Property Tax Blog

A homestead can be a separate structure, condominium or a manufactured home located on owned or leased land, as long as the individual living in the home owns it. A homestead can include up to 20 acres, if the land is owned by the homeowner and used as a yard or for another purpose related to the residential use of the homestead.

Agricultural appraisal lowers the value of land owned by qualified farmers and ranchers. It values rural land based on the land's capacity to produce crops, livestock, or timber, instead of its value on the real estate market. This lower value reduces property taxes on the land.

The land must be devoted principally to agricultural use.

Agricultural use includes production of crops, livestock, poultry, fish, or cover crops. It also can include leaving the land idle for a government program or for normal crop or livestock rotation. Land used for raising certain exotic animals (including exotic birds) to produce human food or other items of commercial value and cutting wood for use in fences or structures on adjacent agricultural land also qualifies. Using land for wildlife management is an agricultural use. Such land was previously qualified open-space land and is actively used for wildlife management. Wildlife management land must be used in at least three of seven specific ways to propagate a breeding population of wild animals for human use. Contact your local appraisal office for details. Timberland must be used with the intent to produce income and be devoted principally to the production of timber. Both agricultural land and timberland must be devoted to production at a level of intensity that is common in the local area. The land must have been devoted to agricultural and/or timber production for at least five of the past seven years. However, land within the city limits must have been devoted continuously for the preceding five years, unless the land did not receive substantially equal city services as other properties in the city.

Your homestead can be a separate structure, condominium, or a mobile home located on leased land, as long as you own it. Your homestead can include up to 20 acres if the land is used as your yard.

A residence may be owned by an individual through an interest in a qualifying beneficial trust and may be occupied by a trustor of a qualifying trust.

If you are not the sole owner of the home, you will receive only a portion of any qualified exemption, based on your percent of ownership. For example, you own a 25-percent interest in a homestead valued at $100,000, for a total value of $25,000. You will receive 25 percent of a $15,000 school homestead exemption, or $3,750

You may qualify for a property tax exemption if you are either (1) a veteran who was disabled while serving with the U.S. armed forces or (2) the surviving spouse or child (under 18 years of age and unmarried) of a disabled veteran or of a member of the armed forces who was killed while on active duty. You must be a Texas resident.

You must have documents from either the Veterans' Administration or the branch of the armed forces that show the percentage of your service-related disability. Your disability rating must be at least 10 percent.

If you are a surviving spouse or child, you must have the veteran's disability records. You may need other documents such as proof of marriage or age.

This exemption ranges from $5,000 to $12,000, depending on the extent of the disability. This exemption is not only for a home -- you can apply it to any property you own on January 1. However, you may pick only one property to receive this exemption for the taxing units that tax the property.

The disabled veteran's exemption is different from a disabled homeowner's exemption.

The deadline to file a formal notice of protest is Monday for most residential property owners in Harris County.

Homeowners can file online through hcad.org, by mail, or by dropping off their form at HCAD’s offices by 5 p.m. Monday. Letters must be postmarked June 1 and online filings must be made before midnight.

The property tax is the primary source of local government revenue in Texas and provides funding for the services provided by counties, cities, school districts, and a variety of special entities such as community colleges, port authorities, hospital and flood control districts, and municipal utility districts. While the total combined state and local tax burden in Texas is among the lowest in the nation, the portion of the tax burden borne by property taxpayers in Texas is relatively high.

Under Texas law, all real property (land, buildings, etc.) and tangible personal property used for the production of income (business inventories, equipment, etc.) is taxable at its January 1 market value unless exempt by law, or unless subject to special appraisal provisions, such as the appraisal of agricultural land at its productivity value.

Three factors determine the total amount of taxes imposed on a property. These include the appraised value established by the appraisal district for the county in which the property is located; the exemptions, if any, to which that property may be entitled, such as the homestead exemption for owner-occupied residential property; and the tax rates set by the governing bodies of the taxing units (jurisdictions) in which the property is located. The purpose of the appraisal is to allocate the tax burden fairly among all taxpayers.

For owner-occupied residential property receiving a homestead exemption, appraised value may be lower than the property’s market value because of what the law refers to as the “homestead cap.” Under current law, while a homestead property’s January 1 market value isn’t capped, that property’s appraised value is capped at a maximum increase of 10% each year. For example, the January 1 market value of a capped residence might be $200,000. However, if that home were appraised at $175,000 on January 1 of the prior year, this year’s appraised value would be $192,500 ($175,000 x 1.10). A residential property qualifies for the cap the year after the year the owner first receives his or her homestead exemption on the property. In our present economy, there are likely to be situations where the market value of a home may have decreased as of January 1, 2009, but the 2009 appraised value may still increase because it was capped last year at less than the current market value.

Here's what Jim Robinson the Chief Appraiser had to say about 2009 property tax values......

 The Harris County Appraisal District (HCAD) began mailing 2009 residential value notices on March 20. Out of 860,000 homes on which valuation was complete on March 20, only 16% were showing an increase in their January 1 market value. Of the remainder, 45% had a reduction in market value and 39% had the same market value as in 2008.

In many, but certainly not all residential neighborhoods in Harris County, we saw declining sales prices during the final months of 2008 and the first two months of 2009. In neighborhoods where foreclosures had become the predominant sales type, considerable weight was placed on foreclosure sales as an indicator of market value.

However, in neighborhoods where few if any foreclosures have occurred, foreclosure sales are not considered to be indicative of the market and their consideration, in such instances, is disallowed by Texas law.

The greatest impact of foreclosures, and the largest number of decreases in the January 1, 2009, market value, occurred in neighborhoods with homes in the $100,000 and under price range. Overall, homes valued at $250,000 or less experienced the highest percentage of actual value reductions, while neighborhoods with homes valued at $500,000 or more received the highest percentage of actual value increases.

There are about 140,000 homes on which 2009 valuation isn’t yet complete. This includes homes with new construction as of January 1 and about 55,000 that sustained varying levels of damage during Hurricane Ike.

Value notices on the majority of these remaining residential properties, as well as for commercial and industrial real property, will be mailed beginning in April. Because business owners have until April 15 to file annual renditions on their personal property assets such as inventory and equipment, business personal property notices won’t be mailed until around June 1.