Property taxes in Texas have always been skyrocketing. When compared to the other states in the United States, Texas ranks third in the list. Texans who strive to own a property of their own not only just pay the cost of the building but will also have to bear the property taxes. This makes it difficult for owners of the property to find money to pay. Property taxes can become frustrating if not dealt properly. But why are property taxes so high in Texas? Let’s take a detailed look at it.
Why are property taxes high in Texas?
States that depend on the revenue from property taxes to fund services usually have a higher tax rate. The Texas law allows the local taxing units to use the property taxes collected for schools, hospitals, roads, etc. There are three major aspects to be taken into consideration to understand why property taxes are high in Texas. One is the source of revenue, second who sets the tax rate, and finally the increasing home appraisal values. Let us take a look at all the aspects.
• The source of revenue
The state of Texas depends a lot on property taxes because the state does not have any income tax as such. As the state does not get money from income tax or sales tax it automatically relies on property taxes to fund for the services. This in turn increases the property taxes above the average.
If you are waiting for a property tax reform, then it might happen only if a state income tax is implemented or if the sales tax is increased. If the state receives funding from the above-mentioned taxes for local services, then the dependency on property tax would reduce which in turn would result in lower property taxes.
• Who sets the tax rate?
Another major reason why property taxes are high could be because they are set locally. The state does not frame your property tax bill, it is the local taxing unit that does. This makes it difficult for state officials to regulate the tax rate. There are a few things the state government can do to reduce the rates, pass bills to make the regulations firmer on the hikes, make residents vote on the hike, or increase state funding for education which plays a major role in a Texans property tax bill.
• Increasing home appraisal values
If you own a property in Texas, you must have noticed that the value of your house has been increasing every year. Why is this? It is because the average appraised value of your property is increasing i.e. the percentage of property tax will not increase but the bill will. If you feel your property taxes are way too high you can always opt for a tax protest.
Tax delinquency rate
When a taxpayer fails to pay his property taxes on time, he/she is imposed to pay a penalty. As explained earlier Texas hugely depends on property taxes and when a taxpayer fails to pay, it affects the local services. Hence, the delinquency rate has been increased with the hope that the taxpayers would make the payments on time. Even though this has pushed property owners to make payments on time, it has become a burden for those who were already finding it difficult to pay.
The solution
There are a few steps you can take as a property owner to reduce your tax bill. You can apply for exemptions or challenge the assessed value of your property with the ARB. You can do this on your own else hire a property tax consultant. To know how effective a property tax consulting firm would be in protesting your Texas property taxes check out my article.
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