Texas Property Tax Laws That You Need to Know

There are several things that could impact the asking price of your home. You can set the asking price however you want, but in order for your sale to be successful, that price has to be reasonable. 

The market value of your home is determined by its size, features, construction, and finishing materials, along with its overall condition. However, real estate prices are also significantly affected by the state’s property taxes and cost of living. 

Since real estate prices tend to go down when property taxes and cost of living go up, you might want to refrain from posting a “Buy my house Texas” ad on the local listing site. A good rule of any sale is to familiarize yourself with the market beforehand. 

To help your sale, here’s a list of Texas property laws that you need to know before selling your home. 

Texas Property Tax Laws

Texas Property Tax Laws

The Lone Star State is among the nine U.S. states that don’t collect personal income taxes. In addition, it also has no state property tax. Instead, the Texas Constitution and statutory law authorized local governments to administer and collect taxes locally. 

Without statewide tax and no income tax collection, Texas relies almost exclusively on sales taxes, taxation of certain businesses and tangible personal property, and property taxes as its source of money. Local governments use this tax revenue to pay for public services, such as public schools, streets, roads, police, and first responders. 

The Texas Constitution does impose several restrictions and limitations on the ability of the Texas Legislature of governing bodies to impose taxation. Most of these limitations pertain to property taxes and property tax rates, with certain sections clearly prohibiting statewide property taxation. Here are some basic rules for property taxes in Texas:

·        Under Texas law, the taxation of property must be uniform and equal, meaning that no single property should pay more in taxes than its fair share. 

·        All property must be taxed based on the current market value of the property. This is the value of a property for which the property would sell when parties involved are looking for the best possible price, and neither is pressured into selling or purchasing the property. 

·        Properties used for agricultural or timberland purposes are exempt from taxation based on the property’s current market value. Instead, these properties are based on the value of what the property produces, which effectively reduces the tax bill for such properties. 

·        Each property within a county must have a singular appraised value guaranteed by the county appraisal districts. This prevents the local governing bodies from assigning different values for a particular property, as all property must use the same value. 

·        According to Texas law, all property is subject to taxation unless they’re exempt by federal or state laws. These exemptions can be partial or absolute, depending on the property. 

·        Property owners have a right to reasonable notice of increases in their appraised property value, which effectively increases their taxes. 

Overall, the property taxes in Texas are among the highest in the nation, ranking 7th as a state with the highest average property tax rates, currently averaging at 1.80% compared to the national average of 1.07%. However, considering that Texas collects no personal income tax from its taxpayers, the tax burden in Texas remains one of the lowest in the nation. 

Fort Worth Tax Laws

Property and homeowners in Tarrant County are subject to different taxing units responsible for setting the budget for the upcoming fiscal year and establishing a tax rate that would allow the units to meet the revenue goals. 

Though it has to adhere to the Texas Tax Code Chapter 11 when it comes to rules regarding taxation and exemptions, Fort Worth’s local government determines the local taxes for the upcoming tax year. 

Property owners in Fort Worth, Tarrant County seat, have to pay Fort Worth’s city rate of 0.748%, followed by the school district’s rate of 1.378%, which sums up to 2.12% property tax rate in Fort Worth. Add the county’s general rate of 0.234%, and you’ll get a total property tax rate of 2.36% 

If you want to know more about how property taxes in Fort Worth work, check out our Property Tax Guide.

Texas Property Tax Bill Relief

Property tax bill reliefs, better known as property tax exemptions, are among the best ways to reduce your property tax bills and potentially save hundreds of dollars in tax money. 

Texans are eligible for a variety of property tax exemptions, including residence homestead, over-65 homestead, disabled homestead, and disabled veteran homestead. In some cases, Texans could even combine their exemptions, like over-65 homestead exemption, with an exemption for people with disabilities. 

Homestead Exemption

The residential homestead exemption allows you to reduce your tax bill for up to 20% of the appraised value of your primary residential property. However, there are certain limitations that apply to homestead exemptions. The exempted sum from the taxable value can’t be greater than $25,000 or lower than $5,000, and it only applies to primary residences. Secondary residences are excluded from homestead tax exemptions. 

Exemptions for Seniors and the Disabled

Texans that are 65 years of age or older can qualify for an additional $10,000 tax relief for school taxes. In addition, surviving spouses, widows, and widowers aged 55 whose deceased spouse qualified and applied for an over-65 tax exemption can continue to reap the exemption benefits themselves. 

The same rules apply for people with disabilities, as long as the disabled person meets the definition of disabled under the OASDI Act. In addition, elderly citizens with disabilities can apply for both exemptions and enjoy the benefits of both. However, those applications can’t originate from the same taxation unit. 

Disabled Veterans Exemption

The Texas Property Tax System provides partial property tax assistance to disabled veterans, their surviving spouses, and children. The same exemptions are made available to surviving spouses of U.S. armed service members killed in active duty but only apply under certain conditions. 

Home Sales Tax Exemptions

Home sales are taxable up to 20% under the Texas Tax Law, so if you sold your home for $250,000, you owe $50,000 in taxes. However, there’s a legal workaround to paying capital gain taxes on home sales. 

According to Four 19 Properties, which are cash home buyers Arlington home-sellers highly praise, you’re exempt from capital gain taxes only if you sold your primary residence and used your capital gains to purchase a new home of equal or similar value.

In addition to conducting business in Arlington, we buy houses Fort Worth residents wish to sell fast, so contact us if you’re selling a house without a realtor. We’ll appraise your property and offer cash payment regardless of the condition your home’s in. 

responsible for setting the taxes

Who Is Responsible for Setting Taxes? 

Taxes in Texas are assessed and administered by the county, which makes each county independent of one another. Here’s a list of governing bodies responsible for setting taxes: 

The Appraisal District 

The Appraisal District’s Chief Appraiser is primarily responsible for appraising all residential property in the appraisal district’s jurisdiction at a fair market value. Appraisal districts also administer and manage tax exemptions and create the appraisals for taxing units. However, taxation and property tax assistance for religious and non-profit charitable organizations must go through the Texas Comptroller of Public Accounts Office. 

Taxing Units and Jurisdictions

Taxing units and jurisdictions are cities, counties, schools, and other special districts, which are responsible for establishing and adjusting the tax rate. This rate is applied to the assessor’s valuation of your home to develop your tax bill. 

The Tax Assessor-Collector 

Formulating your tax bill is the primary responsibility of the Tax Assessor-Collector. They’ll take the appraisal district’s tax roll and apply the jurisdiction’s tax rate to generate the property tax bill you’ll receive in October each year for the upcoming tax year. 

Appraisal Review Board 

The Appraisal Review Board (ARB) is composed of local citizens authorized to conduct arbitration between taxpayers and the appraisal districts in cases of dispute. The ARB may challenge the appraisal district’s valuation of the property and other actions. 

The Taxpayer

Taxpayers and property owners of residential or business property are responsible for paying taxes and having reasonable expectations that the taxation process is being fairly administered. However, if a taxpayer suspects that his property was unjustly appraised, they may appeal to the ARB. 

Summary

Texas has some of the highest property taxes in the nation, which could adversely affect the valuation of your property. However, the overall tax burden in Texas is one of the lowest in the country, meaning that you’d still get a good valuation of your home.

If you’re looking to sell your property in Texas, contact Four 19 Properties, cash home buyers Arlington taxpayers refer to when looking for fast sales and cash payments, regardless of the condition the property is in. 

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