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Back to Basics – Everything You Need to Know About Texas Property Taxes

Property taxes can be a complex topic, especially in Texas, where the rules and regulations can be a bit different than in other states. In this blog post, we’ll break down the basics of Texas property taxes and what you need to know about them.

What are property taxes?

First, let’s define what property taxes are. Property taxes are a type of tax that is levied on the value of real estate and personal property. The money collected from property taxes is used to fund local government services such as schools, police and fire departments, road maintenance, and other essential services.

In Texas, property taxes are the primary source of funding for local governments. Unlike some other states, Texas does not have an income tax, so property taxes are even more important for funding local government services.

How are property taxes calculated in Texas?

In Texas, property taxes are based on the appraised value of the property. The appraised value is the estimated market value of the property as of January 1st of the current tax year. The appraised value is determined by the local county appraisal district.

Once the appraised value is determined, the property owner’s tax liability is calculated by multiplying the appraised value by the local tax rate. The tax rate is set by local taxing units such as school districts, counties, and cities. The tax rate is usually expressed in terms of dollars per $100 of appraised value.

For example, if a property’s appraised value is $200,000 and the tax rate is $2.50 per $100 of appraised value, the property owner’s tax liability would be $5,000 (200,000 x 0.025 = 5,000).

It’s important to note that property taxes in Texas are assessed annually, so the appraised value and tax rate can change from year to year.

What factors can affect the appraised value of your property?

The appraised value of your property can be affected by several factors, including:

Market conditions: The appraised value of your property may increase or decrease based on market conditions in your area. If the real estate market is hot, the value of your property may increase. On the other hand, if the market is slow, the value of your property may decrease.

Improvements: If you make improvements to your property, such as adding a new room or upgrading the kitchen, the value of your property may increase.

Location: The location of your property can also affect its appraised value. Properties located in desirable areas, such as near good schools or with easy access to highways, may have a higher appraised value than those in less desirable areas.

Age and condition: The age and condition of your property can also affect its appraised value. A newer property in good condition may have a higher appraised value than an older property in poor condition.

What exemptions are available for Texas property taxes?

There are several exemptions available for Texas property taxes that can help reduce your tax liability. Some of the most common exemptions include:

Homestead exemption: This exemption is available to homeowners who use their property as their primary residence. The exemption reduces the appraised value of the property by $25,000, which can result in significant savings on property taxes.

Over-65 exemption: This exemption is available to homeowners who are 65 years of age or older and have owned their home for at least one year. The exemption reduces the appraised value of the property by $10,000.

Disability exemption: This exemption is available to homeowners who have a disability and have owned their home for at least one year. The exemption reduces the appraised value of the property by $10,000.

Veterans exemption: The veteran property tax exemption is a tax break available to Texas veterans who have a service-connected disability. The exemption can reduce the appraised value of the veteran’s property by a certain amount, depending on the veteran’s disability rating. The exemption amount ranges from $5,000 for veterans with a disability rating of at least 10% to a full exemption for veterans with a disability rating of 100%. This exemption is in addition to any other exemptions the veteran may qualify for, such as the homestead exemption or over-65 exemption.

It is important to know and understand the basics when it comes to the property taxes you are paying every year. The rules and regulations, the factors that drive property taxes, and the deductions that are available all add to a complicated equation that makes navigating the systems confusing. Our team at TXPTR is available any time of year to help you save money and make your tax payments on time. Contact a member of our team today to learn more!