This video explains in detail the consequences of not paying property taxes for Texans.
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Archive for the ‘The Basics’ Category
How the Texas Homestead Tax Cap Works
How the Texas Homestead Tax Cap Works (in simple terms)
For homes that are receiving a homestead exemption, which is any property that the owner considers their primary residence, the appraised value may be lower than the property’s market value because of what the law refers to as the ‘homestead cap’.
Currently the law states that, while a property’s January 1st market value isn’t capped, the property’s appraised value is capped at a maximum increase of 10% from the previous year.
So, lets say
- the market value of someone’s home on Jan 1st is 200,000$
- But, the year prior it was only valued at 170,000$.
- This years appraised value would be 187,000$, which is an increase of 10% from the previous year
But, in some situations, the value of the home can go down while the appraisal goes up.
Lets pretend that next year, something happens and
- the home’s value drops from 200,000$ to 190,000$
- The cap for that year would be 205,700$
- The appraised value would increase from 187,000$ to 190,000$
and taxes would increase even though property value decreased
To qualify the owner must first receive the homestead exemption, then the value must increase more than 10% within a year.
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How to lower your property taxes
Property taxes: we all have to pay them. But there is never a need to pay excessive taxes. These two options will ensure you do not pay beyond your share in property taxes: homestead exemptions and protesting your home’s value.
Homestead Exemption
Be sure you’ve claimed your homestead exemption. Claim it once, and it’s yours for the rest of the time you live in that house or your status does not change. Also look at the other available exemptions to see if you qualify.
What if I’m not sure if I’ve claimed the exemption?
Look your property up. Run an internet search on “[Your county] property tax search.” The result will likely be a .gov site or have the intials “CAD” in the name, like hcad.org, for Harris County. The site you find should have an option to search through properties in your county, and the results will tell you if you’ve claimed the homestead exemption.
Is it too late to claim the exemption for last year’s taxes?
You have until one year after the delinquency date for taxes on your home. File the application for homestead exemption now.
Protest your home’s value
Every citizen has a right to equal and uniform taxation. The craziness in the economy combined with the fact that properties are not appraised every single year makes it likely that your property might be overvalued.
If you think your property is taxed above its value, look at our series on protesting property taxes.
Homestead Exemption Changes
Starting September 1, 2011, the Texas Legislature has added identification requirements to your new homestead application.
When you apply for a homestead exemption, you now must submit documented evidence that you live in your home, namely: a copy of your driver’s license and vehicle registration receipt.
There are alternatives to each. If you don’t have a driver’s license, a state-issued personal identification certificate will do. If you don’t own a vehicle, you can submit a copy of a utility bill in your name for the property.
This new legislation is an effort to prevent illegal exemptions, which increase the tax burden on everyone else.
You will not get a homestead exemption if you do not submit the correct documentation.
If you already have a homestead application, nothing changes for you.
3 reasons to get a property tax loan
1. Avoid hefty fines, foreclosure, and lawsuits.
See our previous article for more on these dire consequenses that begin the instant you are unable to pay your property taxes on time.
See our previous article for more on these dire consequenses that begin the instant you are unable to pay your property taxes on time.
2. Save yourself from the stress of delinquency.
Stress, of course, can cause all sorts of health problems, which will only increase your stress. Eliminate the vicious cycle by getting a tax loan, taking a deep breath, then addressing the underlying causes.
3. Buy yourself some time.
Get your property taxes paid, then take a breath so you can rationally and calmly reassess your financial situation, without worrying about the penalties, fines, and fees that would otherwise be stacking up.
If delinquency is looming over you this year consider a property tax loan through a good lender.
The local services you provide through your property tax
There is no state property tax in Texas. Your property tax is a local tax, going straight to the governing bodies near you. Nearly 4,000 local governments in Texas are the ones collecting and using your property tax, including cities, counties, school districts, and special districts.My home, for example, is taxed by my city, of course, but again for the county, the regional water district, the school district, and the college district.
The different districts use the money for their local needs. Streets, fire protection, police departments, schools, colleges–property taxes are the largest single funding source for these community services. But just what are, exactly, the services you are paying for with your property taxes?
Consider just some of the functions and services of the common governments that use your property taxes:
County
- Restaurant inspections
- Disease control
- Water sanitation
- Courts
- Jails
- Sheriff’s office
- Public buses
- Elections: managing elections and counting ballots
- Animal care and control
- Emergency management
- Emergency planning services
- Trails, parks, and open space
- Wastewater management
City
- Aviation
- Local cable channel
- Animal control
- Consumer health
- Garbage and recycling
- Code compliance
- Provides equipment servics to other city departments
- Fire protection
- Libraries
- Municipal courts
- Parks
- Athletics
- Community centers
- Forestry
- Graffiti abatement
- Building permits and plans
- Inspections
- Neighborhood education
- Police
- Public events
- Streets, lights, signals, markings
- Parking meters and city-owned parking garages
- Storm water, including high water warning flashers, drain cleaning, maintaining drainage canals
- Tap water
School district
- Elementary education
- Secondary education
- School buildings
- Teachers
- Supplies
- Utilities/maintenance
- Administration
- School counselors
- Staff development/training
- Extracurricular activities
- Computers and technology
- Library
- School buses
- Nurses
- Security
- “Improve the lives of homeless and at-risk families” in the school district, sometimes including free meals during summer vacation for the children of such families.
Community college
- College education
- Small business development, including counseling and mentoring
- Continuing education
- High school outreach
- Dual enrollment/early high school
- Instructors
- Academic support
- Student services
- Scholarships and fellowships
- Maintenance of property
- Tuition discounts
ALL property is taxable…except when it isn’t
The Property Tax Code states that all property is taxable if it is located in Texas.
Now, before you start wondering how behind you are in taxes because you didn’t pay property tax on your computer or carpet or carbureator, the tax code continues: all property is taxable unless there is an exemption.
Fortunately, there are quite a few exemptions available. Yes, even ones to cover your keyboard.
The exemptions that apply to most of us are:
- Residence homestead. For the property you live in.
- Family supplies for home use
- Tangible personal property
- Motor vehicle for personal activities or used to produce income
Most of these common exemptions don’t require you to even apply for the exemption–you automatically get it.
So take a deep breath and relax–you don’t have to pay property tax on your dining table. At least, not here in Texas. Other states, we can’t vouch for, though we’ve heard horror stories.
Property Tax Basics: the Official Document
Property Tax Basics is a 33 page document from the Comptroller of Public Accounts. It’s a ver
y useful document and I recommend you flip through it. If you like to have all the basic information in one tangible place, this docu
ment is for you.
The language, as befitting a government document, is occasionally a bit thick, but not as bad as you might expect. It’s not the Tax Code or anything like that.
And the calendar is for 2010, but you can get the 2011 Property Tax Calendar here.
The Property Tax Basics document gives basic information on property taxes, how they work, and how to protest–the same things we cover on this blog, only more official, since the document comes straight from the Texas State Comptroller of Public Accounts, not via your humble FYP LLC Research Editor.
Property Appraisal: the Basics
Before your county or taxing authority can tax your property, they must know how much your property is worth. Appraisal is the process of determining your property’s value.
You have the right to have your property correctly appraised: your property cannot be taxed significantly differently from similar properties in your area.
But how does this appraisal process work? Should you be watching out for some Man From the Government in a black suit and bowler hat slinking around your backyard?
Three Methods
No, our tax money does not pay for mysterious government agents to visit every single piece of property. Instead, three common methods to value property are:
- Market Data Comparison
- Income
- Cost
Market Data Comparison
This is by far the most common method of appraisal for residential property. The tax authority looks at the selling prices of properties similar to yours. Did your neighbor just sell his home for $100,000? Same with the other people in your neighborhood who recently sold homes? If their homes are about the same as yours, your home will be valued at $100,000.
This gives you a good opportunity if you feel like you’re taxed too much. When protesting your appraisal rate, look at the market value of the properties around you.
To compare your home’s appraisal to others, look for homes similar in location, lot size, improvements, age, condition, access, amenities, views, easements, deed restrictions, and legal burdens affecting a property’s ability to be sold.
Income
For properties that make money–like offices, hotels, or retail stores–the income approach to appraisal looks at how much money an investor would be willing to pay for this property as he or she anticipates future income from the property.
In other words, for an office that generates $1 million in income each year, how much would an investor pay to own that office? That amount is the appraised value.
Cost
Some properties are not sold frequently or–like new buildings–are still under construction and therefore have no data on anticipated income or market comparison. For these, the cost method of appraisal is used. The appraiser calculates how much it would cost to replace this property with one equally useful.
Protesting Appraisal
Over-appraisal (making your property taxes higher) is forbidden by law, so you have the right to protest.
To protest your appraisal, look at our post series on how to protest your property’s value.
The 12 Rights of Property Taxpayers
As a property taxpayer, you have a dozen rights to protect you.
Uniform Taxation
You have the right to equal and uniform taxation.
You do not have to pay more than your fair share of taxes.
Uniform Appraisal
You have the right to ensure that your property is appraised uniformly with similar property in your county.
Your property taxes cannot be significantly higher than a similar property.
Appraisal Techniques
You have the right to have your property appraised according to generally accepted appraisal techniques and other requirements of law.
Accepted appraisal techniques include market value (most common), mass appraisal, cost approach, and income approach.
Exemptions
You have the right to receive exemptions or other tax relief for which you qualify and apply timely.
Exemptions, like a homestead exemption, 65 or older/disabled exemption, veteran’s exemption, or charitable organization exemption, lower–or eliminate–your property taxes.
Notice
You have the right to notice of property value increases, exemption changes and estimated tax amounts.
By the end of May, you will get a notice if the value of your property is higher than last year, if the value is higher than your rendition, or if your property wasn’t on the records last year.
Inspect Appraisal Information
You have the right to inspect non-confidential information used to appraise your property.
Protest
You have the right to protest your property’s value and other appraisal matters to an appraisal review board composed of an impartial group of citizens in your community.
Appeal
You have the right to appeal the appraisal review board’s decision to district court in the county where the property is located.
Fair Treatment
You have the right to fair treatment by the appraisal district, the appraisal review board and the tax assessor-collector.
Voice
You have the right to voice your opinions at open public meetings about proposed tax rates and to ask questions of the governing body responsible for setting tax rates.
Petition
You have the right to petition a local government to call an election to limit a tax increase in certain circumstances.
Free Pamphlet
You have the right to receive a free copy of the pamphlet entitled Property Taxpayer Remedies published by the Texas Comptroller of Public Accounts.
You can access this pamphlet online.
