Why Are Texas Property Taxes So High?

Hi everybody it’s Robin McCoy with Keller Williams. I want to chat a little bit today about property taxes… hot topic right now in the state of Texas and in Dallas County. I attended an MLS meeting this morning. It is where Realtors® come together with their affiliates (the people that make up our extended team… home warranty people… insurance people…loan people…essentially everybody that helps make a Realtor® strong). They are the ones that we go to for the answers that we don’t have. We all get together once or twice once or twice a month and we learn something. It’s how we get smart. Today at the East Dallas MLS meeting it was someone from the Dallas Central Appraisal District or “DCAD” as we like to call it.

What is DCAD looking at?

The presenter was there to talk a little bit about property taxes and a little bit about where they get this information. I thought I’d share the high points of what I gleaned from her presentation. This is in no way a complete explanation of them. I am not an expert. However, I do have resources to go to. that help me stay smarter. When we think of an appraisal, we think of in the sense of the sales process meaning you’re buying or selling a home and an appraiser comes out and determines the value of this particular property. They go in the house they look at the house they look at condition, upgrades, etc. It is more about the house in the neighborhood.

What with the appraisal district does, which is really almost an assessment district, they look at neighborhoods. Not just your house. It’s the neighborhood and what your particular house or property would sell for in that neighborhood. That is how they assess its value. They do call this a mass appraisal or they are mass appraisers versus a field appraiser who goes in during the transaction process.

Image of a house sitting on top of a big pile of dollar bills.

DCAD is required by law to assess or appraise or value a property at 100% of what it would sell for on January 1st of that year that they’re doing the assessment or the appraisal. At any point in time that they are plus or minus 5% then they must go in and reassess that neighborhood.

How do they divide up the county?

Now neighborhoods are divided up in a number of different ways. All houses are put in a “class” so a class 2 house may be wood siding or an older home whereas a class 21 may be a newer home with stone and brick. They also use the University of Texas at Dallas (UTD) as a third party resource so they aren’t doing this all themselves. UTD serves as a disinterested third party that is also working on these mass assessments and appraisals. By law they are required to go in and reevaluate a neighborhood a minimum of one time every three years. Now in a market such as ours right now where it is moving up and moving down and is fluctuating quite a bit they’re going in and doing it every year.

Homestead Exemptions

Now let’s talk a little bit about exemptions. In the state of Texas every homeowner is allowed one homestead exemption. And if you’re over 65 you have an exemption. If you’re disabled you have an exemption.  If you’re in an agricultural area you can have an exemption. These are exemptions on your property taxes for your property.

You’re only allowed one homestead so if you have a lake house and a primary residence you can only claim a homestead on one of the two. You must own the property on January 1st of the tax year to file for the Homestead Exemption.

If you are buying a house between now and December 31st you will want to file your Homestead Exemption in January of 2020. Assuming that you don’t close on your house until January 2nd you have to wait until the following January of 2021 to file that exemption. If you bought a house in the last few years and you never did file an exemption for whatever reason you’re allowed to go back two years. Example, if you bought a house in 2014 and for whatever reason you did not file a Homestead Exemption you can only collect two years back. It’s very easy to file this homestead exemption and it is free to do so. You only have to do it one time for the length of time that you own the property.

Where do they get their data?

The presenter was a little elusive on where they get their information. As far as sold data, Texas is a nondisclosure state. One of the Realtors® asked, “Where do you get your sales data. It’s a nondisclosure state.”  The presenter said they get it from various places they have friends that give them the information. I don’t know where they’re getting it and she was not forthcoming with that. That is something that’s out there that we don’t really have a tangible answer for.I get asked that a lot and I still don’t have the answer.

How does it work?

Talking about exemptions I can send you this. If you’re in Dallas County and you file a homestead exemption on your property you will benefit on the county taxes. That’s going to include Parkland Hospital and the community college district. For those county services you’re will get a 20% reduction in the value of the property. If you are valued at $100,000 you are going to now be valued at $80,000.

If you would like this document to help understand, or at least get a better handle on what your taxes are and where that number came from, please reach out.

Let me know how I can help you with any of your North Texas real estate needs. My name is Robin McCoy. License number 0582766  with Keller Williams and I hope you guys have a fabulous day.

Published by Living In DFW

I guess you can take the girl out of Texas but you can't take Texas out of the girl. I was born here in Dallas and moved away at age 8. After 30 years of moving around the United States, as a child with the family and as an adult without them, I finally found myself back in Dallas. Since I returned in 2001 I have sold furniture for Crate&Barrel and Real Estate with Keller Williams. It is my hope to share with you what I love, question, and find interesting here in DFW.

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