PROPERTY TAX APPRAISALS + NEW HOMESTEAD RULES
In case you missed it, all of the counties in the greater Austin area have now released appraised values for 2022, and they’re high- like super, super high. For many homeowners the appraised value is more than double last year’s appraised value. Williamson County estimates a 40% bump in value, Hays County jumped 44.5%, and Travis County saw a whopping 56% increase in value. One of my personal properties doubled in appraised value, and these rising appraised values have significant consequences for homeowners.
Let’s say your property was valued at $300,000 last year and your property tax rate is 2.21. Your property taxes would be $6,630 total or $552.50/month. If your appraised value climbs to $600,000 your property taxes are now $1,105/month. That means you will have to pay an additional $552.50/month! Now, if you have any exemptions on your property, this brutal scenario may not be so bad. If a home is a primary residence, you can have a homestead exemption that protects you in two ways. First, your appraised value can only be increased by 10%, and you will benefit from a $25,000 exemption on your property tax valuation for school district taxing entities, and other taxing units may also offer a separate exemption of up to 20% of the total value.
This year, a new law went into effect that allows homeowners to file their homestead exemption immediately upon closing on a new primary residence. However, the exemption will not kick in until the following year. Furthermore, the 10% annual cap on increasing your appraised value will not go into effect until you have owner-occupied the home for a full tax year. For example, let’s say you bought a new home yesterday. You can file for a homestead exemption right away. However, you will not benefit from the 10% cap until 2024, after you’ve owner occupied the home for a full tax year starting Jan 1, 2023.
Furthermore, in previous years, most counties would reduce your homes appraised value to the sales price of the home if you purchased the property in the past year. This was an easy protest where you would simply provide a copy of the settlement statement, and they would automatically reduce your appraised value to the sales price. Unfortunately, that is no longer the case. They are doing a time adjustment for the appreciation that occurred from the closing date to the end of year, I heard this was around 1% per year, but I have not been able to confirm with a reputable source.
If you haven’t checked your mail in a while, go ahead and make yourself a stiff drink, before you take a look at your appraised value. You can find links to all the county appraisal district sites below.
In the past, you were able to fight your appraised value by providing relevant recent sales as comparables to illustrate your home's appraised value was not accurate. These days it’s unlikely you will find too many comps to support a reduced value. However, you can still protest your valuation, and illustrate any factors that reduce your homes desirability on the open market and thus the appraised value. Feel free to reach out for comps if you want to tackle this yourself or you can contact a company to do so on your behalf, 5 Stone and Texas Protax are a couple I’d recommend.
If you’re planning to purchase a home in the near future in the greater Austin area, it’s more important than ever to pay attention to a property’s tax rate. Tax rates vary significantly throughout the Austin metro area, and even if appraised values continue to rise, a lower tax rate will mitigate the burn.
