Texas homeowners frequently wonder why their real estate taxes appear to fluctuate from year to year. Planning your finances wisely requires understanding the variables that affect how much your property taxes change over time. This guide examines the key players in the Texas property tax system, the formula used to determine property taxes, regional variations in property tax rates, and the state’s initiatives to rein in property tax appraisal rises.
Let’s become acquainted with the leading players and their duties in the Texas property tax system before we examine why property taxes vary:
The task of estimating the market value of properties under their purview falls to county appraisal districts. They gather information, conduct appraisals, and determine property values, which constitute the basis for calculating property taxes.
In the property tax system, tax assessors and collectors—typically elected officials—play a crucial role. They generate tax statements, send tax bills based on property values and tax rates, and collect payments. These representatives guarantee appropriate assessment and collection of property taxes.
School districts, cities, counties, and special districts are a few examples of local taxing bodies that determine tax rates and use property tax money to pay for infrastructure and public services. Variations in property taxes may be impacted by the tax rate chosen by each taxing authority.
To understand why property taxes vary, you must first know how they are calculated. Here’s a quick overview:
The assessed value of a property and the tax rate decided upon by local taxing bodies are used to determine how much property taxes should be paid. The equation is simple: Property Tax Amount = Assessed Value x Tax Rate. Changes in the assessed value or tax rate can cause variations in property taxes. The Assessed Value is the Appraised or Market Value less any relevant exemptions.
Texas’s many regions have varying levels of property taxation. The number of taxing entities, property values, and local government spending are some examples of variables that can explain regional variations. For instance, property taxes may be greater in a city with a strong education system and many special districts than in a rural location with fewer taxing bodies.
Texas has put restrictions on property tax appraisal increases in place to ease worries about rising property taxes:
Texas passed legislation in 2019 capping residential property tax appraisal increases at 10% annually. This means that even if the market value of your property rises, the increase in its taxable of assessed value for property tax purposes cannot exceed 10% in a calendar year. This policy protects against unforeseen, significant tax hikes for property owners. The SB 2 legislature in Texas passed in 2023, also created a three year trial 20% annual increase cap for all non homestead properties.
Effective financial planning depends on a solid understanding of the variables that affect changing property taxes. American Finance and Investment Co., Inc. (AFIC) is here to help if you own property in Texas and have inquiries regarding your property taxes or need assistance managing your property tax payments.
To assist you in navigating the complexity of property taxes, our knowledgeable team can offer recommendations and property tax loan estimates. Contact AFIC to learn more about your alternatives and ensure your property tax payments are manageable and predictable. Don’t let fluctuating property taxes hold you back.
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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