Texas Property Taxes

[REWahoo]

For those of you owning real estate in Texas, what has been your experience with annual increases in property taxes? I was pleasantly surprised when I got my bill this month to see the increase was very small, less than 1%.

We built the house in 1998 and taxes have increased 16% since we moved in. There has been no reappraisal of the property value, maybe attributed to living in a rural area in a county with substantial growth of residential real estate. Guess the added revenue from new homes has kept the appraisers away from looking existing home values.

But I'm worried I may be in for a very rude surprise down the road.

 

[HFWR]

Don't have the numbers at my fingertips...

My tax rate has been fairly flat, but the value has climbed yearly, from $113000 in 2000, to $130000 in 2005, resulting in a tax bill rise of $200-300.

Current rate is ~$2.70, effective about $2.15...

 

[Ol_Rancher]

When I lived in Rollingwood, Texas (small 'city' carved out of west Austin) I live in a 2300 sq ft home that sold for $335,000  in March of 2004. It was tax appraised at around $278,000 if memory serves. My property taxs paid in '04 were a bit over $6,000 and scheduled to be $6,600 in '05. This was because there is a 10% increase/year cap. The new owners would be way north of that figure.

Austin condo - (606 sq ft) good cenrtal location by park and entertainment
2005
Assessed Value - $57,759
county - rate = 0.4872 = $281
city        rate  = 0.443  = $255
school    rate = 1.623 =  $937
hsp dist            0.0779 = $45
Com Coll dist    0.900   = $52
total = $1,571

Now in a rural Texas hill county with a cost basis for 1100/sq ft home (cost basis = $123,000) a guest cabin w/ loft, a 3 bay (12 ft each) pole barn and 25 acres has a total cost basis of $372,000. all new construction with many extras. Acreage is Agricultural exempt and the county does not know the home exists. I am under no obgliation to report it. No building permits needed since I tied into already existing well and septic. They are aware of the cabin and barn. (Shhhhhhhhh). Total tax bill  $800 for '05.

'04 taxes   home not built
county tax - 57,420 total assessed
                    52,420 taxable
                    0.4691 tax rate
                    245,90 tax amount
School tax - 1.60 tax rate
county ESD - 0.06 tax rate
ground water dist - 0.029 tax rate
total tax bill = $938
   
'05 taxes  phantom home built 
county tax - assessed vakue $57,420
rate = 0.4691 = $34                 
school
rate = 1.60 = $245
WWC dist - rate 0.290 = $17
Emer ser. Dist - rate = 0.06 = $33
total tax bill = $815
3% discount if paid in October

Decrease due to homeowners exemption in '05, early payment, state sales tax offset (reduction)

 

[wabmester]

Current rate is ~$2.70, effective about $2.15...

Why are property taxes so high in Texas? Other states, like WA, also have no state income tax, but our property taxes are a bit over 1% of assessed value.

 

[Jarhead*]

Why are property taxes so high in Texas?   Other states, like WA, also have no state income tax, but our property taxes are a bit over 1% of assessed value.

Just a guess on my part, but believe it would have to do with the value of the property in Texas, versus value in your area.

Comparing Calif. versus Texas, for instance, a home that costs $900,000 in Calif. for a new buyer would generate a tax of approximately
$9200.

That same size home with close to the same amenities could be purchased in Texas for say
$400,000.  (The difference could be more dramatic depending on area).

My guess is that there is probably not a great deal of difference in the taxes being generated per unit versus the two states.

Realize you were talking about your area versus Texas, so the difference wouldn't be as great, but the same idea seems to make sense.

 

[SteveR]

The actual amount of taxes on RE can be different from one state or even one county to the next due to how the value of the house is determined as well as the tax rate per $1000 of valuation.

My taxes have gone up over 20 % in the past two years. The tax rate has gone up some due to additional school taxes but the biggest increase is due to the higher and higher "market value" used to determine the taxes due. Actual sales prices of house in my area were on the increase until a couple of months ago. Now it seems that nothing is moving and the prices are starting to drop slowly. I am seeing this in other areas here too. Prices are starting to level off and maybe even dip a bit as RE sales are slowing down some now.

The tax rate here is still half of what it was in IL where I lived. The same house I have here would have been at least 2X as much there and the taxes 4X as much.

 

[busman]

Enjoy it while you can. Our valuation is up 19.9% since 2000. Probably not too bad, but it still stings, especially since they seem to hit it hard every few years instead of gradually increasing over time:

2001 +9.1% (after protesting 13.2% increase)
2002 -0.4% (a pleasant surprise...maybe they felt sorry for the 2001 bump!)
2003 +1.9%
2004 no change (also a pleasant surprise)
2005 +9.3% (protest was denied)

Note that we haven't made any improvements during this time.

 

[eytonxav]

My valuation has gone up since 1993 by 32.5%, while my property taxes increased by 91% (no home improvements) to $12.8K.  Depends largely if you are in a high growth area; robin hood school district; and whether the town has any commercial offset.   The other thing that amazes me in Texas, is that older homes never see any depreciation. 


The Tarrant County Appraisal board are specialists in appraising above market levels. In my neighborhood, many people moved into homes that had unfinished bonus rooms that were not factored into to TADs sq ft assessment for the home.  These rooms were subsequently finished off, but TAD never adjusts the Sq Ft on the books, and this tends to distort the price per sq ft for the entire neighborhood, especially for those that had accurate sq ft assessments.

The other thing I hate about Texas is the Robin Hood school funding system; we have seen our local school system go down the drain as our tax $s are being diverted to the state to help poorer school systems.  This system has been determined to be unconstitutional as it is a defacto income tax, but since the law makers can't agree on an alternative funding scheme, we jsut keep paying into Robin Hood.  This Texas legislature is such a joke!!!

 

[Nords]

The other thing I hate about Texas is the Robin Hood school funding system; we have seen our local school system go down the drain as our tax $s are being diverted to the state to help poorer school systems.

Hawaii's school system IS part of the state, and its teachers are state govt employees... no "local" school taxes here.

 

[Texas Proud]

I have been screwed in the last few years... first, my rate is up to 3.14...

The value has increased a lot the last few years... The '02 dip was winning a protest, but then they up me so much that I was below the value and protesting would not do anything.... and I do NOT have a valuable house

00 10%
01 9%
02 -6%
03 10%
04 10%
05 3%

 

[JPatrick]

When DW and I decided to look into relocating to Mo, my neighbor said "you're crazy, they have real estate taxes, income tax and personal property taxes". Texas is a bargain. 
Okay- - -So I ran the numbers.
In MO I buy a house that is valued at $75K more than my  TX house. I will have to pay MO income tax on most everything I make.
I will have to pay personal property taxes on 2 fairly expensive cars, 1 classic car, and a $20,000 boat.

I can pay all of that in Mo for about $800 less that my TX real estate taxes.
Moral of that story of course --things ain't always as they seem.

The truth is, once you escape the large TX cities, your tax life is much better.

 

[wabmester]

Yeah, who was the guy who came up with the idea of a property tax? Tax me for something that generates no income and for which I have to constantly spend money to maintain. Brilliant.

 

[justin]

Yeah, who was the guy who came up with the idea of a property tax? Tax me for something that generates no income and for which I have to constantly spend money to maintain. Brilliant.

tax philosophy: tax in an equitable manner, according to ability to pay. Wealthy people make more, spend more and own more property - therefore, higher income taxes, sales taxes and property taxes for the wealthy.

 

[wabmester]

tax philosophy:  tax in an equitable manner, according to ability to pay.  Wealthy people make more, spend more and own more property - therefore, higher income taxes, sales taxes and property taxes for the wealthy. 

Yeah, tell that to all of the fixed-income retirees whose modest houses have appreciated to astronomical levels due to the real estate bubble.   Ability to pay should be based on income, nothing else.    If you sell an appreciated property, *then* tax the suckers.   What's the deal with the crazy home cap gains exclusion?   Repeal the exclusion, repeal property taxes, and tax property sales to make it revenue neutral.

 

[justin]

Yeah, tell that to all of the fixed-income retirees whose modest houses have appreciated to astronomical levels due to the real estate bubble. Ability to pay should be based on income, nothing else. If you sell an appreciated property, *then* tax the suckers. What's the deal with the crazy home cap gains exclusion? Repeal the exclusion, repeal property taxes, and tax property sales to make it revenue neutral.

Your proposed method might work. Dunno.

Taxing sales would reduce liquidity in the housing market, IMHO. Also, where do you propose the fixed-income retirees move TO after they sell their appreciated house? Different city, state, country? Many states have property tax breaks for elderly (65+).

Honest, fair taxing jurisdictions should set tax rates honestly and fairly. If the assessed tax base doubles in value, then the tax rates should be cut in half in order to produce the same revenue. I think some taxing jurisdictions may look at the boom in house valuations as a winning lottery ticket. Keep the tax rate the same, and when the tax base doubles, your municipality gets to spend twice as much money!

 

[SteveR]

RE taxes are to cover the ineffeciency of state and local governments and to pay for schools.  

Personally, I would like to see a head tax for schools.  If you don't have kids under 18, you pay no tax.  If you do, then you pay tax on each one you have under age 18.  That to me is the only fair way to do it.  I hate paying to educate my neighbor's 5 kids and there are a lot of those kinds of neighbors here.  If their property is assessed the same as mine, they pay the same tax regardless of how many rug rats they have spawned.

 

[wabmester]

Also, where do you propose the fixed-income retirees move TO after they sell their appreciated house?

The problem right now is that they are forced to sell if they can't afford the annual property taxes.   Taxing the sale instead of the property would mean that they don't have to sell their appreciated house.    Tax the estate when the property changes hands.

Many states have income- or age-based property tax deferrals, but that's just a kludge.   And since states and local gov'ts get the property tax, this thing is impossible to fix unless you coordinate changes at both the state and fed levels.    And we all know how well state/fed agencies coordinate.   

 

[Nords]

RE taxes are to cover the ineffeciency of state and local governments and to pay for schools.  

Personally, I would like to see a head tax for schools.  If you don't have kids under 18, you pay no tax.  If you do, then you pay tax on each one you have under age 18.  That to me is the only fair way to do it.  I hate paying to educate my neighbor's 5 kids and there are a lot of those kinds of neighbors here.  If their property is assessed the same as mine, they pay the same tax regardless of how many rug rats they have spawned.

You don't even want to get into the system that the states have worked out with the Feds for military people (non-residents) sending their kids to public schools...

Again not every state has locality taxes, and Hawaii pays for its schools through the state taxes.

A neighborhood with a good school is considered more valuable than a neighborhood with no school. So having to pay school taxes can actually deliver a boost to your property value.

 

[justin]

RE taxes are to cover the ineffeciency of state and local governments and to pay for schools.

Personally, I would like to see a head tax for schools. If you don't have kids under 18, you pay no tax. If you do, then you pay tax on each one you have under age 18. That to me is the only fair way to do it. I hate paying to educate my neighbor's 5 kids and there are a lot of those kinds of neighbors here. If their property is assessed the same as mine, they pay the same tax regardless of how many rug rats they have spawned.

Are you opposed to an educated citizenry?

Under the terms of your proposal, we might as well abolish the public school system. The neighbor with 5 kids would be paying tens of thousands a year to educate his children. Why not opt out of the tax and send em to private school? What about the poor family with 5 kids in the inner city? Where are they going to get the tens of thousands of dollars to pay their head tax?

As conservative as I am, I still prefer our existing structure for school taxation. A head tax for children would be extremely regressive and untenable for most families. By spreading the tax burden across the whole tax base, you have many decades to fund the education of the children you may have. An educated populace benefits everyone, and will increase the tax base in the future. (If the government makes the pie bigger, then it can take smaller slices)

You've already had the opportunity to send your kids to public school. Now that you would no longer have to pay tens of thousands of dollars per year, of course you are in favor of taxing others! (maybe I'm being cynical)

 

[ProfHaroldHill]

regardless of how many rug rats they have spawned.

I'd bet that you're a former rug rat yourself . . .

HH

 

[SteveR]

I'd bet that you're a former rug rat yourself . . .

HH

Yes I am and I have spawned a couple myself.

The only thing I am trying to do is make people think outside the box a little about ways to provide some equity to the system. Why should I have to support couples that willingly create more mouths to feed and educate than they can afford? That is a huge issue here. Couples are almost convinced to have as many kids as possible and that puts a huge strain on the education system and later on the welfare system as all these kids try to find jobs and create their own large families.

I am not opposed to paying my taxes; I have no choice in the matter. But I do resent those that can afford to pay more to educate their herd of kids not being forced to pay a higher percentage in school taxes.

An no Justin, I am not saying I would abandon the inner city kids and deprive them of an education; I am saying that those that are not is such die straits should pay proportionally more if they have more kids. I do not see this as a radical idea; it is still using the Robin Hood concept of taxation but would have an additional twist that would add additional taxes for those that have more than X kids and meet certain income levels so as to not unfairly tax those that can least afford it.

The well off families in the middle class neighborhoods with a kids that exceed the minimum number would pay the "head tax" to help fund education. Everyone esle would continue to pay the usual amount. Maybe this would provide some incentive to LBYM and only have the number of kids you are willing to finance. Just a thought.

 

[Texas Proud]

Yeah, tell that to all of the fixed-income retirees whose modest houses have appreciated to astronomical levels due to the real estate bubble.   Ability to pay should be based on income, nothing else.    If you sell an appreciated property, *then* tax the suckers.   What's the deal with the crazy home cap gains exclusion?   Repeal the exclusion, repeal property taxes, and tax property sales to make it revenue neutral.

Most taxes for people over 65 are frozen in Texas.. so they do not have to worry about gains..

 

[justin]

I am not opposed to paying my taxes; I have no choice in the matter. But I do resent those that can afford to pay more to educate their herd of kids not being forced to pay a higher percentage in school taxes.

Hey, all those kids are going to grow up and pay taxes to support you. I think a growing population will be better for our country's economic vitality. Especially encouraging middle class families to have more kids. They're more likely to go to college and earn more (read: pay more taxes). Make the pie bigger, so the slice the taxman takes is smaller. Besides, those with more kids have bigger houses with more bedrooms, and pay more property tax as a result. Maybe your house is oversized? Or rather, you're able to afford an oversized house.

In summary, taxes suck but somebody has to pay them.

 

[SteveR]

Hey, all those kids are going to grow up and pay taxes to support you.  I think a growing population will be better for our country's economic vitality.  Especially encouraging middle class families to have more kids.  They're more likely to go to college and earn more (read: pay more taxes).  Make the pie bigger, so the slice the taxman takes is smaller.  Besides, those with more kids have bigger houses with more bedrooms, and pay more property tax as a result.  Maybe your house is oversized?  Or rather, you're able to afford an oversized house. 

In summary, taxes suck but somebody has to pay them.   

You are assuming that all these kids will have jobs and contribute to the tax base instead of depending on it for their daily living. I would argue that more is not better. More kids in a family would make it harder for them to go to college, not easier, due to limited finances. More kids just put more strain on the system. Utah is ranked near the bottom on $$ spent per child but it is not because the tax rate is low, it is because there are tons of kids here. Utah has the highest birth rate of any state in the union.

How big are the class sizes in your public schools? Here they frequently reach and exceed 35 in many schools. Ever try to teach that many kids at one time? It is a zoo. The learning process requires more attention to individuals and large class sizes lowers the overall quality of education for all of them.

I think we may agree to disagree on this subject. That is what makes America great.

 

[justin]

I think we may agree to disagree on this subject. That is what makes America great.

I think you have a great idea about allocating the education tax burden based on number of school age kids. However, putting a use tax on government services could completely eliminate the property tax burden (in theory). Charge user fees for parks, fire and police services, mental health care, prisons, etc. However, how do indigents pay for these services? The burden of payment for these services will fall back on the taxpayers. Then you get hit with a double whammy - middle income folks start paying the user fees for themselves and, through their taxes, for the lower income indigent people. A family might have 1 kid, and end up paying $15000/yr for their kid's school head tax (and the unpaid portion of lower income kids' head taxes). An untenable situation for most middle income folks.

My feelings on school head tax: good in theory, but the practical effects would be unacceptable. But we can agree to disagree. And I'll continue to be thankful I live in a rational taxing jurisdiction with respect to property taxes.