How Texas Does Property Taxes Right: Debunking the Negative Myths

Here’s what you need to know about Texas property tax myths and their truths:

• You may protest your property taxes whether they have increased, decreased, or stayed the same.
• Protesting is not pointless and will not harm you; it is your legal right to ensure fair and equal taxation.
• Appraisal districts may not be able to raise assessed values beyond a cap, but they can raise market values, which will affect assessed values over time.
• The 10% homestead appraisal cap does not protect you until one year after January 1 of the year you claim the exemption.
• Major remodels are not protected by the 10% cap and will raise your property value, leading to an increase in property taxes.
• Appraisal caps can be beneficial, but there is a case for “too much of a good thing.” Some states with higher appraisal caps have shown greater disparity in taxation and harm to the property market.
• The $140,000 homestead exemption only applies to certain portions of your property tax bill, not the entire thing.
• Statewide regulations set by Texas legislation are in place to protect property owners and limit local entities, not to increase property taxes indiscriminately.
• Annual reappraisals by your local county can actually help your tax bill by capturing a more current picture of property value.
• Gill, Denson & Company is ready to help ensure you only pay your fair and equal share of taxes by assisting with your property tax protest from start to finish. 

Texas Property Tax Myths

The Texas property tax system has a poor reputation compared to other states. While there is some fair criticism, there are also myths that cause unnecessary anxiety in property owners. We’re here to set the record straight and help our clients navigate the system with ease while maximizing their property tax savings.

#1: You Can Only Protest If Your Property Value Increased

This is one of the biggest Texas property tax myths, and something our team is frequently asked about. You have the right to protest every year, whether your value has increased or not. If the county determines there is no change or even a decrease, we may still be able to find just cause for a further reduction.

#2: Protesting Now Is Pointless, or Even Harmful

Myth #1 leads us into myth #2, that protesting is either pointless or hurts you somehow. However, the point of protesting is to exercise your right to fair and equal taxation. You can only ever maximize your chances of reducing the county’s assigned value, therefore lowering your property tax bill. And when you work with Gill, Denson & Company, it’s risk-free because you’ll only ever pay a contingency fee if we successfully save you money.

#3: Appraisal Districts Can’t Raise Your Home’s Value Anymore

The reason some homeowners believe protesting is pointless is because of a misunderstanding about capped values. While appraisal districts are legally not allowed to raise a property’s assessed value above a certain limit, this does not affect the market value. The county will still assign a market value each year based on the January 1 status. Your assessed value is then calculated with any exemptions and caps you are eligible for. Over time, even with a cap, that assessed value can steadily increase to follow rising market values.

#4: The 10% Homestead Appraisal Cap Protects You Right Away

The 10% homestead appraisal cap is a huge benefit for Texas homeowners on their primary residence. It limits the amount their assessed value can increase each year by 10%, provided the property’s condition hasn’t changed. This can lead to significant savings year after year, but it does not go into effect right away. It only begins to protect your taxable value 365 days after January 1 of the year you first claim the homestead exemption.

#5: Remodeling Won’t Affect Your Taxes If Your Value Is Capped

Before you agree to a major remodel, thinking it won’t affect your property taxes, consider this. The cap is only valid as long as the property’s condition remains the same. This means that major renovations affecting the property’s market value will be accounted for in your next tax appraisal. While you won’t lose the benefit of the cap entirely, it won’t prevent a natural increase from remodeling or additions.

#6: Higher Appraisal Caps Would Be More Beneficial

Some states have annual appraisal caps, preventing certain properties from seeing an increase above the set limit each year. While Texas offers a 10% cap for homestead properties, other states have even higher caps. Higher caps sound good in theory, but in reality, it leads to disproportionate property taxes from one neighbor to another. It also discourages property owners from selling and new buyers from purchasing. Once the transaction is done, the cap no longer applies, and that property’s appraisal can drastically “catch up” to current market value.

#7: The $140,000 Homestead Exemption Applies to the Whole Tax Bill

Texas homeowners may claim a $140,000 exemption on their primary residence, if eligible. This is also how you can gain access to the 10% homestead cap. However, there is a misconception that the exemption applies to the entire property tax bill. It primarily applies to the school district portion of your bill, although it may apply to other local taxes, as well. Overall, it still provides a significant amount of relief on your annual bill.

#8: Statewide Regulation Leads to Higher Taxes

Some property owners believe that statewide regulations are the reason for higher property taxes and that these things should be managed at the local level. But tax rates are set by local government entities. School districts, counties, and cities determine the annual rates based on their budgetary needs. It’s statewide regulations that help limit those rates and the annual property tax increases that property owners can see. Taxation must also be “equal and uniform” according to the Constitution (Article 8, Sec. 1(a)).

#9: Annual Reappraisals Are Hurting My Property Value

While county appraisers are not infallible and can often overvalue properties, their annual reappraisals are not directly to blame for property value increases. These increases are typically due to higher demand and/or inflation, which lead to higher market values. In fact, a reappraisal can work in your favor if the property value has decreased as of the county’s January 1 assessment date, even if it increases after. 

Waiting longer to reappraise may sound nice at first, but as seen with Tennessee’s 5-year cycle, it can lead to overwhelming increases all at once. Annual appraisals help ensure the equal and uniform taxation requirement by capturing value changes in a timely manner.

What Texas Gets Right About Property Taxes

Now that we’ve debunked some of the biggest property tax myths, let’s focus on some things Texas really does well. 

Property Tax Exemptions

First, there are several property tax exemptions available to Texas property owners. Those eligible for the homestead exemption, aged 65 and older exemption, or the veterans and those with disabilities exemption (to name a few) receive a reduction in their taxable property value. This lowers the base value that certain local tax rates are applied to, providing significant relief on their overall property tax bill.

The Right to Protest

Every Texas property owner has the right to protest their property taxes every year. As we mentioned previously, county appraisers make mistakes sometimes, and not every decrease in value is recorded properly. Protesting the county’s assigned market value or using the “equal and uniform” argument allows property owners to potentially decrease their overall bill. While the process can seem complex and time-consuming, the professional tax advisors at Gill, Denson & Company are ready to assist you every step of the way.

Get started with the team at Gill, Denson & Company today to ensure you only pay your fair and equal share of property taxes.