Here at Ownwell, we take pride in providing Texans with the tools, resources, and information necessary to manage their real estate with confidence. Given the recent changes in Texas property tax legislation, we thought it would be helpful to create a list of the top 6 things property owners need to know about the new property tax legislation.
1: Lower Property Taxes for Homesteaded Properties
Arguably, the most notable change made regarding this new legislation involves changes to homestead exemptions. A homestead exemption removes part of a home's value so that it lowers the property’s taxes. Previously, homestead exemptions reduced a property’s taxable value by $40,000, now it will lower the taxable value by $100,000. For example, with the passing of Senate Bill 2, a property owner with a $300,000 homesteaded property will now see their taxable value go from $260,000 to $200,000 for the year. This exemption increase combined with the compression of the ISD property tax rate will cut the property taxes of an average-priced home by around $1,250 to $1,450 every year. While many Texans have voiced concerns about the decreased ISD tax rates potentially reducing school funding, this legislation does not actually take money away from education. Utilizing Texas’ budget surplus, the Texas legislature voted to offset the loss of tax revenue by public schools by covering the difference with money from the Texas’ Rainy Day Fund.
2: More Predictable Property Taxes
One of the most influential aspects of the new property tax legislation is the introduction of the circuit breaker limitation to Senate Bill 2 (SB 2). What is the circuit breaker limitation? The circuit breaker limitation is a provision of SB 2 which ensures that the appraised value of qualifying non-homestead real properties do not rise too rapidly. The biggest value of the circuit breaker limitation is that it effectively implements a 20% appraisal cap on a property’s previous year's appraised value for property owners who do not have or do not qualify for any exemptions. This provides added protections to home and small business owners so that they do not experience rapidly increasing property values and taxes like those experienced in 2021 and 2022.
3: Enhanced Convenience with Digital Documentation
Prior to the passing of House Bill 1228, there was no uniformity when it came to the use of physical and digital means of communication and sharing of documentation between property owners and the Central Appraisal District (CAD). With the passing of this bill, all CADs are required to offer digital delivery for all communication and documentation related to property taxes and protests. Implementing this digital requirement helps property owners and their representatives maintain a digital paper trail for communication with the CAD. This fosters a more transparent approach to handling property tax matters.
4: Improved Homeowner Support
Traditionally, the taxpayer liaison officer (TLO) helps property owners with questions and concerns about the local appraisal district or Appraisal Review Board (ARB). While the TLO was the main point of contact for property owners to voice property tax concerns, the TLO did not have the ability to moderate disputes between parties. This changed with the passing of House Bill 1285. HB 1285 gave TLO’s the power to work directly with property owners and with the ARB or appraisal district. This helps bridge any gaps in understanding or communication between the two parties which will allow for faster resolutions to disputes. Navigating the process of filing and resolving disputes with the ARB can be confusing so having a TLO to guide property owners through the process and provide them with comprehensive help will be immensely helpful.
5: Less Hassle for Senior Citizens & More Savings Child Care Facilities
From children to the young at heart, the widespread impact of Texas’ new property tax legislation will be felt by Texans from all generations. By passing House Bill 4077 and Senate Bill 1381, the age 65 or older exemption receives some much-needed improvements. Now local appraisal districts will automatically apply an age 65 or older exemption to any homesteaded property in which they have the owner's date of birth on file. Previously, Texans needed to apply for the age 65 or older exemption once they qualified. Furthermore, surviving spouses will also inherit the age 65 or older exemption status from their deceased spouse without having to submit a new application. Child-care facilities and families with young children will also benefit from this new legislation courtesy of Senate Bill 1145. SB 1145 cuts the taxable value of any child-care facility by at least 50%. These savings can then be passed on to the children's families through lower tuition to help relieve some of the financial burden caused by childcare costs.
6: More Accountability & Compliance by Appraisal Review Board
Historically, there have been negligible repercussions for the ARB creating excessive hindrances that put an unnecessary burden on the property owners. The passing of House Bill 4101 is immensely beneficial because HB 4101 put a stronger emphasis on compliance with hearing procedures by the ARB. This is achieved by widening the scope of limited binding arbitration which affords property owners an avenue to remedy any hindrances. By holding the ARB accountable for the quality of care and punishing actions that make protesting one's property taxes more challenging, HB 4101 sets property owners up for success by shifting the burden of the property tax protest process from the property owner back onto the ARB.
Ultimately, the passing of this legislation provides widespread relief to millions of Texans and has profoundly changed the property tax landscape of the Lone Star State. We at Ownwell understand that keeping up with property tax legislation and navigating property tax laws can be a challenge. That is why we offer year-round property assessment monitoring and exemption filing services to ensure that property owners are always in the best position to maximize their savings. Visit Ownwell.com/Appeal to see how much you could save with Ownwell.