Property Taxes – Q & A

Are you thinking about buying a home in Texas? Property taxes are one of the most important factors to consider before taking the plunge. Here’s an overview of property taxes in Texas and answers to your common questions:

What Are Property Taxes?

Property taxes are annual taxes imposed on real estate owners by local governments. The taxes are paid to the government for the maintenance of schools, roads, public services, and other municipal needs.

How Much Are Property Taxes in Texas?

The property tax you will pay depends on the county or municipality in which you reside. Generally speaking, Texas has some of the highest property taxes in the United States, with an average effective homeowner tax rate of 2.06%. However, these rates can vary greatly from one region to another.

How Are Property Taxes Calculated?

Property taxes in Texas are calculated based on the appraised value of the home and the local tax rate set by the county or municipality. Homeowners can request an appraisal from their local tax assessor to determine the estimated value of their property. Local tax assessors then set the property tax rate based on the home’s estimated value and how much money is needed to cover public expenses.

Who Pays Property Taxes?

The owner of any real estate must pay property taxes to the local government. In some cases, landlords may pass part of the cost on to tenants through rent payments.

When Are Property Taxes Due?

Property taxes are typically due in January and July of each year in Texas. However, some local governments may have different payment schedules. It’s a good idea to check with your local tax assessor for more information on deadlines and payment options.

Are There Any Exemptions or Credits for Property Taxes in Texas?

Yes. Certain qualified individuals may be eligible for exemptions or credits that can help reduce their property tax liability. For example, elderly homeowners who meet certain income criteria may qualify for a homestead exemption that reduces their taxable value by $25,000 or more. Additionally, other programs may be available at the state and local level to help eligible taxpayers save money on their property taxes.

How do property taxes work?

Property taxes are what most homeowners in the United States pay for the privilege of owning a piece of real estate, on average 1.5 percent of the property’s current market value. These annual local assessments by county or local authorities help pay for public services and are calculated using a variety of formulas.

Are property taxes deductible?

Property taxes on all real estate, including those levied by state and local governments and school districts, are fully deductible against current income taxes.

Where can I learn more about appealing my property taxes?

Contact your local tax assessor’s office to see what procedures to follow to appeal your property tax assessment. You may be able to appeal your assessment informally. Most likely, however, you will have to go through a formal tax-appeal process, which begins with an appeal filed with the appropriate assessment appeals board.

How is a home’s value determined?

You have several ways to determine the value of a home.

An appraisal is a professional estimate of a property’s market value based on recent sales of comparable properties, location, square footage, and construction quality. This service varies in cost depending on the price of the home. On average, an appraisal costs about $300 for a $250,000 house.

A comparative market analysis is an informal estimate of market value performed by a real estate agent based on similar sales and property attributes. Most agents offer free analyses in the hopes of winning your business.

You can also get a comparable sales report for a fee from private companies specializing in real estate data. You can also find comparable sales information on various real estate Internet sites.

Are taxes on second homes deductible?

Interest and property taxes are deductible on a second home if you itemize. Check with your accountant or tax adviser for specifics.

What is an impound account?

An impound account is a trust account established by the lender to hold money to pay for real estate taxes and mortgage and homeowners insurance premiums as they are received monthly.

Do all loans require impound accounts?

If you take out an FHA or VA loan, the lender can require an impound account to pay real estate taxes and hazard insurance premiums, as with a standard loan. Most conventional loans do not require an impound account.