Understanding Property Taxes in Texas

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Real Estate

Property Taxes in Texas

In Texas property taxes are an important part of the local tax structure. Currently Texas does not have a State Income Tax so property taxes are assessed and collected at a County Level to support County and Municipal Governments, Public Schools and special taxing units like hospitals and underground water districts. Property taxes are the main sources of income for Public School Districts, 64% of property taxes collected go to support Public Schools. County Government receive 18% and Municipal Government receives 15%. 

Texas property taxes are higher than other States because Texans do not pay a local State or Local Income Tax. On average Texans pay 19% less than the average American in State and Local Income Taxes. 

Taxable Property

Property taxes are levied on real property that includes unimproved land, improvements like buildings and other structures, mines, timber and estates. 

Property Appraisals 

Property taxes are appraised, assessed and collected at a local level, however the Texas Legislature establishes the property tax code and the Texas Comptroller of Public Accounts overseas and audits the property tax system. Appraisal districts are county-wide and responsible for appraising the value of all taxable property with it's county. The appraisal district is also responsible for processing applications for tax exemptions. A 2009 constitution amendment calls for uniform standards and procedures to be used across the state. The Texas Comptroller's office reviews the appraisal standards for each district every 2 years to ensure they are uniform.  

Property Tax Rate Assessments 

After the appraisal district submits it's report on appraised values and exemptions each taxing unit (county, municipal, public school and special taxing units) then set a tax rage and assesses and collects taxes from property owners.

Tax Exemptions 

Tax exemptions decrease the taxable value of a property and the amount of taxes owed. For example a property. Typically the owner of a property must qualify for the exemption by January 1. However exemptions for a disabled person or elderly apply to the full calendar year in which the owner becomes eligible. 

Homestead Exemption

The most common exemption for residential real estate is the homestead exemption. This grants homeowners a $15,000 exemption from school property taxes and a $3,000 exemption from county taxes if the county collects a special tax for farm-to-market roads or flood control. The residential homestead exemption applies to no more than 20 acres. To receive a homestead exemption the homeowner must apply with the County Tax Appraisal office. 

Over 65 or Disabled Person Exemption

Am eligible disabled person or Over 65 or older are elegible for a $10,000 exemption from school property taxes in addition to the general homestead exemption. The eligible property owner may take either the disabled or elderly exemption, but not both. 

Disabled Veteran Exemption

Disabled veterans who qualify for an exemption of $5,000 to $12,000 on a single property. A minimum disability rating of 10% qualifies a veteran for a $5,000 exemption and a veteran with a rating of 70% or more qualifies from a $12,000 exemption. This $12,000 exemption also applies to a veteran who is blind in at lease one eye, missing one or more limbs, over 65 years old with at lease a 10% disability rating. Veterans with a 100% disability rating also receive a total exemption from property taxes on the current residence homesteads.  

Agriculture Exemption

Open space land is appraised according to it agriculture productivity value not it's market value. The property to designated at open space must have occurred on the land 5 of the preceding 7 years. When the property is located in multiple districts an application must be filled for each district. If the lands use changes, the property owner must pay the difference between the taxes paid and the taxes that would have been owed if the land had been appraised on market value for each of the pasted 5 years, plus a 7% interest.  

In Conclusion

The Texas Property tax system is a complex code of rules and laws. Recent years tax rates have increased in many areas to keep up with local government expenditures. For more details please consult your local Taxing Authority or an Attorney familiar with Property Tax Law. 

Allen Deaver Asset Realty