A Guide to Understanding Your Property Tax

Homeowners across the state of Texas pay taxes on their property to support a variety of local public services. Although millions of Texans pay property taxes each year, many misunderstand how their bill is calculated. At Home Tax Solutions we talk to many Texas property owners each day and find that many are confused about the difference between a tax assessment and a home appraisal.

We’ve put together some helpful information for you to better understand your tax assessment, how your bill is calculated, and what you can do if you disagree with your assessment.

What is a tax assessment?

A tax assessment is an opinion of value that is used as the basis for calculating how much a homeowner will pay in property taxes. The higher value given to a home, the greater a homeowner will pay in taxes. In nearly all cases, a tax assessment is based on the market value of a home.

Contrary to popular belief, a tax assessment is different from a home appraisal. Although a home appraisal also provides an opinion on the market value of a home, it has a different purpose. An appraisal is typically used to determine the value of the collateral for a home mortgage, as well as other purposes.

How is a tax assessment conducted?

The exact procedure a property assessor follows is dependent on state laws and regulations that govern assessment administration. However, generally speaking, an assessor’s job is to organize a community’s properties into different groups based on similar characteristics. He or she then analyzes comparable sales of those properties to determine an average sales price for each group, which becomes the basis for arriving at an assessed value. However, an assessor must also take into account individual aspects of a home to arrive at a final value, including square footage, geographic location, and renovations. Assessments are done on a regular basis to take into account changes in the value of properties.

Assessed value versus tax rate

Once an assessed value is reached for a home, municipal governments apply a predetermined tax rate formula to arrive at a homeowner’s final property tax. This formula is designed to ensure that a community has enough revenue to fund all budgeted public spending.

Opportunities to appeal

If you disagree with your tax assessment, there are steps you can take to have it reviewed. However, it’s important to note that you cannot contest your property tax rate, only the assessed value of your home. If you believe the assessor incorrectly calculated the square footage of your home or the number of bedrooms, missed a major renovation, or valued your property incorrectly, you may appeal through a formal process. Some municipalities review appeals by mail only, others review appeals at board meetings or by phone. Make sure to check with your local assessor’s office to find out how the process works in your area. If you believe an assessor incorrectly valued your home and the appeal process allows for it, one option is to hire an appraiser to provide an alternative valuation. An appraisal completed by a qualified appraiser can be an effective tool in the appeals process, and may provide sufficient evidence to modify your assessment. However, if you are unhappy with your assessment simply because your neighbor pays a different amount in taxes, that is likely not enough for a successful appeal. Remember, a lot of factors in addition to location impact a property assessment, including upgrades and renovations.

Also, don’t forget that there are statutory deadlines for appealing an assessment that vary from state-to-state. Read your assessment notice carefully as the dates for appeal are generally included. You should check with the assessment office or its website to confirm the exact deadline. The assessor’s office will also tell you if you are able to appeal in-person, by mail, or by phone. However, you should be aware that the property owner is ultimately responsible for demonstrating that the assessment is incorrect. To do so, you should document the factual reasons that the assessment is inaccurate, such as the assessor miscalculated the number of bedrooms in your home. Simply claiming that your taxes are too high will generally not result in a successful appeal.

Property taxes are a significant cost for homeowners. Yet many misunderstand the assessment process, which ultimately determines their tax bill. It is critical to understand how the process works to make informed decisions and take the appropriate steps should you disagree with your assessment, including potentially hiring an appraiser.

How property taxes are handled in Texas

Property taxes in Texas are collected by county tax assessor-collectors, who attach a lien to every residential and commercial property on Jan. 1, which stands until the bill is paid.  If taxes remain unpaid after June 30, taxing entities can add as much as 42 percent in penalties and interest.

Most counties refer delinquent property tax accounts to an attorney for enforced collection.  At this point, the property owner may incur an additional penalty of up to 20 percent of the total taxes, penalties, and interest due. The attorney also has the legal authority to foreclose.

Once a property tax bill is delinquent, a licensed tax lien financing company can offer the property owner the option of transferring the lien to a private entity in return for a payment plan, known as a tax lien transfer. This enables the property owner to pay back the financing company over time. Home Tax Solutions for example, offers payment plans of up to 10 years.

Tax lien transfers ensure that the taxing entities get the tax funds they need for schools, streets and other services.

The tax lien transfer option has kept thousands of Texas property owners out of foreclosure by providing them with much needed flexibility in paying off their property tax bills. Licensed tax lien financing companies in Texas transfer approximately 15,000 liens annually, helping owners resolve delinquencies and stay in their homes and businesses.

About Home Tax Solutions

Home Tax Solutions offers property tax payment plans in Texas, creating affordable and flexible payment plans for people who are delinquent on their property taxes. With a property owner’s consent, Home Tax Solutions pays the property owner’s delinquent property taxes directly to the local taxing authority, which then transfers the tax lien to Home Tax Solutions. Additionally, Home Tax Solutions provides tax lien solutions nationwide by working closely with municipalities and government officials to find solutions to unpaid property taxes.

Home Tax Solutions is a privately held specialty finance company headquartered in Dallas, Texas. The company offers property owners an easy, quick, and affordable solution to paying their delinquent property taxes. As one of the fastest growing companies in the industry, Home Tax Solutions remains focused on conducting business ethically, keeping the consumers financial recovery as top priority. For more information, please contact one of our property tax specialists today.