What Homebuyers Need to Know About Property Taxes in Texas
Texas makes a simple trade: no state income tax, higher property taxes. For homebuyers — especially those moving from other states — that trade shows up directly in the monthly payment, and it surprises people every year. Here is how the system works and how to keep your bill honest.
How the bill is built
Each January 1, your county appraisal district assigns your home an assessed value. Your total tax rate is the sum of rates from every entity that serves your address — the county, the city, and above all the school district, which is usually the largest slice. Combined rates around DFW commonly land in the range of 1.8 to 2.5 percent of assessed value per year.
On a $400,000 home, that is roughly $600 to $830 per month, collected inside your mortgage payment through escrow. Two similar houses in different school districts can differ by well over a hundred dollars a month.
Compare tax rates between neighborhoods the way you compare list prices. The school district line is the big one.
File your homestead exemption — it is free money
If the home is your primary residence, the homestead exemption reduces the taxable value for school taxes and, critically, caps annual increases in your assessed value at 10 percent. Filing is free, done once with your county appraisal district, and in Texas you can now file as soon as you move in rather than waiting for January.
Watch for official-looking letters offering to file it for a fee — that is a junk-mail industry. Never pay anyone to file a homestead exemption.
File the homestead exemption yourself, free, right after closing. It lowers the bill and caps future increases.
Protest season and the new-construction trap
Every spring you have the right to protest your assessed value, and in a hot market it is often worth doing — many homeowners win reductions with nothing more than recent comparable sales. Mark the protest deadline on your calendar; it arrives with your appraisal notice.
One expensive trap: new construction is often taxed on the land alone for the first year. Your initial escrow may be based on that tiny bill, and when the county assesses the completed home, your payment can jump hundreds of dollars a month. Good lenders escrow against the projected full value from day one — ask yours to.
Buying new construction? Insist on escrow based on the improved value, or brace for a payment jump in year two.
We build full, honest tax estimates into every payment quote, so the number we show you is the number you will actually live with. Questions about a specific neighborhood? Call Steve Barton at 214.673.1319 or visit corecommunitymortgage.com.
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