Texas property tax law changes every few years. See the latest posts for the most up-to-date information.
You received your property tax appraisal in the mail, opened it, and nearly passed out from the latest figure. Yes, Texas home values are rising, but the property value you received is not correct nor commensurate with the current market value of similar homes in your neighborhood. Paying higher taxes from an unfair appraisal irks you, but what can you do?
Texas does not collect personal income, inheritance, or estate tax. Instead, it relies on sales, corporate income, and property taxes. Fortunately, the state has a relatively low overall tax burden, despite its high property tax rates than other states.
A tax burden measures a state government’s tax burden on its residents. It includes direct taxes (tax rates on corporate and individual incomes) and overall taxes (direct and indirect taxation at different government levels) as a percentage of GDP.
This post discusses Texas property tax, calculating it, what happens when you purchase a home, how to reduce your property tax by protesting or using exemptions, and how a property tax service can help you reduce your tax burden.
What is Property Tax and Who Sets It?
Federal and local governments impose property taxes on assets, such as homes. However, Texas does not have a state property tax. Instead, its property taxes are local taxes counties set and collect.
The state legislature authorizes local governments to determine property value, set the tax rates, ensure equality and uniformity, and collect taxes. It’s the largest income source for local governments and pays for schools, roads, the police, fire protection, streets, and other public services.
The County Appraisal District (CAD) determines the value of your property while a County Tax Assessor applies a proportional tax rate to it. In addition, your local government hires appraisers who base your home’s value on similar properties in your area.
How is Texas Property Tax Calculated?
The calculation of Texas property taxes depends on your county of residence. Texas’ average tax rate of 1.80% ranks it the seventh-highest state. So, for example, if your home is worth $200,000, your annual personal property taxes using this average rate would be $3,600.
How Can You Lower Your Property Tax Bill?
Homeowners can lower their property tax bills by protesting the appraised value or taking advantage of the available exemptions. The latter is the most common method residents use to reduce their property tax bills.
How Do Texas Property Tax Exemptions Work?
Texas offers various partial or total property tax exemptions. A partial exemption removes a fixed dollar amount or percentage of your property’s appraised value from taxation, while a total exemption excludes the entire appraisal value from taxation. In addition, the state requires its taxing units to provide certain mandatory exemptions but have the option to decide whether or not to offer other types.
Below are the types of property tax exemptions in Texas.
1. Residence Homestead
Texas requires its school districts to provide a $40,000 exemption on residence homesteads. It also allows taxing units to adopt a residence homestead exemption limit of 20% of the property’s appraised value, and the exemption should be over $5,000. Finally, the tax code requires counties collecting flood control or farm-to-market taxes to provide a $3,000 exemption.
Qualifying individuals must have an ownership interest in a property and use it as their principal residence. They should also not collect another residence homestead exemption in the US.
Related: What You Need to Know About Exemptions for Texas Homes
2. Inherited Residence Homestead
You can claim an inherited residence homestead exemption if you have an interest in a property you acquired by will, intestacy, or a transfer on death deed. If you have inherited a residential property, but the deed does not name you as the owner, you must provide the appraisal district with:
- An affidavit establishing ownership interest
- A death certificate copy of the prior owner
- A copy of the home’s recent utility bill
- A court record citation related to the applicant’s property ownership, if available
Additionally, other property owners residing in the home must also provide an affidavit authorizing the application submission.
3. Disabled Veterans and their Surviving Spouses
Disabled veterans can enjoy up to 100% exemptions of their appraised property value for their primary residence. The exemption amount received depends on the disability rating of the veteran. In addition, surviving children and spouses who remain unmarried can also qualify for an exemption, provided the property remains their residence homestead.
4. Disabled Persons or Seniors Aged 65 or Older
Disabled persons or citizens aged 65 or older qualify for an additional $10,000 exemption if they reside in school districts. They can also seek an exemption of at least $3,000 in other local property taxes. After that, school districts cannot charge an amount more than that paid in the first year after qualifying. In addition, widows over 55 can continue claiming the tax exemption.
5. Surviving Spouses of First Responders
Finally, surviving spouses of specific first responders fatally injured or killed while on duty can qualify for a total tax exemption on their residence homestead. However, they must remain unmarried after their spouses’ death.
Can I Protest My Property Tax?
Yes, you can protest your property tax if you think your recent appraisal does not match the market value, in order to reduce your tax burden.
However, protesting your home appraisal is a somewhat complicated process. It requires paperwork, evidence gathering, and presenting your evidence at a hearing. Some may find the process time-consuming or too intimidating to go it alone. Many prefer to hire a property tax protest professional to represent them in this process.
If you go it alone and protest your home’s appraisal because you believe it’s too high, you will need a plan of action to protect your homeowner’s rights.
- Find out your home’s current market value. You could look at the selling prices of similar homes in your area, hire a licensed appraiser, or get a comparative market analysis from a realtor. If your home has a significant defect that lowers its market value, you could include that in your evidence report.
- File a written protest notice by the deadline. A written notice is enough to appear before your Appraisal Review Board (ARB). Include your name, property address, and statement of dissatisfaction with the appraisal district’s decision. You will receive feedback on your hearing date, time, and place within 15 days.
- Discuss your protest with your local appraisal office. Sometimes you could solve the matter before appearing before the ARB.
- Appear before the ARB. Read the ARB procedures you receive and prepare for your hearing with the facts, figures, and examples. You will face off with the chief appraiser during the hearing. Finally, the ARB will decide.
If you disagree with the decision made by the ARB, you can also appeal the decision of your local Appraisal Review Board to:
- Your county’s district court
- State Office of Administrative Hearings or SOAH for property valued at over $1 million. Its judgments are final, and you cannot appeal them.
Alternatively, you can appeal the determination by seeking binding arbitration by an independent third party. The Texas Comptroller’s office maintains a complete registry of qualified arbitrators and processes requests and accompanying deposits.
Related: Why You Should Be Using a Texas Tax Protest Service
How Can a Professional Property Tax Protest Service Help Lower Your Taxes?
Property tax protest services help you lower your taxes by representing you throughout the entire protest process. Experienced and knowledgable, they know the steps, deadlines, and data required to successfully protest your property taxes. They offer a stress-free option to prevent you from paying more than your fair share of property taxes by protesting appraisals to lower the tax burden.
Benefits of Hiring a Property Tax Protest Service
Taxes can be confusing, so hiring a property tax protest professional is smart. Below are some benefits of hiring a property tax service:
- It saves you time otherwise spent gathering evidence, applying for a hearing date, and appearing before the ARB
- It saves you money since the tax protest service will help get you a correct and fair tax appraisal, ensuring you only pay what you owe
- It gives you the expertise you need to protest and get the best possible outcome annually
- It helps prevent costly mistakes
- It gives you a resource to ask questions and learn
- It helps you stay organized
- It gives you peace of mind
Get Help with Your Texas Property Tax Protest Today
Texas has high property taxes because it does not require state income tax. Fortunately, you have several opportunities to lower your taxes as a homeowner using property tax protests and exemptions.
Hiring a property tax service allows you to save money annually by ensuring your property tax appraisal is correct and fair, so you don’t pay more than you should. However, most property and homeowners don’t know they can protest or how to do it, while those who do know may find the process stressful and labor-intensive.
Home Tax Shield helps you save as much money as possible on your property tax bill. Once you sign up for our service, we will help you protest your property tax bill, ensuring you only pay what you owe and not a dollar more. We cover the entire protest process, from evidence gathering to representing you before an Appraisal Review Board, annually and affordably. Sign up today.