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Texas - How the Real Estate Market Impacts
Property Taxes

by Foy Mitchell, Dallas, May 2015


Texas has been one of the most productive and fastest growing areas of the United States, both in population and economy for several years now. This is good news if you are in the business of real estate. But how do you feel if you aren’t planning on selling and taking advantage of this booming market? Somewhat apprehensive?


Truth in Taxation


Rising values carry with them the portent of rising property taxes. Texas is one of the few states that have an active statutory requirement that “taxes be equal and uniform.” It also has an agency (the Texas Comptroller’s Property Tax Division) to regularly monitor the efforts of local appraisal authorities to insure they are complying with the law concerning appraisals and uniformity.


Texas law has provisions under sections of the Property Tax Code called “Truth in Taxation," that attempt to require a taxing authority to adjust their tax levy in accordance with specified limitations. The focus of this law is to keep a tax agency from using rapidly growing property values as a revenue generator beyond a reasonable level of increase.


Under this law, an entity can raise their tax rate up to 7.99% without the threat of having citizens file a petition for a tax rate rollback. If they wish to raise the rate higher, they become subject to a citizen tax rate rollback provision.


One of the problems with this law is that the notice is not published in such a manner as to bring the intentions of a taxing authority to the attention of the public. Often, a taxpayer is not aware of a significant tax increase until they receive a tax bill. At this point, a protest is futile.


Taxpayer Involvement is Crucial


These issues point out the need for taxpayers to maintain a constant awareness of the actions and planned actions of appraisal authorities and state and local government.


Close inspection of Notices of Appraised Value require not only an understanding of how the proposed value relates to actual market value but also how equitable that value is in relationship to other similar properties. And, once the value issue is settled, continued vigilance must be maintained to insure the taxing authorities are adopting tax rates that are not excessive and are in compliance with law.


Rapidly growing property values are good because they indicate a healthy, growing community. Schools, cities, and other governmental agencies that are well funded and able to provide quality and reliable services to their communities help create the climate for strong economic growth.


However, determining what is actually needed by local governments and how tax dollars are spent can only be assured by involved taxpayers.