(What Property Taxes Are)

Every year, your property is assessed. What will happen is the County Appraisal District will look at your property and determine how it will be taxed. 

How do they do it? 

A qualified appraiser will take a look at your property very closely. Factors such as size, location, condition, and market trends are used to determine that value. 

And who is it for? 

Technically, it’s for the county to determine how much tax you will pay on the property. This is your property tax.

So you have your assessed value, then what happens? 

This is where the county is going to determine how much you will be paying per year based on various taxing entities.

Counties, cities, school districts, hospitals, and colleges all classify as a taxing entity in this case. Each of these entities has a tax rate. So, for example, let’s say you live in Frisco, Texas. The taxing entities that you would be accountable to pay your property taxes to are Collin County, Frisco, and Frisco ISD. Simply multiply your assessed value by the tax rates of the entities and you will get your yearly property tax amount. 

So now that you know how property taxes work, would it surprise you to know that you are most likely overpaying on yours? 

How is that even possible? Aren’t there teams of people who make sure that isn’t the case? 

Yes and no. But it happens. More often that you think.

And it is a result of over-assessment. 

And there are a couple of ways that this can happen. 

1. Inaccurate Data: Appraisers rely on data such as property dimensions, square footage, and number of rooms to determine the value. If this information is incorrect or outdated, it can result in an over assessment.

2. Lack of Familiarity: Appraisers may not be familiar with specific neighborhoods or local market conditions, leading to inaccurate assessments.

3. Timing of Assessment: Property values can fluctuate over time due to market conditions. If your assessment was conducted during a period of high property values, it may not reflect the current market reality.

4. Subjectivity: Appraisals involve a certain degree of subjectivity. Different appraisers may have different opinions on the value of a property, leading to inconsistencies and potential over assessments.

Put all of these factors together and you may have a wildly different home value than what the truth is. And if it’s higher…you’re going to be taxed more. 

And it’s not even your fault. 

What Can You Do About It?

Feeling stuck in the water? The truth is, you are probably spending money that you don’t have to. In fact, the odds say that you are. 

But you can put a stop to it…

If you suspect that your property has been overassessed, there are steps you can take to challenge the assessment and potentially lower your property tax bill.

Here are 5 steps you need to take if you think you might be overpaying: 

1. Review Your Assessment: Obtain a copy of your property assessment from the local tax assessor's office. Carefully review the details. This includes your: 

• 
  property dimensions
• square footage
• any discrepancies that may affect the value

2. Gather Evidence: Collect evidence to support your claim of over assessment. This can include:

• recent sales data of comparable properties in your area
• professional appraisals
• assessments from independent appraisers

3. File an Appeal: Contact your local tax assessor's office to inquire about the appeals process and the specific deadlines for filing an appeal. Follow the instructions provided and submit your appeal along with the supporting evidence.

4. Attend a Hearing: In some cases, an appeal may involve a formal hearing where you can present your case to a review board. Be prepared to present your evidence and articulate why you believe your property has been overassessed.

5. Seek Professional Assistance: If you're unsure about navigating the appeals process or want expert advice, consider hiring a licensed property appraiser or a tax professional with experience in property tax appeals. 

Why is this so important now? 

Because if your property is overassessed, you could potentially miss out on the largest property tax cut in history. 

Property Taxes will Be Substantially Lower for Texas Residents

Property taxes are about to go down. Way down. 

The Texas house has unanimously voted in approval of a bill that could reduce property taxes by more than 40% of Texas homeowners. 

In simple terms, the package's main focus is to increase the homestead exemption in the state. The homestead exemption is the portion of a home's value that is not subject to property taxes used to fund public schools. Currently, this exemption is set at $40,000 in Texas. However, the package aims to expand it to $100,000.

Before this bill can go into effect, the people of Texas will have to vote. On November 7, there will be an election to determine whether or not this bill goes into place. 

If approved this bill will apply to the 2023 tax bills that are due in January. 

Let’s look at a couple of scenarios for home and business owners: 

Scenario 1: Residential Homeowner

So, what does this look like for a homeowner? 

With the decrease in tax rates for school districts, let's take a look at how that would impact a homeowner. 

We will look at a single-family home in Dallas with a median value of $388,639. With the current exemption of $40,000 which brings the taxable value to 309,775. The current Dallas tax rate is 1.18, so when we multiply our current taxable value by this rate we get $3,655 due in school taxes each year. 

Current ISD Tax Rate

Home Value             $388,639

State Exemption.    -40,000

ISD Discount            -38,864

Taxable Value.         309,775

Tax Rate                    x1.18

Tax Due                     3,655

The proposed plan changes things. Say we have the exact same house. But this time, the proposed exemption of $100,000 is in place. This brings the taxable value down to $249,000. And when we take into account the decreased tax rate of .97, we end up with $2,423 in property taxes. 

That is a difference of $1232. THat is over $100 a month in savings just from school district taxes! 

If that doesn’t get you excited, then I don’t know what will. 

Proposed ISD Tax Rate 

Home Value           $388,639

State Exemption   -100,000

ISD Discount         -38,864

Taxable Value         249,775

Tax Rate                   x.97

Tax Due                   $2,423

Scenario 2: Business Owner/Investors 

Small business owners and Investors are also getting a sweet deal. 

The bill will also provide relief to commercial and rental property owners with properties valued below $5,000,000. Appraisal districts will not be allowed to increase the taxable value of those properties by more than 20%, for the next three years. 

Let’s say there's a businessman who owns an office building in a pretty good location.

His office's value went up by 18% in 2022 compared to the year before, and then it shot up by 48% from 2022 to 2023. 

Actually, since 2019, the value of his office has almost doubled.

Today, his office is worth $638,000. Because this is less than $5 million, the appraisal cap, this would qualify his property. This rule would lower the value they consider for his office, as any property that increases in value by over 20% will not be subject to pay the property taxes on the exceeding amount. 

This year he would not have to pay property taxes on $123,000 in property value.

But…If a property doesn’t get more than 20% more valuable this year, this rule won't make any difference.

As you can see, pretty much everyone is going to see the benefits of this.

Is there anything else in the Bill? 

As a matter of fact, there is! In this massive bill, another proposed change involves the inclusion of three positions on each appraisal district's board of directors, which will be elected by a majority vote during county general elections and serve four-year terms.

This is good news, because now those elected to oversee the appraisals in a county will take on more accountability…leaving more power… to the people. 

Don’t Overpay for Your Property Taxes in Texas

Property taxes can be a significant financial burden for homeowners, and it's disheartening to think that many are overpaying due to over assessments. However, by understanding the assessment process, carefully reviewing your property assessment, and appealing if necessary, you can potentially lower your property tax bill. And not just by a couple of bucks. 

With the new Texas legislation slicing property taxes, your home’s assessment is more important than ever. Don’t be left hanging. You could miss out. 

And by the way, my name is Levi and we get contacted everyday from people just like you moving to Dallas Texas. If you want to be first to know about the Dallas market, this is your channel so reach out when you’re ready to make a smooth move to Dallas.