Ask any homeowner — or REALTOR — in Texas and most will say that the state is known for having some of the highest property taxes in the country. That might be stretching the truth a bit, but taxes here are still extremely burdensome.
Depending on the formula you use, Texas ranks 36th in highest property taxes in the country (Tax Foundation) and 30th for overall tax burden (Wallethub), which includes property, income and sales taxes. While the middle of the pack isn’t the worst place to be, it’s certainly not a great position either. And there’s evidence that the property tax burden for Texas homeowners is getting worse. Between 2018 and 2021, the state slid four spots on the Tax Foundation’s property tax structure rankings.
Texas is a state that prides itself on its business-friendly policies. For example, there are no income taxes for workers or corporations. And while property taxes weigh heavily for most homeowners, there are actually no state property taxes. According to the Texas Comptroller office, the state does not set tax rates or collect taxes. All property taxes and rates are set, collected, disputed and settled by local governments. So the friendliness extended to businesses seems to be working. Just look at some of the companies that recently moved or announced a move to Texas, including Tesla and Apple.
At the same time, does all this friendliness come with a price? Say, higher property taxes? That does seem to be the case. The thing is, despite homeowners’ protestations to reduce their skyrocketing tax bills, the money that counties need to operate on a day-to-day basis has to come from somewhere. Again, according to the state comptroller office, “The local property tax is the largest single funding source for community service. Your local property taxes help to pay for your public schools, city streets, county roads, police departments, fire protection and many other vital programs.” The good news is that money raised from these taxes stays local. State government doesn’t get a dime of it.
Right now, there is some relief on the horizon for homeowners — and REALTORS. During the 87th Legislative Session, which recently concluded after a third special session that extended several weeks into autumn, property tax relief was one of Governor Greg Abbott’s agenda items. Senator Paul Bettencourt of Houston authored a bill to allow new homeowners to file for the homestead exemption in the year they purchase property rather than waiting for the following January. The law passed both chambers unanimously and will go into effect immediately for the 2022 tax year. Jaime Lee, director of advocacy communications at Texas REALTORS, says the agency testified in support of the legislation. “It will offer homeowners a way to lower their property’s taxable value and save on their property taxes.”
In the third special session, the Legislature approved another property tax relief bill — also authored by Sen. Bettencourt. This one will increase the homestead exemption for school districts, from $25,000 to $40,000. However, this piece of legislation still needs approval by voters, which will happen in May. According to Lee, “the homestead exemption is provided in the Texas Constitution, and changing that document requires a vote — that’s why it’s on the ballot.”
If it passes, the state surplus will make up the difference in revenue for school districts. And once that happens, homeowners will see a savings of about $176 per year on their property tax bills. While not a lot, it’s something. Expanding the homestead exemption also passed unanimously through both chambers.
Dates Homeowners Should Know
Now that the good news is out of the way, the due date for property taxes is fast approaching. Bills arrived in mailboxes at the beginning of October and homeowners have until January 31 to pay up. Those who can’t pay, or need more time, should inquire about a tax deferral. According to the Travis County tax assessor-collector office, “a deferral allows homeowners to postpone paying their property taxes for as long as they live in that residence.” Applicants may qualify if one or more homeowners is disabled or is 65 or older. Without a deferral, delinquent balances will start accruing penalties and interest starting February 1. And if bills are still unpaid by July 1, local taxing authorities can start imposing even more penalties for legal costs.
At the start of the year, while most homeowners are paying off their property tax bill from the previous year, appraisal districts are gearing up to appraise property values for the next, from January 1 through to April 30. During this time, appraisal districts are also processing exemption applications. During April and May, appraisal value notices are mailed and once they’re received, homeowners have 30 days to appeal. If an owner believes the value assigned to their property by the county is higher than the current market value, they should file an appeal. According to Realty Austin, “When people don’t appeal, the taxing authority accepts that their value is correct which affects all homeowners in a given area.” So by appealing, homeowners help keep residential real estate valuations down to earth — or at least in line with market value. Protest forms can be downloaded from one’s county appraisal district office.
Over the past few years, surveys have shown that reducing property taxes is one of the top three concerns for homeowners in Texas. So it’s nice to know that in a year some folks may describe as turbulent in terms of the economy, politics, and the environment, at least something is going our way.