TAX INFO > TEXAS LOCAL PROPERTY TAX

PATH OF A PROPERTY TAX DOLLARS

1. You pay your property taxes to the local tax collector.
2. The tax collector distributes funds to schools, cities and other local governments.
3. Local governments spend funds on: Schools, Roads, Hospitals, Fire Departments, & Other Programs

The Texas local property tax is just that — a local tax, assessed locally, collected locally and used locally. More than 3,700 local governments in Texas — school districts, cities, counties and various special districts collect and spend these taxes.

Several types of local governments may tax your property. Texas counties and local school districts tax all nonexempt property within their jurisdictions. You also may pay property taxes to a city and to special districts such as hospital, junior college or water districts.

Most, but not all, local governments contract with their county’s tax assessor-collector to collect the taxes on their behalf. The Comptroller of the State of Texas conducts an annual property value study for each school district in the state, to measure whether their appraisal districts are appraising property at market value and thus ensuring appropriate school funding. The Comptroller’s study, however, does not directly affect local values or tax collections.

Where Does the Money Go?

The local property tax is the largest single funding source for community services. State government receives no benefit from these local taxes. Your local property taxes help to pay for your public schools, city streets, county roads, police departments, fire protection and many other vital programs. In Travis County property taxes support 119 local government agencies including 21 cities, 14 emergency districts, the county, the hospital district, the junior college, 48 municipal utility districts, 1 road district, 15 school districts, and 17 water control improvement districts.

Who Does What?

Your local property tax system has several main components.

Property Tax Process
OFFICE: ROLE:
County Appraisal District (CAD) The constitution requires that taxation be equal and uniform and that property owner’s pay a fair share of the property burden in proportion to their property’s value. Ensuring this fairness and determining the fair market value of property is the role of the appraisal district. The appraisal district determines the market value, what a property would sell for, as of January 1st of each tax year. For example, a mobile home is worth less than a mansion, so a mobile home should pay less tax than a mansion (“in proportion to value”). Appraisal districts collect relevant characteristics data for each property it appraises. Construction cost and recent sales data are used to build mass appraisal models to determine the fair market value of each property based on its characteristics.

Appraisals are just the first step in the property tax equation. The next step in the equation is the tax rates that are determined by the taxing units. If government spending does not change then, as the appraised values go up, the tax rate goes down, so that the total amount of taxes collected stays the same as last year. This is known as the effective tax rate. Any tax rate above the effective tax rate increases the property tax burden.

Appraisal Review Board A board of local citizens, appointed by the county administrative judge, that settles disagreements between you and the appraisal district about your property’s value.
Local Taxing Entities Set budgets and property tax rates.
County Tax Assessor Collector In many counties, local governments contract with this official to collect all property taxes due in that county. The assessor-collector then transfers the appropriate amounts to each government. Although some taxing units may contract with an appraisal district to collect their taxes, the appraisal district does not levy a property tax.
TAXING UNIT Decide which services to provide and how much money they must spend to provide those public services. Property tax rates are then set to generate enough revenue to meet the budgetary needs. Some taxing units have access to other revenue sources, such as a local sales tax. School districts must rely on the local property tax, in addition to state and federal funds.

Changes in property values do not increase or decrease the total amount of taxes paid to a taxing unit; that is determined by the taxing unit’s budget and the tax rate they set. Total taxes collected increase only when government spending increases.

Effective Tax Rate- A calculated rate that would provide the taxing unit with approximately the same amount of revenue it received in the previous year on properties taxed in both years. This rate calculation does not include the impact of additional tax revenue resulting from new construction.

Rollback Tax Rate- Tax rate level that allows the taxing jurisdiction to collect 8% more taxes, not including debt repayment, than the previous year. This is the maximum tax increase allowed by law without triggering an election to “rollback” the taxes.

Adopted Tax Rate- This is the tax rate that was adopted by the taxing unit for the year.

 

When Do They Do It?

The property tax process for each tax year includes a series of steps, as follows:

Brief Property Tax Calendar
Date(s) Event
January 1 CADs are required to appraise property at its value on this date. A lien attaches to each taxable property to ensure property tax payment.
January 1 - April 30 CAD completes appraisals and processes applications for exemptions.
January 31 Taxes due to local taxing units (or county tax assessor-collector, if acting on their behalf).
February 1 Local taxing units begin charging penalty and interest for unpaid tax bills.
April - May Appraisal districts send notices of appraised value.
May 1 Appraisal review board begins hearing protests from property owners.
July 1 Local taxing units may impose additional penalties for legal costs related to collecting unpaid taxes.
July 25 Appraisal districts certify appraised values to taxing units
August - September Local taxing units calculate and effective and rollback rate, publish notice of public hearings on taxing unit budget and tax rates, and adopt final taxing unit budget and tax rate.
October 1 Local taxing units (or county tax assessor-collector, acting on their behalf) send tax bills to property owners.

 

What Does the Texas Constitution Say?

The Texas Constitution sets out five basic rules for property taxes in our state:
1. Taxation must be equal and uniform. No single property or type of property should pay more than its fair share. The property taxes you pay are based on the value of property you own. If, for instance, your property is worth half as much as the property owned by your neighbor (after any exemptions that apply), your tax bill should be one-half of your neighbor’s. This means that uniform appraisal is very important.

2. Generally, all property must be taxed based on its current market value. That’s the price it would sell for when both buyer and seller seek the best price and neither is under pressure to buy or sell. The Texas Constitution provides certain exceptions to this rule, such as the use of “productivity values” for agricultural and timberland. This means that the land is taxed based on the value of what it produces, such as crops and livestock, rather than its sale value. This lowers the tax bill for such land.

3. Each property in a county must have a single appraised value. This means that the various local governments to which you pay property taxes cannot assign different values to your property; all must use the same value. This is guaranteed by the use of county appraisal districts.

4. All property is taxable unless federal or state law exempts it from the tax. These exemptions may exclude all or part of your property’s value from taxation.

5. Property owners have a right to reasonable notice of increases in their appraised property value.

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