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Texans’ property taxes are rising, and homeowners feel the pinch in their wallets. Because the problem is so meteoric and widespread, many homeowners think there’s nothing they can do to make the tax bill more reasonable. Even Texas lawmakers’ best efforts to curtail rising property taxes haven’t succeeded — at most, they’ve slowed the rapid ascent into higher and higher tax bills. But there are a few different strategies you can use to lower the total tax value of your property. Remember: the tax value of your property doesn’t necessarily match your home’s actual value or potential selling price, and lowering your property’s tax value won’t hurt. With that in mind, let’s dig deeper into why many Texans see their tax bills go up and four critical strategies for cutting them back down.
Two Things Making Your Property Taxes Go Up
The number at the bottom of your property tax bill may be the main number you worry about as property taxes start to come out. But it’s just as important to know how your county or city calculated that final number (and why it keeps going up). The basic formula for calculating your property tax bill is:
- [Tax rate in your jurisdiction] * [Assessed value of your property] = [Property tax amount due]
This formula is overly simplified, as it doesn’t break down the various tax line items your property must pay. That includes city taxes, school district taxes, taxes for local junior and community colleges, and county taxes, each of which may have a different tax rate and apply to the whole or a part of your property. However, it does illustrate the two ways your property taxes can change from year to year:
- Tax rate increase: Your county, city, or school district may determine that they require more tax revenue, which leads to a rise in the tax rate for that applicable line item. However, if the tax rate exceeds a certain percentage, it triggers an automatic election so voting residents can vote on the new rate.
- Property value increase: If your county determines that your property is more valuable than in the previous year(s), it can raise your assessed property value. Some ways your property value might increase are if homes or land is in greater demand in your area (a common situation in Texas metroplexes today) or if you make improvements to the property.
There’s little that Texas residents can do to affect tax rates directly. However, there are several strategies you can use to lower your assessed property value, either by exempting part of it from being taxable or by reducing the total assessed value.
1. Apply for a General Residence Homestead Exemption
If you own your home (even if it still has a mortgage) and it’s your primary residence, you can apply for the General Residence Homestead exemption. This simple step can remove hundreds from your annual property tax.
How It Lowers the Tax Value of Your Property
One of the most direct ways this exemption helps cut the tax value of your property is by exempting a portion of your home from the above calculation in three ways:
- $40,000 of your home’s property value is exempt from school district taxes (under Tax Code Section 11.13(b)).
- Your taxing unit may have a local option exemption of between $5,000 and 20% of the property’s value (under Tax Code Section 11.13(n)).
- $3,000 of your home’s property value is exempt if your county collects flood control and farm-to-market taxes (under Tax Code Section 11.13(a)).
While this doesn’t directly lower your home’s assessed value, it effectively reduces your home’s taxable value by removing part of the value from consideration. For example, Lovejoy ISD in the northern DFW area has a school district tax rate of 1.474600 in 2022. If your home has a value of $500,000, the school district portion of your taxes is $7,373. With a homestead exemption in place, only $460,000 will be taxed at that rate, bringing that portion of your property tax bill to $6,783.16. Provided you’re eligible for this exemption, this one step can save Lucas homeowners $589.84 on its own — and homeowners in other tax districts will see comparable savings.
Long-Term Cap on Property Assessment Increases
Another benefit of filing for this exemption is its year-over-year cap on property value increases. Once you have this exemption in place, your local tax district cannot increase the value of your property by more than 10% each year unless you’ve made improvements to the property. This caps any increases you may see to a more manageable rate. For example, if you have an exemption and your property is valued at $300,000, it can’t be valued at above $330,000 next year unless you renovate and improve. A neighbor with a comparable property but no homestead exemption might see their property value increase to $360,000 based on market demand and the county’s tax assessment processes.
How to Start
Applying for a general residence homestead exemption is simple. All you have to do is fill out Form 50-114, available on the Texas Comptroller’s website or your local county appraisal district website, and submit it to your local tax authority. They will determine eligibility and automatically factor in your tax reductions on subsequent bills.
Related: What is a Homestead Exemption in Texas?
2. Apply for Other Exemptions Your Property Is Eligible For
A general homestead exemption isn’t your only option for exempting part of your property’s value from tax calculations. For homeowners 65 and older or homeowners with disabilities, Texas also provides an exemption for an additional $10,000 of your home’s value regarding property taxes. Homeowners cannot receive this benefit for their age and their disabled status simultaneously; instead, you must choose one for a total exemption of $10,000. However, by filing both this and your general homestead exemption, you can cut the tax value of your property by a total of $50,000 for the school district portion of your property taxes.
School district taxes are the most significant portion of property taxes for most Texan homeowners.
Disabled veterans can cut the tax value of their property even further. Depending on your disability rating, you may be able to exempt part or the entirety of your home across all tax categories (city, county, school district, and more).
How to Start
Homeowners can apply for these exemptions using Form 50-114 for all exemption types. Simply make which exemptions you request under Section One of the form and provide all necessary supporting documentation. Note that your driver’s license must have your new home address listed, making it the number one reason it is rejected.
3. Transfer Exemptions to New Properties or New Owners
Filing for exemptions can be overwhelming. Luckily, suppose you’re a surviving spouse of a homeowner eligible for exemptions or an eligible homeowner simply moving to a new home. In that case, Texas has provisions to allow for the transfer of some exemptions.
Property Transfer
If you are a senior or disabled homeowner, you don’t just benefit from an exemption. You also receive a “tax ceiling” on the school district portion of your property taxes. This tax ceiling can move with you to a new home as a “ceiling transfer.” This ensures you have the same percentage obligation in your new tax district or location. At the same time, the actual dollar value may rise or fall depending on the school district, but the percentage you’re obligated to pay will not.
Survivorship Options
If you owned your home jointly with a spouse over 65, you could continue receiving that exemption in particular circumstances. You must have ownership of the property and be 55 years of age or older, and your spouse must have either received the exemption or have been eligible for it before their death. Simply apply for the over-65 exemption as a surviving spouse and provide documentation.
Related: Property Tax Relief Measures Approved in 2022 That Can Help You Next Year
4. Protest Your Property Taxes to Reduce the Tax Value of Your Property
Rather than reducing the taxable portion of your property’s value, you can try to reduce the assessed value of your property overall. You can protest your property taxes by contesting what the county (or other tax jurisdiction) has assessed your property value. Lowering this number can reduce your total tax bill across all line items.
The Protest Process
Many tax districts allow homeowners to begin the protesting process online by submitting a form. At this stage, you can present a counter-value of what you think your home’s value is. You can also provide supporting evidence, such as comparable homes’ values or selling prices, proof that your home requires improvements to reach the county’s value estimate, and other evidence that their assessment is wrong.
From there, your county may offer a counter-value that you can accept or decline, schedule an informal meeting with the county appraisal district for a more in-depth conversation, or schedule a formal hearing where you and the county assessor present your arguments to a board of residents. Each county’s processes are slightly different.
Benefits of Protesting Your Property Taxes
Protesting your property’s assessed value is beneficial, even if you only get a nominal decrease in your property taxes. Those benefits include:
- An immediate reduction in property taxes
- A smaller proportion of school district taxes due
- Long-term reductions in property taxes: For example, suppose you file a homestead exemption and successfully reduce your property’s assessed value from $300,000 to $280,000 through a protest. Next year, rather than a maximum possible assessed value of $330,000 (the original value and a 10% increase), your property can only increase to $308,000. The year after, your home’s value might be $363,000 versus $338,800. Even if you only successfully protest your property taxes once, the long-term reduction of the tax value of your property can quickly reach the hundreds of thousands.
Start Reducing Your Tax Bill With Help From Home Tax Shield
Cutting the tax value of your property can be complicated, especially if you don’t have time to file documentation with your tax district or make it to in-person hearings. At Home Tax Shield, we’re here to help you fight back against rising property taxes and do our best to reduce your property’s tax value. Contact us today to get started and see what you can save.