Should You Challenge Your Property Tax Assessment in Texas?

Homeowners in Texas must pay property tax each year to the local taxing authorities. In many counties in the Lone Star State, the full tax is due February 1. In some counties, the tax is split, with payments due on December 1 and July 1.

Opening a tax bill can cause shock to many homeowners. But by learning how property taxes are computed in Texas, you can investigate whether the assessed value of your home is too high, and the basis of an excessive property tax bill.

This article describes the tax assessment process in Texas. It will help you determine whether the taxable value of your home is higher than it should be. If so, there are measures you can take to have that value reduced in order to knock some dollars off your property tax bill.

How Your Texas Tax Bill Is Calculated

Texas does not have any state property taxes. Rather, taxes are determined at the county level, depending on the location of your home. Two factors determine your Texas tax bill:

1. the taxable value of your property, and
2. the tax rate (that is, the percentage of the taxable value that the local tax authorities use to compute your property tax).

Below is an overview of these factors.

The process starts when a local public official—known as the county tax appraiser—determines your home's taxable value. In Texas, the taxable value of a residential property is 100% of its "market value"—basically, what it would sell for on the open market. The 100% figure is also known as the assessment ratio.

The taxing authorities multiply the taxable value of your property by the tax rate to arrive at the tax you'll owe. Imagine that the taxable value of your property is $300,000 and the tax rate is $10 for every $1,000 of taxable value. Your property tax for the year will be $3,000 (300 x $10 = $3,000).

Local officials set the tax rate, so it varies depending on where you live. There are 254 counties in Texas, each with its own tax rate. You can view each of those counties, and find information about local assessment policies online. If you're unhappy about the tax rate, there's not much you can do other than vote wisely for the elected officials who determine it, and carefully consider revenue issues that appear on the ballot.

But the story is different for the taxable-value factor. If the taxable value assigned to your home is too high, you might be able to get it lowered—and save a bundle in property tax.

Consider this example: George and Loren own a home in Texas. The county tax appraiser has placed a taxable value of $400,000 on the property. The local tax rate is $10 for every $1,000 of taxable value. This means that their annual property tax is $4,000. George and Loren do some research and conclude that, based on recent sales of comparable homes, the taxable value of their home should be $350,000. They successfully appeal their assessment, thus lowering their tax bill to $3,500 a year. That $500 reduction could add up to $5,000 in savings over a ten-year period.

Get contact information for your county tax appraiser from the Texas Comptroller of Public Accounts.

Checking Official Tax Record for Your Texas Home

The tax record for your home might contain inaccurate or incomplete information, leading the county tax appraiser to place too high a value on it. As explained above, the higher your home is valued, the more county tax you will pay.

Get a copy of the tax record from your county tax appraiser's office. Review the record for errors. Among other things, check the following:

• Is your home correctly classified as residential property?
• Is the size of your home and the lot it sits on correctly stated?
• Does the record accurately list the number of bedrooms and bathrooms?
• Does the record list improvements that were not actually made?
• Are defects in your home—such as a leaky basement or an aging roof—mentioned?
• Is the age of your home accurately stated?
• Is the purchase price accurate?
• Does the record give you the benefit of all the tax breaks that you may qualify for—such as those that may apply based on your income, age, disability, or military service?

If there is incorrect or incomplete information, let the tax appraiser know so that the record can be corrected and the taxable value adjusted. But even if the tax record is accurate, you might disagree with the tax appraiser's conclusion regarding the market value of your home. In that case, you'll need to do more.

Gather Information About Whether Your Home Has Been Fairly Valued

Two types of information can help you establish that the tax appraiser has placed too high a taxable value on your home. The first (and most important) is how the appraiser has treated homes similar to yours within your Texas county and neighborhood. The second is how much homes like yours are currently selling for.

Taxable Values of Similar Properties

Review your county tax assessor's records for homes in your community that resemble your own. The time and effort can be worth it if you believe that your home is truly over-valued. Focus on homes that have approximately the same square footage as yours and are located in the same neighborhood or a nearby one. If similar homes have a taxable value lower than yours, this is strong evidence that you're over-assessed.

Consider this example: George and Loren own a three-bedroom ranch-style home in a subdivision with many homes like theirs. The taxable value of their home is $375,000. They check the records for a dozen similar homes in their subdivision and discover that the average taxable value of those homes is $340,000. What's more, most of the other homes have finished basements, while George and Loren's doesn't. The two have good evidence for claiming that the taxable value of their property is too high.

Sale Prices of Similar Properties

If you bought your house recently, the price you paid is excellent evidence of its current value. Regardless of when you bought your home, however, you should gather information about recent sales prices of similar homes in your community. For advice on gathering this kind of evidence, see Listing Your House: What List Price Should You Set?

Try to avoid gathering data from transactions in which the buyer has purchased a home from a relative, or at a foreclosure or property tax sale. The sales prices in such transactions may be artificially low and won't be convincing evidence of true market value.

You might also consider asking an experienced real estate broker to give you information about recent home sales in your area, based on data from the Multiple Listing Service. You might need to pay a modest fee for such assistance.

If the stakes are high, you can hire a private appraiser to visit your home and provide a written evaluation, though this will be more expensive. A local lender or real estate broker might be able to recommend a qualified appraiser. If not, explore the Appraisal Institute website.

If you recently refinanced your home or took out a home equity loan, the lender probably ordered a professional appraisal. Obtain a copy of it. It may give you powerful ammunition in your quest for a reduced taxable value.

Additional Resources

To learn more about the property tax system in Texas, see Property Tax System Basics, on the website of the Texas Comptroller.