Property Tax Basics

Property Tax Basics

Texas has no state property taxes, therefore, local governments set tax rates and collect property taxes that are used to provide local services including schools, streets, roads, police, fire protection, and many other services.

Many parties play a role in administering the property tax system: property owners, appraisal districts, appraisal review boards, local taxing units, tax assessor-collectors and the Comptroller’s office.

Who Does What?

The property owner is responsible for paying taxes and has an expectation that the taxing process will be fairly administered.

The appraisal district appraises the value of your property each year.

The appraisal review board is a board of local citizens that hears disagreements between property owners and the appraisal district about the value of property.

The taxing units, including the school districts, counties, cities, junior colleges and special districts, decide how much money they must spend to provide public services. Property tax rates are set to generate the needed budgets. School districts must rely on the local property tax, in addition to state and federal funding.

The county tax assessor-collector collects all property tax due in that county and transfers the appropriate amounts to each taxing unit.

The Comptroller’s Property Tax Assistance Division (PTAD) is primarily limited to monitoring responsibilities. A Property Value Study (PVS) for each school district is conducted biennially for state funding purposes. The PVS ensures property values within a school district are at or near market value for equitable school funding. PTAD also performs Methods and Assistance Program (MAP) reviews of all appraisal districts every two years. The review addresses four issues: governance, taxpayer assistance, operating standards and appraisal standards, procedures and methodologies. School districts located in counties that do not receive a MAP review in a year will be subject to a PVS in that year.

What Do They Do?

Texas local property tax is just that; a local tax, assessed locally, collected locally and used locally. Texas counties, local school districts, cities, special districts and water districts tax all non-exempt property within their jurisdictions. The governing body of each local government determines the amount of property taxes it wants to raise and sets its own tax rate.

When Do They Do It?

Where Does the Money Go?

Why Do They Do It?

The Texas Constitution sets out five basic rules for property taxes in our state:

  1. Taxation must be equal and uniform. No single property or type of property should pay more than its fair share. The property taxes you pay are based on the value of property you own. If, for instance, your property is worth half as much as the property owned by your neighbor (after any exemptions that apply), your tax bill should be one-half of your neighbor’s. This means that uniform appraisal is very important.
  2. Generally, all property must be taxed based on its current market value. That’s the price it would sell for when both buyer and seller seek the best price and neither is under pressure to buy or sell. The Texas Constitution provides certain exceptions to this rule, such as the use of “productivity values” for agricultural and timberland. This means that the land is taxed based on the value of what it produces, such as crops and livestock, rather than its sale value. This lowers the tax bill for such land.
  3. Each property in a county must have a single appraised value. This means that the various local governments to which you pay property taxes cannot assign different values to your property; all must use the same value. This is guaranteed by the use of county appraisal districts.
  4. All property is taxable unless federal or state law exempts it from the tax. These exemptions may exclude all or part of your property’s value from taxation.
  5. Property owners have a right to reasonable notice of increases in their appraised property value.

How Can I Challenge What They Do?

If you are dissatisfied with the results of a decision made by your appraisal review board you have the right to appeal to district court in the county where the property is located. You may also appeal the determination to binding arbitration or to the State Office of Administrative Hearings (SOAH) provided certain criteria are met. Binding arbitration is conducted by an independent third party. If the property value is over $1,000,000 you may appeal with SOAH; the decision of administrative law judges are final and may not be appealed.

For additional information about property tax basics please see the following: