Important Texas Property Tax Law Updates for 2024

Important Texas Property Tax Law Updates for 2024Our Texas lawmakers were busy during the 88th legislative session, making several changes to the property tax laws. We asked Gill, Denson & Company, a local property tax firm, to summarize the important changes for our clients.

Property Tax Rate Compression

The State of Texas has recently announced a significant initiative to alleviate the burden of property taxes on homeowners. With a surplus of funds totaling $7.1 billion, the state has decided to directly allocate these funds to school districts. The purpose of this allocation is to "buy down" the tax rate for property owners, ensuring that school districts can maintain their funding levels while simultaneously reducing the tax burden on local property owners.

This initiative will result in a reduction of the school Maintenance & Operating (M&O) tax by 10.7 cents per $100 in property value. Given that school taxes typically comprise the largest portion of most property owners' tax bills, this reduction will provide substantial relief to homeowners across the state. Importantly, this tax reduction will benefit all property owners, regardless of the size or type of their property.

By directly addressing the issue of property taxes, the state of Texas is demonstrating its commitment to supporting homeowners and ensuring that they can continue to afford their homes. This initiative is expected to have a positive impact on the housing market, making homeownership more accessible and affordable for individuals and families throughout the state.

Increased Homestead Exemption Amount

In a move aimed at providing substantial relief to homeowners, lawmakers have approved an estimated $5.6 billion in relief through an increased homestead exemption. This exemption, which was previously raised in 2022 from $25,000 to $40,000, has now been further increased in 2023 to $100,000.

This means that homeowners will only be taxed on $300,000 of their property's value, instead of $360,000, as in the case of a property valued at $400,000 by their appraisal district. This significant increase in the homestead exemption will lead to substantial tax savings for homeowners across the state.

The decision to increase the homestead exemption reflects lawmakers' recognition of the challenges faced by homeowners in meeting their property tax obligations. By reducing the taxable value of their homes, this measure aims to make homeownership more affordable and accessible to a wider range of individuals and families.

This increase in the homestead exemption is expected to have a positive impact on the real estate market in Texas. It will make homeownership more attractive, potentially leading to an increase in home sales and a boost to the overall housing market. Additionally, the tax savings realized by homeowners can be reinvested into their homes, further enhancing their value and contributing to the overall improvement of neighborhoods and communities.

Appraisal Cap Pilot Program

In an effort to provide stability and relief to owners of commercial, mineral, and non-homestead properties valued under $5 million, lawmakers have introduced a three-year appraisal cap pilot program. Unlike residential properties, these types of properties do not qualify for the homestead exemption, leaving them susceptible to significant and often unpredictable tax increases.

Under this pilot program, appraisal districts are prohibited from increasing the taxable value of qualifying properties by more than 20% year over year. This measure aims to protect property owners from sudden and drastic increases in their property taxes, providing them with a greater sense of financial security and predictability.

The implementation of this appraisal cap pilot program is expected to have a positive impact on owners of commercial, mineral, and non-homestead properties. By limiting the annual increase in taxable value, property owners will have more certainty about their tax obligations, allowing them to better plan and manage their finances.

Furthermore, this program could lead to increased investment in these types of properties, as owners may be more inclined to make improvements and upgrades knowing that their tax burden will be more stable and predictable. This, in turn, could lead to a revitalization of these properties and a boost to the local economy.

Overall, the introduction of the three-year appraisal cap pilot program represents a positive step towards providing relief and stability to owners of commercial, mineral, and non-homestead properties, ultimately benefiting both property owners and the communities in which these properties are located.

Additional Updates

In addition to the significant changes aimed at directly benefiting property owners, there are several other changes to the property tax system that may have a less direct impact but are nonetheless important. These changes are designed to improve the efficiency and effectiveness of the property tax system, ultimately benefiting property owners and taxpayers as a whole.

One of the key changes is the addition of new seats on the appraisal district board. These new seats will help ensure that a diverse range of perspectives is represented on the board, leading to more balanced and informed decision-making. This could result in a fairer and more transparent appraisal process, benefiting property owners by providing them with greater confidence in the accuracy and fairness of their property assessments.

Another important change is the increased franchise tax exemption. This exemption will provide relief to businesses, including those in the real estate industry, by reducing their tax burden. This could lead to increased investment in the real estate market, benefiting property owners by potentially increasing property values and rental income.

Additionally, the introduction of an online binding arbitration filing system is expected to streamline the dispute resolution process for property owners. This online system will make it easier and more convenient for property owners to file disputes, potentially leading to faster resolution and reduced costs.

These changes, while not directly impacting property owners in the same way as the previous measures, are important for improving the overall functioning of the property tax system. By enhancing transparency, efficiency, and fairness, these changes will ultimately benefit property owners and taxpayers by providing them with a more reliable and effective property tax system.

Should I Protest My Property Taxes?

While the recent updates to the property tax system are certainly a step in the right direction, there are additional steps that property owners can take to ensure they are only paying their fair share of property taxes. One key issue to be aware of is the use of mass appraisal methods by appraisal districts. These methods, while efficient for valuing large numbers of properties, can sometimes lead to inaccuracies due to the reliance on outdated or inaccurate data.

Appraisal districts are often short-staffed and tasked with valuing hundreds of thousands of properties, which can lead to errors in how properties are valued and taxed. As a result, property owners may find themselves paying more in property taxes than they should be.

To ensure you are not overpaying on your property taxes, it is important to take proactive steps to review your property assessment. This can include checking the accuracy of the information used to assess your property, such as the size, condition, and amenities of your property. If you believe your property has been overvalued, you have the right to appeal the assessment and provide evidence to support your claim.

Staying informed about changes to the property tax system and seeking guidance from a real estate professional can help you navigate the complexities of the property tax system and ensure you are only paying your fair share. By taking these steps, you can potentially reduce your property tax burden and ensure you are not paying more than necessary.

We recommend reaching out to a property tax protest firm with local experience to help keep your value in check. Even if you have a homestead exemption, there is a direct benefit to a successful protest, which will lower your taxable value, thereby decreasing your tax bill.

We partnered with Gill, Denson & Company to offer protest services at a reduced rate to our clients. Visit the Get Started page on their website and use the code AUSTINTATIOUS512 to get a 25% contingency fee rate. The best part is you will only pay if they save you money.

Important Texas Property Tax Law Updates for 2024

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