Here's How Your Property Tax Bill Is Calculated In Central Texas

Apr 26, 2019

As homeowners in Travis, Williamson and Hays county receive their property tax appraisals this month, it should not come as a shock to see the appraised value of their homes has gone up. Home values have climbed consistently for a decade.

The shock may come at the end of the year, when property tax bills are due. It’s at that moment property owners ask themselves: "How did they come up with this figure?"

A Numbers Game

There are more than 750,000 housing units in Travis, Hays and Williamson counties combined. There are far fewer appraisers, so taxing districts use a statistical model to do the assessments.

Appraisers review sales and market valuations and compare them to a computer model that factors in location, size of the home, whether there are added features like a garage, land value, estimates of materials used to build the home and depreciation.  

“Generally speaking, that is the equation for how to calculate or estimate what your value is,” said Will Wiggins, a partner at North Texas Property Tax Service. Wiggins was the Travis County Appraisal District’s assistant director of residential appraisal for two years and helped launch the statistical model there.

Two Values

There are two values on your property tax statement: the market value and the assessed or appraised value. Why two?

Texas law allows homeowners to reduce the taxable value of their homes by $25,000 under the homestead exemption; the owner is not taxed on that portion.

The homestead exemption also limits how much the taxable value of your home can go up each year.

“The law states that any homestead exemption tax liability is limited to no more than a 10 percent increase in taxable value,” Wiggins said.

There are additional exemptions at the county and city level, depending where you live.

Over time in a hot housing market like Austin, those limitations usually keep the taxable value lagging the market value. The median price of a home in Austin is $375,000, according to March data from the Austin Board of Realtors. It doesn't get much cheaper if you look farther out: The median home price is $305,000 in Bastrop, Caldwell, Hays, Travis and Williamson counties. That is up nearly $100,000 since 2013.

But since the market value will continue to creep up, it could make it difficult to protest your home’s tax value when you compare it to other homes nearby.

Location, Location, Location

A lot of what drives a home’s value is the land it’s on. It's cliché, but location is the main factor in how a home is valued. And that goes beyond nearby amenities or schools; Austin’s zoning and building restrictions limit what can be built where, creating scarcity in parts of the city and forcing values up.

Eight years ago, more than half the homes for sale in Austin could be had for less than $200,000. Now, less than 9% of homes sell at that price point, according to Texas A&M University's Real Estate Center.

Still, the market value is usually higher than the number you’re actually paying taxes on – and that number can be lowered.

The Right To Appeal

Property tax appraisals are not the last word. Anyone can ask their taxing appraisal district to take another look at a property. Travis and Williamson counties allow online protests. Bastrop allows online protests in certain cases. Caldwell and Hays counties require filing a written notice of appeal.

The State Comptroller's Office has a step-by-step “video” on how to present documentation for a property tax appeal.

If this all seem too much, there are professional services that can help. Many of the services will take a percentage of the amount your home's taxable value was reduced.

The deadline to protest tax appraisals is May 15.