How to Prepare for 2023 Property Tax Increases

Commercial property taxes in Dallas and throughout the state are among the highest in the nation. In recent years, business owners have been forced to cope with property tax increases in Texas at a time when costs are also rising for supplies, energy, and labor.

Options to lower your commercial property taxes may be few, although opportunities to protest your appraisal could arise. However, most commercial property owners will have to find ways to prepare their budgets for the new normal of rising taxes.

Reasons Behind Surging Texas Commercial Property Taxes

By and large, Dallas commercial property taxes are based on your property’s appraised value. In Texas, the assessment ratio is 100% of the appraised value, which differs from other states that apply tax rates to a fraction of the appraised value.

Rising Market Values

Overall, Texas residential and commercial property values, especially in urban areas, have been rising. From 2021 to 2022, commercial property values in Dallas county went from $157 billion to $180 billion. New construction contributed to this somewhat, but market forces account for the bulk of higher property values.

Since 2019, the state capped property tax increases at no more than 3.5% unless local voters decide otherwise. Limiting tax rate increases can only go so far in the face of rising property values. A higher assessed value can still yield a bigger tax bill even if a tax rate is lowered.

Multiple Tax Districts

Local taxation districts determine tax rates for their citizens. Areas with overlapping districts create higher bills because many entities need tax revenue.

Examples of authorities that receive property taxes include:

  • School districts
  • Hospitals
  • County
  • City
  • Special Tax Districts

Tax assessments come from your area’s Central Appraisal District (CAD). The CAD Chief Appraiser in your community determines the values used for taxation, which are to be applied uniformly by all taxing authorities.

How to Prepare for Rising Commercial Property Taxes

No one foresees any relief from property tax increases in Texas in the near future. You can expect 2023 to place an even bigger bill in your lap, but you can take steps to prepare for the rising tax burden.

Consider Delaying Improvements

Renovations or additions to your commercial property will most likely increase your property’s value. If commercial property taxes in Dallas are straining your resources, you should avoid improving your property immediately.

Monitor Market Values

Keep a close eye on the sales of commercial properties in your area. They strongly influence your current market value. If you perceive an unfair appraisal for your property compared to what others sold for, you may have grounds to protest your property’s currently appraised value.

Adjust Your Budget

In many cases, a tax bill cannot be appealed, and you simply have to pay it. Plan ahead financially as far as possible so that you have money to pay your commercial property taxes in Dallas. You don’t want to go into arrears and have penalties piled on top of your bill.

Explore Exemptions or Abatements

Businesses rarely qualify for property tax exemptions, but, if your property suffered damage in a natural disaster, a temporary exemption could be available.

You could also look into tax abatement or exclusion opportunities, such as:

  • Wind or solar installations
  • Fire-safety equipment
  • Pollution control equipment
  • Special economic development areas

Prepare for 2023! Meet with Dallas Property Tax Consultant

In some circumstances, an assessment appeal of your appraised value could be feasible. At the Hegwood Group, we understand the complexities of commercial property taxes in Dallas. Let us help you make your case for an appeal and save money in the new year.

Ask us to evaluate your options by contacting our office today.

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