Texas property tax rates have long been a sore spot for property owners throughout the state. It is a widely known fact that Texas has some of the highest property taxes in the country, largely due to the absence of personal income taxes and the fact that property tax rates are set on a local government level rather than a state level.
However, in the wake of skyrocketing home values, homeowners were left flabbergasted at their appraisals, wondering how it would affect their property tax rates. So, who is to blame for the rising property taxes in Texas, what does it mean for homeowners, and are the relevant authorities doing anything to limit the damage?
An exploding real estate market throughout Texas resulted in staggering property appraisal values in 2022, with the major metropolitan areas experiencing double-digit growth in home values.
For example, Harris County (the most populous county in Texas) saw residential appraisals increase by 15 to 30 percent. These jaw-dropping value increases have been attributed to a robust year for the housing market in 2021, caused by low-interest rates, the number of new home starts, and the increased demand for properties in the county. These factors resulted in higher sales prices and, therefore, higher market values. In a news release from early 2022, Roland Atlinger, chief appraiser for the Harris County Appraisal District, said, “We are seeing most residential and commercial properties in Harris County increasing in value this year.” He further stated that in his nearly 40 years in the real estate business, he has “never, ever seen such large increases in market values.”
Harris County was not the sole recipient of these valuation increases either – increased property appraisals were experienced across the board. Eye-popping increases of 25 percent in Bexar County, 20 percent in Tarrant County, 53 percent in Travis County, and 24 percent in Dallas County just scrape the tip of the iceberg. The Chief Appraiser for the Travis County Appraisal District, Marya Crigler, echoed Atlinger’s sentiments, saying, “This is unprecedented for us in Travis County. And I think that same unprecedented appreciation is being seen statewide.”
It is important for homeowners to remember that higher appraisals across a district will not necessarily mean higher property taxes for you. The market value of your home and the taxable value are different amounts, and at least some local governments will have to reduce property tax rates to comply with recent state laws intended to slow property tax growth.
While home values were subject to major increases, and it has been widely reported that some tax rates would also increase, state law dictates that the taxable value for a residence homestead cannot increase more than 10 percent annually. In addition, there are various exemptions, and deferrals available for Texas homeowners to help relieve some of the property tax burdens. It is also the right of every Texas homeowner to protest their property appraisals should they not agree with the amounts presented to them. A number of appraisal districts have online portals that make the process relatively easy and informal, with the option to formally protest to the Appraisal Review Board should you not be satisfied with the outcome.
Playing the blame game has become an easy and habitual part of human nature. Many Texans believe the high property taxes should be blamed on the appraisal district, while others have blamed everyone from Californians to Governor Greg Abbott, Tax legislators, and even the state government (despite the fact that the State of Texas does not levy any property tax).
The fact of the matter is there is no one party to blame. Instead, it is a combination of a variety of factors that co-exist in the Texan economy and political system. The main reason property taxes are so high in Texas is that there is no state income tax. This means that local governments are left to rely on sales tax and property taxes to fund government.
The property tax revenue is used to fund essential resources and public services such as schools, libraries, road maintenance, and emergency services (to name a few). Due to how essential these funds are to each taxing district, it is difficult to find ways to reduce the burden. Public schools, in particular, rely heavily on property tax revenue to fund their operations.
Dr. Charles Gilliland, a research economist who studies property taxes at the Texas Real Estate Research Center at Texas A&M University, said that the only way to institute meaningful property tax reductions would be to find some other revenue source or substantially cut education budgets. “Neither one of those options is palatable in today’s political atmosphere, so that’s how we got into this situation,” he said.
High property taxes are often at the center of discussion for lawmakers, and Texas legislators have tried several ways to slow property tax growth. The state’s homestead exemption, which is the portion of a homeowner’s property value exempt from taxation, was raised, the limit on annual tax rate increases was introduced, and bills are frequently being brought before the court to reduce property tax burdens.
Among some of the measures taken to slow the growth were two laws passed in 2019:
A Texas Taxpayers and Research Association study found that the bills had some effect, showing that had they not been passed, taxpayers in Texas would have had to pay $6 billion more in property taxes in 2022 than they did in 2021. However, the study also showed that while school tax rates have dropped by 13 percent since the bills were passed, taxable property values still rose by 23 percent.
Two more modest property tax relief measures were voted upon and passed in May of 2022 to further combat the rising property taxes. In what Governor Abbott called a “Victory for ALL property owners in Texas,” voters approved two propositions to lower property taxes for homeowners by decisive margins. The first proposition targeted older and disabled Texans, while the second provided modest relief to all homeowners.
While the above laws have, to some degree, slowed the growth of property taxes, it has also called for participants in the 2022 governor’s election to bring forward solutions in hopes of limiting the property taxes in a way that appeals to voters. Abbott and his Democratic opponent, Beto O’Rourke,put up dueling proposals on the matter. Abbott proposed a “taxpayer bill of rights” that would include ideas to make appraisals more transparent, further reduce school property tax rates, and limit a local government’s ability to take on new debt without asking voters first. O’Rourke, on the other hand, reportedly suggested that the state pick up 50% of public school spending, that Medicaid be expanded to relieve overburdened hospitals, and that other measures of bringing in tax revenue should be considered, such as legalizing marijuana.
Furthermore, the Texas legislature has reportedly earmarked $3 billion of its American Rescue Plan Act funds (from the coronavirus pandemic) for “property tax relief” after suing the federal government for the right to use the federal stimulus funds.
This is a lot of information to digest, and while measures are consistently being investigated to reduce property taxes, it appears as though the high taxes – as discouraging as they are – will be a reality for homeowners in Texas for the foreseeable future.
Unfortunately, many homeowners find themselves struggling to pay their annual property tax bill, leading to late payments, short payments, and even non-payment. Delinquency, however, has severe ramifications in the form of sky-high penalties, interest, and even foreclosure.
You can get help paying your property taxes through a property tax loan. Instead of paying off your property tax burden in one lump sum, you will have the flexibility to repay your property tax loan in installments, giving you the financial freedom you need to avoid delinquency without putting yourself under too much financial strain.
Founded in 1946, American Finance & Investment Co., Inc. (AFIC) started by serving the financial needs of El Paso and has since grown to become one of the top property tax lenders in the state of Texas, with a complaint-free track record for over 65 years, with the Better Business Bureau. We offer our clients an affordable, hassle-free way to ensure that your account with the local government tax office is paid in full and will work out a manageable repayment plan for you. AFIC can provide you with an instant quote by completing the form on our homepage. For qualifying properties, we can help you pay off your delinquent taxes and offer you the following benefits:
We pride ourselves on finding solutions to suit the unique needs of our clients. If you would like to discuss our property tax loans, please contact our experienced team at AFIC today.
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