Do you have to pay property taxes?

All real property (and a lot of personal property when used in business) is taxed annually. This definition extends to primary residences, secondary residences, investment properties, and land in your name. Each county, by statute, places a lien on real property on January 1st of each calendar year so that property taxes are paid; otherwise, the taxing authority may foreclose on the property for non-payment. Property taxes are a massive part of each county’s overall revenue used to meet budget demands. 

All real property owners must comply with this requirement. However, if you are renting property and do not own it, you are not subject to ad valorem taxes. Instead, this responsibility falls on the owner of the property.

How is property valued by your county’s central appraisal district?

Each taxing authority (City, County, School District, Fire District, etc.) sets a tax rate for real property. Every year, all real estate within those taxing districts have their value “assessed” by the county appraisal district. This appraisal is based on any of these three methods:  income approach, cost approach, or sales comparison approach.

Here’s a summary of each:

• Sales Comparison Approach:  The appraiser considers the recent sale prices of similar homes in the same general area. The appraiser then makes adjustments (adds or subtracts value) to arrive at the value of the property being appraised. This approach is how most single-family residential real estate is valued.
  
  
• Income Approach:  The appraiser assesses the value of the property based on the income it would likely create if the property were rented. This option is more commonly used on commercial properties.
  
  
• Cost/ Replacement Approach:  The appraiser determines the value of the property by considering what the appraiser estimates it would cost to build the property from the ground up, including labor and material. The land will also be valued, as in all other methods of valuing.

What factors affect your property taxes?

• Property type (residential, commercial, agricultural, etc.): Governments levy uniform charges to properties of the same type. They factor in size, age, location, construction type, and other determinants when arriving at a collective tax rate for a given property category. 
  
  
• Property use: The use of your property affects how much (if any) you pay to the authorities. For example, properties used for religious practices may be exempt from taxes.
  
  
• Tax appraised value: We earlier stated that ad valorem taxes are flexible based on the value of an asset. An appraised value is one obtained from a licensed inspector’s appraisal of your property. It can arise from any of the methods discussed above (cost/income/market) and determines how much you pay to the authorities. The tax authorities can lower your ad valorem taxes by decreasing the value of your property and vice versa.
  
  
• Tax rate: Authorities levy ad valorem taxes based on their budgets. Each year, they review the needs and wants of their citizens and decide how best they can meet those needs. The money goes into funding transport, community education, and other public sectors and impacts the overall tax rate. Tax authorities can lower your ad valorem tax bill by decreasing the tax rate and vice versa.
  
  
• Homestead or other exemptions (when applicable): Some property owners are exempt from ad valorem taxes. They include those running religious and governmental activities, senior citizens, veterans, and people eligible for the school tax relief program. Please note that in all these cases, you have to fill out an exemption application. More often than not, you’ll only get the exemption if you are a low-income individual or household. Furthermore, it depends on your home state and local municipality.

Can you reduce your property taxes?

Yes, you can use any of these methods.

Exemptions: 

You may be eligible for one of the following ad valorem tax exceptions:

• Homestead: If you use your home as a primary residence, you may be eligible for this exemption. In most cases, people apply for this relief following the death of the homeowner or bankruptcy. It works if you have lived in the residence for more than a year and meet some income requirements. It allows you to protect part of the primary property value from taxes, thus lowering the amount paid each year. Some states allow you to protect as much as $500,000 of the home’s value. However, please note that some states do not offer such protection, and you must check with your state.
  
  
• Senior Citizen: You may get an exemption if you have reached a certain age based on the state. Again, you need to check with the state about the requirements you must meet. Some require to look into your residency and income status.
  
  
• Disabled Person: Most states will request that you sign an affidavit testifying to your disability before you can get this exemption. Tax exemptions, in this case, also extend to home improvements made to make the house more accessible. For example, if you remodel your home with ramps, you can deduct this from your taxes as part of medical expenses.
  
  
• Disabled Veteran: Veterans are also exempt from most taxes, including ad valorem taxes. However, you need to check with your state and see what applies to you.
  
  
• Veteran’s Surviving Spouse: If you are a veteran’s surviving spouse and have not remarried, you could also get some tax benefits. The tax authorities will review your situation and assess if and how much of a waiver they can accord you.
  
  

Update your Tax Card

Your property’s official record could have some errors that may have increased the appraised value. You may want to assess the card and see if anything may catch your eye. For example, the assessor may have noted more bathrooms than your home has, hence the high tax rate.

Remove Outbuildings

In some states, the presence of outbuildings affects your appraised value. If this is the case in your state and you do not need the sheds and buildings outside your home, you can get rid of them. Remember to update your tax card once you do.

Move

Did you know that different counties levy different taxes? If you live in a county with high ad valorem taxes, it might be time to move to another county where you can pay much less. Keep in mind that this may come with a longer commute, but it could be well worth it.

Can you challenge your property tax assessment?

Yes, every Texas property owner may protest the tax assessed value on their property as long as it’s done according to the Texas tax code. You can use the measures below:

Review your Tax Card

Everything on your tax card may be accurate, but you could still be paying more than people with similar properties in your neighborhood. Luckily, tax cards are public information. You can go through a few and see if you’re paying more than what’s standard. This information can help you negotiate a lower rate.

Get an Independent Appraisal

If you disagree with what the county assessor has arrived at regarding your home’s value, you are free to use an independent appraiser. It will cost you a pretty dime. However, if you stand to save thousands of dollars, why not?

As long as you can back your claim with valid evidence, you can wiggle your way out of paying hefty ad valorem taxes.

Is it time to sell your home?

Are you tired of paying high ad valorem taxes each year? Do you want to move but don’t want the hassle of putting your house on the market? At Buying Texas Today, we specialize in buying homes, land, and commercial properties in Texas as they are. No open houses, no cleanups, no extra costs; bring your house as it is, and we’ll take it! Talk to us today, and let’s break down how you can sell your home in as little as 7 days!

Keywords: Ad valorem taxes, Property tax assessment, Property taxes