All About Property Tax Bills: How Rates, Payments, & Escrow Actually Work

Here’s what you need to know about property tax bills – how they work and how to pay them:

• Property tax bills are typically mailed in the fall, based on the property’s January 1 market value.
• Tax rates are set by local government entities, depending on their annual funding needs. Public input and legislative limitations also play a part in the final rates.
• Property taxes are due every January 31; paying late can incur fees, interest, and even a lien on the property.
• You may pay your taxes annually in a lump sum directly to the county or through escrow, accumulated from your monthly mortgage payments to your lender.
• A successful reduction in property taxes from a protest will lower your lump sum or escrow payments.
• The property tax experts at Gill, Denson & Company are ready to assist with your property tax protest.

When Are Property Tax Bills Released?

Texas property tax bills are typically mailed out every October or November. They are also accessible through the local county tax office’s website and the MUD or school district tax assessor-collector’s website, where applicable. The taxes due are based on the property’s value as of January 1 of that tax year. We highly recommend reviewing your bill as soon as you receive it to check for errors before the payment deadline.

How Are Property Tax Rates Set?

You may notice several different tax rates on your bill. Each one is set by the applicable local government entity, such as a school district, county, city/municipality, or special purpose district. The rates are determined based on each entity’s funding needs for that tax year, as well as any caps or limitations set by legislation. There are also opportunities for property owners to give input during public hearings and when proposed tax rates appear on voting ballots.

You can read more about how property tax rates are determined in our previous blog.

When Are Property Taxes Due?

Your property taxes are due every January 31, regardless of whether you decide to protest or not. You may pay early for a discount (in some counties), but any payments made after the deadline will incur penalties and interest charges. These accrue monthly, which can quickly get out of control. In addition, delinquent taxes may lead to the county placing a lien on your property. There are sometimes payment plans available, but you can expect to pay more in interest.

How to Pay Property Taxes

You may pay your property taxes in a lump sum directly to the county by the January 31 due date or through escrow with your mortgage lender. When you make monthly loan payments to the lender, there may be additional payments to escrow for taxes and insurance. Those funds accrue throughout the year, and the bills are paid annually by the lender on your behalf. If you have a mortgage, your lender may require escrow, so check with them first.

Problems may arise when an escrow shortage occurs, meaning there aren’t enough funds in the account to cover the payments. Mortgage servicers will typically perform an escrow analysis once a year to ensure enough funds are being collected for taxes and insurance. Learn more about escrow shortages and how to prevent or remedy them here.

How Does A Property Tax Reduction Affect Payments

Now, let’s say you protested your property taxes and successfully achieved a reduction. How does that affect your payments? If you make lump sum payments annually to the county, the amount due will be lower than if you had not protested. You are required to pay your taxes in full by the deadline, even if you are protesting. In rare cases where a protest is still ongoing after taxes are due, you will receive a refund for the excess amount.

If you pay your taxes through escrow, your monthly payment automatically lowers after a reduction. The lower value is certified and made publicly available on the local appraisal district website, which the lenders sync up to and should check periodically. If your lender is slow to adjust or if you need assistance, please contact our team. We can provide you with certified documents to share with your lender to expedite the process.

Still have questions about property tax bills or how to reduce your next payment? Get started with our team or property tax experts today.