Property Taxes in Texas – What Are They and How Do I Lower Them?

Property Taxes 101:

For those of you who are not current homeowners or have ever owned your own home, consider this your “Taxes 101” online course. If you have owned a home before, enjoy this brief refresher on ways to lower your property taxes in Texas.

Before we look into ways to lower your property taxes, let’s see what happens to those hard-earned dollars that have to be paid, whether you have a mortgage or not. Each dollar follows this basic path.

1. Whether you pay your taxes separately or have them escrowed and paid within your mortgage payment, you pay those funds to the local tax collector.

2. The tax collector’s job is to distribute the funds to local governments, schools, and cities.

3. Your local government then spends the funds on roads, hospitals, schools, fire and police departments, and other programs that are needed.

There are several ways you can pay those taxes. Many people pay them monthly on their own or may choose to pay them twice a year when they come due. Others choose to pay them through their mortgage with an escrow account.

One of the pitfalls of not having an escrow account is the temptation to spend that extra money you have been saving rather than pay the amount at the end of the year. Many find themselves in hot water because of that common practice and may be better served to have that payment “rolled into” their monthly mortgage payment. It is also common to pay one’s homeowners insurance with an escrow account.

It is common, particularly with first-time home buyers, to forget to factor in taxes and insurance with their monthly mortgage payments. You can find yourself stretched thin when you start paying that extra several hundred dollars a month.

So what can you do about it?

One of the ways to lower your property taxes in Texas is to qualify for any one of the different exemptions available. If your home is valued at $75,000, for example, but you have a $10,000 exemption, you are only taxed on the new value, $65,000 ($75k – $10k exemption).

Two common exemptions are a disability homestead and the over 65 homestead exemption. There are also homeowners with a disabilities exemption, not to be confused with the disability homestead exemption. If you cannot work due to physical or mental disability, you may qualify for this exemption.

There are a number of exemptions you may qualify for, but you have to do your research and apply for them on your own or you can let the Hegwood Group help you find out if you qualify for an exemption. Just because your military spouse dies in combat does not automatically give you the exemption; you have to apply for it. Check with your local tax professional who is familiar with real estate tax exemptions, as these can really make a difference to your bottom line.