Own a home in Texas? Property tax payments are unavoidable. Check out this full guide to Texas property tax rates.
With homeownership comes property tax. State and local governments assess this tax on land, buildings, and other relevant categories of personal property, but most people probably know of it because it is assessed based on a home's value.
The amount you pay in personal property tax depends on how much your local assessor believes your home is worth. For private homes, this usually translates to how much it would bring via sale or how much it would cost to produce. Your local or state government (the Texas association) then multiplies that amount by your local tax rate, also known as a mill rate.
Texas Property Tax vs Nationwide Averages
If you are a property owner in Texas, mill rates can make your property tax shoot through the proverbial roof. Texas may be one of only seven states not to charge a state income tax, but it has the third-highest property tax in the United States, according to national data.
Property Tax Information: What Is the Property Tax in Texas
Texas homeowners pay an average of 1.81 percent of their home's market value in property tax, a rate that is only 0.08 percent lower than the highest rate in the country. Information drawn from the 2017 tax year revealed the average property tax in dollars to be $4,660 statewide. Those in Austin had the highest average property tax in Texas at $7,012.
By way of comparison, the US Census Bureau reported in 2017 that the average American household pays only $2,127 per year in property tax.
Texas Property Tax Assistance: How to Find Help
With personal and property taxes, tax season can be a stressful time. Thankfully there are many options available to alleviate the stress of property taxes, specifically, in Texas.
How Can I Get Help Paying My Texas Property Taxes?
- Local Property Assistance & Tax Relief Programs: After checking with local authorities, the property taxing unit in your area in Texas may have the ability to offer programs for tax assistance in the form of payment plans.
- Tax Exemptions: It is advised to fill out an application before May 1st, however, if done in time, the Texas Comptroller allows taxing units to set parameters for partial and total tax exemptions.
- Tax Appeal or Appraisal Protest: This option will involve formal arbitration processes and court years, however, if you believe your county’s assessor made an error in their evaluation of your property, you may file an official tax appeal or appraisal protest.
Your House Taxes in Texas
Property tax averages allow you to understand how your property tax compares to fellow homeowners in your state, but each owner's amount due actually derives from an individual calculation. In Texas, this is a four-step process:
- Appraising Taxable Property. In January, each county's appraisal district estimates the value of every property. Appraisers consider property use, value, the identity of the owner, and who will be paying the property tax.
- Property value hearings. In May, homeowners who disagree with the assessment of their properties can bring disagreements before an appraisal review board (ASRB). This board, which consists of a group of private citizens, then sends information about taxable properties to taxing units.
- Determination of tax rates. This is done by the local taxing units, which for every homeowner includes the local school district and the county. Some jurisdictions may also have the city and other special districts, such as hospital and fire services, as taxable units. Each unit determines a budget and sets a tax rate that it will need to abide by its budget.
- Tax collection. Bills go out to property owners on October 1, but most districts set January 31 of the following year as the deadline to pay without penalty or interest.
The takeaway: As a Texas homeowner, you will pay different property taxes than your neighbors and will likely pay a different amount year to year.
Estimating Your Texas Property Tax
Since Texas real estate taxes are so individual, depending on the value of your home as well as the financial needs of your municipality, it can be difficult to estimate your property tax with any accuracy. Experienced homeowners have an advantage as long as they have kept good records of what their taxes have been in prior years.
If you are a new homeowner, or if you don't have an easy way of finding out what your taxes have been in the past, you can still estimate what you will owe. Here are two avenues to try:
Visit the website of your county tax office and input the appropriate information into their Property Tax Estimator. In Travis County, for example, they will ask you for information about your districts, exemptions, and home value.
- Visit the Texas Comptroller of Public Accounts, which publishes all reported tax levies from districts, counties, and cities across the state. If you look at properties that are similar in value to yours, you can get an estimate of what you might owe.
- If you're feeling adventurous, there are some independent personal finance websites that provide automated tax estimates. Be wary, however; these are not affiliated with any official government entities.
Your Texas Property Tax Rate Information
Property taxes are determined by home value because, theoretically, people who can afford higher-value homes can afford higher taxes. In Texas, however, the high property tax rate means that many families are facing bills that they can't afford.
In the summer of 2018, a North Texas newspaper reported property tax bill increases of 40 percent or higher over the last eight years, a rate that has led some families to question whether they can afford to stay where they are.
Several months earlier, the same newspaper had shared the story of a Fort Worth widow whose pension was no longer enough to cover the rising property tax on her home. Finances forced her to move to a smaller home near the Arkansas state line, four hours away from her daughter, grandchildren, and great-grandchildren.
It is important to remember that these stories, and others like them, come from a state with no income tax. Even without that expense, homeowners are finding property taxes in Texas to be a burden.
You Don't Have to Move
Many homeowners believe that their only choices are to pay their property taxes or move, but there is another way.
A sale-leaseback allows a homeowner to sell his or her property, converting all of the equity he or she has built up to cash, but still stay in the home as a renter. The seller can continue to pay rent until he or she is ready to repurchase the home or relocate.
Texas Property Tax FAQs:
- How much are property taxes in Texas?
The average property tax rate in Texas is 1.80%. This is currently the seventh-highest rate in the United States. Breaking this out in dollars, if your home is valued at $200,000, your personal property taxes at the average rate of 1.80% would be $3,600 for the year. - Are property taxes higher in Texas or California?
The only exception that Californians need to be aware of is property tax. California's average effective property tax rate is just 0.72% – among the lowest in the country. In Texas, they'll pay 1.9%. - Does Texas pay property tax on homes?
No. Texas has only local property taxes levied by local taxing units. The state does not have current local tax records on each property and its ownership and does not set your property's value for property taxes. - What are property taxes due in Texas?
When Are Texas Property Taxes Due Exactly? The final Texas property tax due date is January 31st every year. Technically, your property taxes are due as soon as you receive a tax bill. However, you have until January 31st to pay without accruing interest fees or penalties.
Key Takeaways
Texas property tax payments may be unavoidable, which means it's crucial to understand exactly what and why you're paying. Talk to a financial consultant to figure out if a sale-leaseback might be a good option to help alleviate your property tax costs.
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