Texas Property Taxes 101

The Texas Constitution establishes the right of counties to assess and collect property taxes from property owners. The Texas Constitution also establishes protections from unfair property taxation, namely that taxation must be equal and uniform.

This means that properties with similar characteristics like size, location, use, construction, age, and more must be valued similarly for property tax purposes.

As a result, each year, over 250 counties across the state of Texas face the monumental task of valuing every parcel of real estate within their jurisdiction.

This responsibility typically resides with the Central Appraisal District (often referred to as the “CAD”) which ultimately determines the taxable values of real estate for tax purposes.

During the first few months of the year counties use mass appraisal techniques to assign market values, appraised values, and assessed values to each property, based on the value a ready, willing, and able buyer would have paid for the property (less applicable exemptions) as of January 1st of the assessment year.

“Mass appraisal” refers to the processes used by Appraisal Districts to appraise real estate (for tax purposes) at scale. The processes use individual property characteristics, neighborhood-specific information, available sales data, and more to create statistical models for property values.

CADs are therefore required to follow the Uniform Standards of Professional Appraisal Practice when using mass appraisal technology to ensure that the same appraisal methods and techniques are used to assess similar properties. Since counties are legally obligated to appraise property values at least once every three years, most CADs use mass appraisal technology to efficiently assess the value of properties within their county.

Depending on the type of property, CADs may use any of the following approaches to establish an appraisal value:

Once the value of a property has been established, the tax rate can be applied to calculate the total property tax bill. The following formulas are most commonly used to calculate your property's taxable value and how much you will owe in property taxes.

While there is no Texas state property tax, county and local governments determine property tax rates, and use revenue generated from property taxes to fund public services such as schools, roads, emergency and first responders, libraries, parks, public works, and more. Since Texas does not have a state income tax, county budgets depend on property taxes for revenue. As a result, Texans face some of the heftiest property tax rates in the nation.

Despite relatively high average property tax rates, the Texas Comptroller has established several forms of property tax relief - including partial or full property tax exemptions, property assessment protests, and property tax deferrals, and more.

Property Tax Exemptions

Depending on the type of exemptions, property owners in Texas are able to receive partial, and sometimes total exemption from appraised values for certain property taxes. Partial exemptions provide homeowners with a fixed percentage or dollar amount that is removed from the assessed value a property is taxed upon. Total exemptions may exclude the property’s entire appraised value from taxation. While each county is required by the state to offer certain exemptions, the dollar amounts or percentages for each exemption are decided on the county level.

The vast majority of property tax exemptions require property owners to submit an application to the appraisal district responsible for assessing real estate in the county the property is located in.

The Texas homestead exemption is the most common property tax exemption state-wide. The residential homestead exemption allows all qualifying property owners to receive certain reductions to the assessed value of their primary residence. Properties that receive the homestead exemption for two consecutive years also receive the homestead exemption “cap”, which limits year-over-year increases in a property’s assessed value to no more than 10%.

The “Over 65 exemption” provides homeowners who meet the age requirements with the ability to freeze the amount of property taxes paid to school districts, and occasionally, some local or county taxes.

Individuals with disabilities that meet defined criteria set by the Federal Old-Age, Survivors and Disability Insurance Act can also receive exemptions that can freeze school district, local, or county taxes as well.

Veterans with a 100% disability rating caused by a service-related injury may also receive total exemption from property taxes. For more details on exemptions visit our exemptions blog or the Texas Comptroller's website.

The best part about protesting your property tax assessment in Texas is that Texans are legally protected from having their property’s taxable value increased as a result of protesting their assessment. This means protesting your property taxes in Texas is a low-risk way to ensure that you're not paying more than your fair share in property taxes.

If you receive an assessment notice for your property that you believe is too high, it is your right as a taxpayer to file a protest with the Appraisal Review Board (“ARB”) to defend your claim of overassessment. Furthermore, the burden of proof falls on the ARB to defend their assessment of your property's value. This means that if you believe there is sufficient evidence to prove your assessment should be reduced, or that there may have been errors in assessing your property, it's in your best interest to file a protest.

While every property owner in Texas is allowed to personally protest their property taxes, you may also appoint a third-party representative to manage your protest for you. Property tax protest services typically file a protest on your behalf and will also request that you sign Form 50-162: Appointment of Agent for Property Tax Matters which gives authorization to represent your property in protest hearings. If you are representing yourself, you will need to file a Form 50-132: Notice of Protest with your county's ARB. The deadline for filing for a protest in Texas is May 15th, or 30 days from the postmarked date listed on the appraisal district notice.

Following the successful submission of your filed protest, you will receive a written notice from the ARB providing the date, time, place, and subject matter for your formal hearing with the ARB. Texas Tax Code requires the ARB to notify you at least 15 days before your protest hearing.

The appraisal district is also obligated to send you the Comptroller's Property Taxpayer Remedies document no less than 14 days before your hearing. This documentation will also include copies of the information the CAD will be using to support their assessment at the protest hearing.

You or your representative may also request an informal conference with the county appraisal district to settle the protest before your formal hearing. If you are unable to come to a resolution in the informal conference then you are still able to continue your protest with the ARB.

Formal hearings provide both the property owners or representatives as well as the chief appraiser an opportunity to present their evidence as to why the property's assessed value is accurate or inaccurate. This can be achieved by using sales comps, recent purchases, and documentation showing diminished value due to property damage or deferred maintenance. Upon hearing both sides, the ARB will make a decision on the assessed value of the property. This decision is binding for the tax year being protested.

It can be time-consuming and confusing to appeal property taxes in Texas. Ownwell can handle the entire appeal process on your behalf. Our team of local experts will put their intimate knowledge of your county's appraisal districts policies to work in order to build an appeal that can maximize your chances at getting a property tax reduction.

Information accurate as of August 8, 2022

Sources: Texas Comptroller’s Office, Texas Constitution and Statutes, The Appraisal Foundation
https://comptroller.texas.gov/taxes/property-tax/basics.php#:~:text=Texas%20has%20no%20state%20property%20tax.&text=The%20state%20does%20not%20set,you%20and%20your%20local%20governments.
https://comptroller.texas.gov/taxes/property-tax/valuing-property.phphttps://comptroller.texas.gov/taxes/property-tax/exemptions/https://comptroller.texas.gov/taxes/property-tax/protests/