent. However, for most homeowners, it doesn’t matter. Here’s why:
- The property taxes you paid in January 2024 were based on your home’s value as of January 1, 2023, and the property taxes you’ll pay in January 2025 are based on your home’s value as of January 1, 2024. It’s the general up-and-down trends of the market that matter, not the temporary spikes.
- The strategy for lowering your taxes remains the same. Whether your local prices go up or level out, it’s important to have your home independently evaluated and protest your property appraisal every spring. The appraisal process is the first big step in the property tax calculation process, and it’s best to start with the lowest possible number.
How to Protest Your Property Taxes
While it’s generally called “protesting your property taxes,” it’s really a process for protesting your home’s appraisal value. This happens in the spring when appraisal values are being finalized, not in the fall when your bill comes out. Homeowners can either independently protest their property value or hire a service to represent them. The DIY process requires these steps:
- Submit Form 50-132, Property Owner’s Notice of Protest, and provide a counter-valuation of your property with evidence to support the new number.
- Go through the process of communicating with the county, which may include communications by email, informal meetings with the appraiser, and finally, a formal hearing in front of the appraisal review board (ARB).
- The ARB hears arguments from the appraisal office and the homeowner before making a final determination.
Tax Experts Help Streamline the Process of Protesting Your Property Taxes
Alternatively, you can hire an authorized tax expert to represent you during the protest process. A comprehensive service can file the documentation on your behalf, represent you in conversations and hearings, and gather documentation to support lower appraisal valuations. At Home Tax Shield, we manage the entire property tax protest process for you, and we can do it every year so you never have to worry about missing a deadline. Sign up today to take back control of your property taxes.