Property Tax Questions in Texas

Texas Property Tax

Property taxes -- also called ad valorem taxes -- are locally assessed taxes. The county appraisal district appraises property located in the county, while local taxing units set tax rates and collect property taxes based on those values. Property taxes provide more tax dollars for local services in Texas than any other source -- they help pay for public schools, city streets, county roads, police, fire protection, and many other services.
There are three main parts to the property tax system in Texas: An appraisal district in each county sets the value of property each year. A chief appraiser is the chief administrator and operates the appraisal office.

A citizen board called the appraisal review board, settles any disagreements between a property owner and the appraisal district about a property's value.

Local taxing units -- city, county, school, and special districts -- decide how much money they will spend by adopting a budget. Next, the units set tax rates that will raise the revenue necessary to fund their budgets. The adopted budgets and the tax rates set to fund the budgets determine the total amount of taxes that a person will pay.

The property tax year has four stages: appraising taxable property, protesting the appraised values, adopting the tax rates, and collecting the taxes.

January 1 marks the beginning of property appraisal. What a property is used for on January 1, market conditions at that time, and who owns the property on that date determine whether the property is taxed, its value, and who is responsible for paying the tax.

Between January 1 and April 30, the appraisal district processes applications for tax exemptions, agricultural appraisals, and other tax relief.

Around May 15, the appraisal review board begins hearing protests from property owners who believe their property values are incorrect or who did not get exemptions or agricultural appraisal. When the ARB finishes its work, the appraisal district gives each taxing unit a list of taxable property.

In August or September, the elected officials of each taxing unit adopt tax rates for their operations and debt payments. Several taxing units tax your property. Every property is taxed by the county and the local school district. You also may pay taxes to a city and to special districts such as hospital, junior college, water, fire, and others.

Tax collection starts around October 1 as tax bills go out. Taxpayers have until January 31 of the following year to pay their taxes. On February 1, penalty and interest charges begin accumulating on most unpaid tax bills. Tax collectors may start legal action to collect unpaid taxes on February 1.
No. Texas has only local property taxes levied by local taxing units. The state does not have local tax records on each property and its ownership and does not set your property's value for property taxes.
All taxable property will pay county and school taxes. If the property is located inside a city's boundaries, you may also may pay city taxes. Special taxing units -- junior college, hospital district, road district, and others -- may also tax your property.

Property Tax Exemptions

You may apply for homestead exemptions on your principal residence. Homestead exemptions remove part of your home's value from taxation, so they lower taxes. For example, your home is appraised at $50,000, and you qualify for a $15,000 exemption, you will pay taxes on the home as if it was worth only $35,000.
No, only a homeowner's principal residence qualifies. To qualify, a home must meet the definition of a residence homestead: The home's owner must be an individual (for example: not a corporation or other business entity) and use the home as his or her principal residence on January 1 of the tax year. If you are over-65, the January 1 ownership and residency are not required.
A homestead can be a separate structure, condominium, or a mobile home located on owned or leased land, as long as the individual living in the home owns it. A homestead can include up to 20 acres, if the land is used as a yard or for another purpose related to the residential use of the homestead.
You must file an application with the county appraisal district between January 1 and April 30 of the tax year. You may file late-up to one year after you pay your taxes or they go delinquent, whichever is first. Once you receive the exemption, you do not need to reapply unless the chief appraiser sends you a new application. In that case, you must file the new application. If you should move or your qualifications end, you must inform the appraisal district in writing before the next May 1. A list of appraisal district addresses and phone numbers is available online.
There are several types of exemptions you may receive.

School taxes: All residence homestead owners may receive a $15,000 homestead exemption from their home's value for school taxes.

County taxes: If a county collects a special tax for farm-to-market roads or flood control, a residence homestead owner may receive a $3,000 exemption for this tax. If the county grants an optional exemption for homeowners age 65 or older or disabled, the owners will receive only the local-option exemption.

Age 65 or older and disabled exemptions: Over-65 and/or disabled residence homestead owners may qualify for a $10,000 homestead exemption for school taxes, in addition to the $15,000 exemption for all homeowners. If the owner qualifies for both the $10,000 for over-65 homeowners and the $10,000 exemption for disabled homeowners, the owner must choose one or the other for school taxes. The owner cannot receive both exemptions.

Optional percentage exemptions: Any taxing unit-including a city, county, school, or special district-may offer an exemption of up to 20 percent of a home's value. But, no matter what the percentage is, the amount of an optional exemption cannot be less than $5,000. Each taxing unit decides if it will offer the exemption and at what percentage. This percentage exemption is added to any other home exemption for which an owner qualifies. The taxing unit must decide before July 1 of the tax year to offer this exemption.

Optional over-65 or disabled exemptions: Any taxing unit may offer an additional exemption of at least $3,000 for taxpayers age 65 or older and/or disabled.

Property Appraisal

If a property is located in a taxing unit on January 1 for more than a temporary period, the property is taxable. State law makes certain properties exempt from taxation-either automatically or by taxpayer application.
A rendition is a form a property owner may use to report the taxable property he or she owns on January 1 to the appraisal district. The rendition identifies, describes, and gives the location of the taxable property. An owner may also give an opinion of the property's value on the rendition form, but it isn't required.
You must file a rendition of business personal property that you own. Before the recent legislation, there was no penalty for non compliance. For the 2004 tax year, there will be a 10% penalty for a late or absent business personal property rendition. In addition, there is also a 50% penalty for filing incorrectly, or evading taxation by not rendering.
You must file a rendition with the appraisal district after January 1 and no later than April 15. The chief appraiser may extend the deadline to May 15 if you request an extension in writing and can show good cause for needing the extension.
The appraisal district determines the value of all taxable property in the county as of January 1 of the tax year. The appraisal district must repeat the appraisal process for property in the county at least once every three years.

For example, the value of a home is an estimate of the price a home would sell for on January 1. The appraisal district compares a home to similar homes that have sold recently and determines the home's value.

The appraisal district also uses other appraisal methods to appraise types of properties that don't often sell, such as utility companies and oil leases. These methods include the cost approach-what it would take to build the property again, less depreciation-and the income approach-what an investor would pay for the property with an anticipated return.

The chief appraiser will send you a notice of appraised value, telling you what the appraisal district believes is the value of your property. The notice includes a notice of protest form and explains how you can file a protest with the appraisal review board if you disagree with the district. The chief appraiser must mail a notice by May 15 or as soon thereafter as possible.

The notice of appraised value is sent if any of the following three circumstances exists:

  • the value of a property is higher than it was in the previous year;
  • the value of a property is higher than the value the owner gave on a rendition; or
  • the property wasn't on the appraisal district's records in the previous year.
  • If the value difference in (1) is $1,000 or less, the appraisal district directors can instruct the chief appraiser not to send the notice.
Property owners' taxes are based on the most current year's market value minus applicable exemptions. The appraised value of a residence homestead for a tax year is limited to the lesser of either its market value or the sum of the market value of any new improvements and 110 percent of the appraised value of the preceding year. The 10 percent increase is cumulative - that is, 10 percent times the number of years since the property was last appraised. Therefore, if a homestead increases in value by 20 percent in two years, all of the increase can be added to the appraisal roll. A limitation takes effect for a residence homestead on January 1 of the tax year following the first tax year the owner qualifies the property for the residence homestead exemption. The limitation ends on the January 1 of the first tax year that neither the owner nor the owner's spouse or surviving spouse qualifies for the homestead exemptions.

District Court Appeal

Once the ARB rules on a protest, it sends a written order by certified mail. If you are dissatisfied with the ARB's findings, you have the right to appeal its decision to district court in the county where the property is located. Before filing, you should consult with an attorney to determine if the case is a good one. Within 45 days of receiving the notice of determination from the ARB, you must file a petition for review with the district court. You also must make a partial payment of taxes-usually the amount of taxes that aren't in dispute-before the delinquency date.
Under specific situations, you may protest after the normal protest deadline.

You may protest failure to receive a notice that the appraisal district or appraisal review board (ARB) was required to send you. You must file this protest before the delinquency date and you must not allow your taxes to go delinquent.

You may protest that the appraisal district appraised your property at least one-third higher than its market value. You must file this protest before the delinquency date, and you must not allow your taxes to go delinquent. You may not protest late for this reason if the property was subject to an earlier protest for the year.

You may protest for the correction of a clerical error, multiple appraisals, or including property on the appraisal roll that should not have been included. This type of late hearing protest may include the current year and the four previous tax years.

You may ask the chief appraiser to agree to do a "joint motion to correct." If both the chief appraiser and you are in agreement on the late change, then the ARB will approve the change. If the ARB rules in your favor, it will instruct the chief appraiser to notify the taxing units about the change. If you paid the taxes, the taxing units will send you any refund for the change on the appraisal roll for your property.
You must file a rendition of business personal property that you own. Before the recent legislation, there was no penalty for non compliance. For the 2004 tax year, there will be a 10% penalty for a late or absent business personal property rendition. In addition, there is also a 50% penalty for filing incorrectly, or evading taxation by not rendering.


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