Gunner Quinn
Editor’s Introduction: Property tax bills are skyrocketing nationwide. With inflation, bare land values are up, house construction costs are up, and house prices are up. Even if property tax rates remain the same, the relative tax burden on individual landowners and homeowners is increasing. Many Americans are trapped in a quandary: They see residential real estate as one of their only viable hedges against relentless inflation. But as their home prices escalate, so do their taxes. Together, the combined stresses of higher interest rates (with consequently higher monthly mortgage payments) and higher property taxes are making home buying unaffordable for Gen Y (Millennial) families, and many Gen X families. – JWR
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Many homeowners in Texas exercise their right to dispute the property taxes set by their appraisal districts every year. This Texas administrative process is called a property tax protest, with the protest deadline to file this year set at May 15. I wanted to share some tips for people for this property tax season and help people outside Texas understand the system before moving. I do love Texas, but I wish somebody had told me everything that I know now.
For reference, Texas’ cost of living is truly very low (my average electricity bill $65/month as a single male, while running A/C at 70F 24/7 and batch cooking, in a 1,100+ sq ft home). Gas, as of April 2025, is $2.65/gallon, and water is $35 a month (I don’t use much water). There is no state income tax in Texas. However, the property tax cost is sky-high – for a $400,000 house, a rough estimate could be $8,000-to-$9,000 in average property taxes. In fact, Texas has one of the highest property tax rates in the US, with averages ranging from 1.6%-2.65% of market value or more each year.
For me, this was a shock as I moved from California, which has Proposition 13 – a rule that means that your property taxes cannot rise more than 2% compared to the prior year’s taxes. This rule limits the property tax increase. Over the past 35 years, that meant that people who stayed in the same house in California for example, could have seen 800% property value appreciation while their tax rate only increased 100%. In Texas, your property taxes could rise 100% in one year if it is not homesteaded. (For context, a homestead exemption is a form that allows you some legal protections, gives you a discount on your property taxes, and also limits the annual increase in your tax bill to 10% per year for the primary home.)
For example, I bought my home at the height of the Covid boom – October 2021. As of January 2022, my county wanted to charge me 50% more than what I paid. Instead of accepting my bill of sale, they said: “You bought 3 lots in a single transaction. Because you didn’t have a real estate agent write down your payment per property, we have determined that you must have received a group discount for buying 3 properties, so we can set the value at whatever we want, and we want 50% more than the peak pricing you paid.” Having a background in finance and tech – financial services in New York and tech product management in Silicon Valley – I was uniquely positioned and determined to fight them.
I was indeed able to get my taxes reduced to about where they should have been, saving myself $3,000-to-$4,000 per year. But the time it took! I spent roughly 100 hours putting together a case for 4 lots (each lot is considered separately and requires its own case). This is not possible for many people working on other areas of their life. So, I thought that I’d write some tricks the appraisal districts do so people can learn lessons it took time for me to acquire. This stuff is important – many homeowners in Texas don’t understand it, and they actually end up selling their house just a few years after moving in because they don’t understand the property taxes.
Here are a few tricks to note (and this may apply in other high-tax regions outside Texas).
1. Quick to Raise, Slow to Cut. During COVID, property values in many parts skyrocketed, specifically from late-2021 to mid-2022. So property values, set annually on January 1st, increased by 50-100%. However, as the market cooled off with COVID restrictions ending in late 2022-2023, the values should have come down a lot. They did not.
2. The Texas Two-Step. An increasing tactic happens as appraisal districts maintain overall values but shift the mix from improvements to land. Land is harder to dispute by homeowners, while home values can more easily be disputed. By moving value from homes to land in year 1, counties make it harder for homeowners to win reductions. In year 2, the counties will say “Oh wow! We valued your home too low, we must raise it $50K!” – conveniently forgetting that the land value already increased $50,000 the prior year. In year 3, they move another $50K from the home to land, rinse and repeat. This one tactic can earn the county tens of millions as they earn $1K each time this process happens!
3. Senior Deferrals Doom. Texas allows for people 65+ to defer their taxes. People don’t have to pay until they pass or sell the house, and then all the tax from the entire period tax was deferred is due at once, with interest. Sounds good – too good! The catch is – because people don’t actually pay, they don’t feel the pain enough to protest annually. They forget the county can 3x their home values in just five years if unchallenged (and without a homestead exemption). Then, after it’s too late to fight the tax bill, seniors eventually get hit at the end. It is a shame that many counties, whether knowingly or not, are taking advantage of senior citizens in this manner.
4. Weaponized Elderly. To add insult to injury, the county uses the neighboring properties of the seniors who deferred their taxes and did not protest their taxes to then say: “Oh, this guy didn’t protest his extreme home value, so that means it’s correct. So, everybody else in the area near this guy also had their home triple in value in 5 years.” It’s nonsense – but it keeps values high so the county can extract more money.
5. Escrowed Again! When properties are bought or sold, depending on the time frame of the year, buyers may be hit by the normal escrow process. From when the property taxes change, it could be an entire year later before the mortgage company’s annual review tells the homebuyer that their property taxes have increased. At that point it is too late to challenge the tax amount!
For example, the deadline to file a protest is May 15 – but many sellers know they will sell their house, so they don’t file a protest. It’s a lot of work and they know that the buyer would get a chunk of the benefit anyway, so why bother? By the time the buyer obtains title, it is often too late to protest. Now the county gets an entire year to set with the value to their satisfaction, and nobody complains because the seller and buyer each only pay a portion of the tax.
6. Lack of Homeowner Education. At the state and local level, there is a lack of homeowner education. The counties don’t want anyone to upset their money maker. So they will offer some classes that teach people a few basic ideas (how to file for the homestead exemption) which, if done correctly by the public, saves the county time. But they don’t want to teach homeowners how to actually protest the county’s position effectively – that would be counterproductive! In the property tax protest private sector, the problem is the same – there is no incentive for the private sector to educate clients, because educated clients would realize than many of the property tax consultants achieve only minimal savings because their focus is on scaling their business by giving a lot of people a little discount and collecting a 40-50% of savings commission, not arguing for the customer to the legal limit to help them save money.
7. Homebuilder or VA/Ag Benefits You Don’t Get. Oftentimes, homebuilders in Texas pay minimal property tax – their valuation is essentially land. When the home is built, it is transferred to the homeowner, who sees the valuation that the builder paid and thinks: “I can afford that amount.” Then, the county revalues the property to full value, and the new homeowner can’t afford it. The same could happen to properties where the seller was a 100% service disabled veteran, who pay no property tax on their homestead, or properties designated as agricultural that pay minimal property taxes. Don’t ever get an agricultural property in Texas unless you understand the agricultural rollback tax!
There are lots of other tricks, but if you are living in a high property tax state or if you are considering relocating to Texas, then these are things that you’ll want to know.
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About The Author: Joel Ho is an angry homeowner, a licensed Realtor, and a licensed Texas Property Tax Consultant. He operates EZPropTax.
Read the full article here