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How Much are Taxes around D/FW?

Taxes on Real Estate in the Dallas-Fort Worth area are High, but Comparable for the Same Size Housing elsewhere

Questions & Answers

Get the answers on home selling and buying.

 


 

 

Q:  How much are property taxes?
A:  In Texas taxes are assessed on real and business personal property. Residential real estate taxes average 2.5 percent of the property's current market value, but they do vary over the Dallas/Fort Worth area.  Personal property is taxed for business use.  Real property is taxes for both business and residential use.  Owner-occupied residential property taxes are somewhat lower due to exemptions, as well as taxes on homes owned by the elderly and disabled.  Some non-profit organizations also benefit from lower taxes, plus government bodies themselves.  

Q:  How are property taxes calculated?
A:  The market value of a property is the starting point.  Market value is established by the sale of the property itself as well as sales of comparable properties nearby.  An exemption may apply to a portion of the market value, depending on its use.  Each property then has its market value and an exemption amount.  The summation of values becomes the tax base. 

 

Annually local authorities for the county, the city, the school district and other taxing bodies create a budget for the following year.  The total budget amount for each body is divided into the whole tax base of properties being assessed to arrive at a rate.  A levy for each property is calculated for each taxing body by multiplying the rate times the exempted market value.  Each property will have multiple taxing bodies levying assessments against it, and the exemption amounts may not be the same for each body.  The total is the tax bill on that property. 

The total effective rate for a property is the sum of all taxes divided by the value.  Typically, the effective tax rate is 2.5% but lower for owner-occupied residences. 

 


Q:  How is the market value of a property determined?
A:  The tax assessor is a county position, who determines the value of the property according its value at the last sale and the sales of comparable properties nearby.  Periodically the value may be re-assessed to reflect changes in market value.  The assessor has access to sales data for all properties in its jurisdiction.  The assessor is trained and certified by the state to assess market value.  In the spring a notice of valuation will be published by the assessor on a property and sent to the owner. 

 

Many owners are conflicted about these notices because they want the value to be high for their home, but they don't want to pay higher taxes.  

 


Q:  How can taxes be reduced?
A:  Exemptions are the most common way of reducing taxes.  Homeowners 65 and older may claim an elderly exemption.  Citizens over 64 may also have their tax rates frozen and not suffer an increase in rates going forward.  This freeze is portable inside Texas and may be moved to another residence.  Veterans who are partially disabled may receive additional exemption amounts, depending on the level of their disability.  Similarly non-veteran owners may receive exemptions when disabled, and the surviving spouse of a 65-year old owner may continue an exemption.  Exemptions can be either a fixed dollar amount off of the appraised value, or a percentage reduction compared to the appraised value. 

 

The most popular exemption is for homestead.  An owner who occupies a residential property as his primary residence can claim homestead exemption.  Renters are effectively paying full taxes because the owner may not claim the homestead exemption on a rental property.  In January the exemption status is determined and that is the time to file for homestead exemption.  Tax assessors generally continue the exemption, once filed, from year to year without requiring re-filing. 

Reduction in market value can also reduce taxes, but requires an appeal. 

 


Q:  How can a property's market value be appealed?
A:  Tax invoices are normally printed and mailed in October, after all appeals have been completed.  When the notice of valuation arrives in the April/May timeframe, the owner can file an appeal either formal or informal with the assessor's office. 

 

An informal hearing between the owner and the certified appraiser for the assessor is where they discuss sales data and the owner presents his case as to why his value is too high.  The appraiser may agree and issue a letter of agreement between the owner and the assessor as to the market value for the current year. 

If the owner and appraiser in the assessor's office cannot agree, the owner may proceed to a formal hearing before a board of appeals to present his case.  Normally, these cases are all heard and adjudicated prior to September, having been filed in May.  

 


Q:  How do property taxes get paid?
A:  In October after the market values have all been determined, the tax invoices are mailed out to owners.  The owner may pay anytime, but January 31 is deadline for payment without penalty.  Sometimes January 31 falls on a non-working day.  If so, the taxes must be paid the last business day prior.  There is no extension into February. 

 

Usually, the mortgage servicing company for the homeowner collects an amount each month and sets it aside in an escrow (impound) account to pay taxes in January for the homeowner.  A typical tax bill is actually 3 bills, one for county, one for city, and one for school district.  These 3 invoices are to be paid at their respective payment locations.  The county usually collects for other taxing bodies, like the hospital or utility districts. 

The homeowner should pay these in January because the penalty is a whopping 7% for delaying until February.  

 


 

Typical Tax Rates – Example

A residential property valued at $123,840 for the tax year 2008, not owner-occupied on January 1, 2008, has no homestead exemption.  For Rockwall Independent School district the tax calculated in September, 2008 and billed in October, 2008, is $1,840.45, or $1.470000 per $100 of taxable value.  (In some states the term millage is used, which is based on per $1,000 of value, and in this example would be 14.700 mills for comparison.)

This $1,840,45 amount would be due by January 31, 2009.

In addition to the Rockwall ISD, this example property would have to pay the city and the county.  The county is $464.40, based on 0.375000 rate, and the city is $925.30, based on 0.747173 rate.  The total of all 3 bills would be $3,230.15.

The county offers a $15,000 senior exemption, but no general homestead exemption.  Veterans disabled more than 30% but less than 50% can get a $7,500 exemption off the market value.  The taxable value for the county if both exemptions are applied for and granted is $101,340.

The school district offers a $10,000 senior exemption, and a $15,000 general homestead.  Veterans disabled more than 30% but less than 50% can claim a $7,500 exemption off the market value.  The net taxable value after all 3 exemptions is $91,340.

The city offers a $67,000 senior exemption, and a $5,000 general homestead exemption.  Disbled veterans can get another $7,500 exemption.  The taxable market value with all of these drops to $44,340.

Figuring in these exemptions, the total tax would drop to $2,028.69.  A nice savings over non-exempt taxes.  Most homeowners would be able to claim only the general homestead exemption and would pay $2,921.33 for this property, a 10% savings.  Because the exemptions in this example are all fixed dollars, not a percentage, the percentage savings is lower as the value of the property increases.

Figuring Your Real Estate Taxes

First, you have to know which taxing districts the property is in, such as which county, which city, which school district, and if there are any, which additional districts the property is in, like hospital district, utility district, college district, and so on.

Second, you have to know the value assessed on the property.  The value is assessed each year based on its value on January 1.  A notice of valuation is sent out each spring.  This is the proposed value and it becomes final if you don't protest, usually by May 31.  Using the mass appraisal technique in the appraisal district's office can sometimes lead to inaccurate values.  It could be because of changes in the structure (additions or modifications), or it could be due to market changes, like inflation.  You can visit your local appraisal district to find the assessed value, if you haven't received a notice.

Third, you need to know the type of property and the rates for various districts.  Residential properties, industrial or commercial properties, farm properties and so on are all types of property that can be assigned to a property.  Rates on residential and commercial properties are the same but farm and timber properties typically pay lower rate.  In addition, you need to know if you qualify for one of the exemptions for different kinds of owners, e.g. homestead owners, disabled owners, and seniors.

Calculating is straightforward after you have all this information.  Take the assessed value, subtract any exemptions and apply the correct rate.  This will give you the tax for that district, but you have to do the same for each overlapping district the property is in.  Each district has budget hearings and presents a final tax revenue amount required to the collector.  Using the appraised values of all the properties in the district, the tax rate for that district is computed.  The total of all these taxes for all the taxing districts is your total bill.  Bills are normally issued in October for payment by January 31.

Tax Rates

Here are some recent tax rates and exemptions in table form.

Collin

District 2011 Rate Homestead over-65 Disabled
Allen City 0.553   $50,000.00 $25,000.00
Allen ISD 1.67 $15,000.00 $10,000.00 $10,000.00
Anna City 0.650332   $30,000.00  
Anna ISD 1.54 $15,000.00 $10,000.00 $10,000.00
Bland ISD   $15,000.00 $10,000.00 $10,000.00
Blue Ridge City 0.610035   $10,000.00 $10,000.00
Blue Ridge ISD 1.67 $15,000.00 $10,000.00 $10,000.00
Carrollton City   20.00% $60,000.00 $60,000.00
Celina City 0.645   $30,000.00 $30,000.00
Celina ISD 1.64 $15,000.00 $10,000.00 $10,000.00
Collin College 0.0863   $30,000.00 $20,000.00
Collin County 0.24 5.00% $30,000.00 $20,000.00
Collin County MUD #1        
Community ISD 1.495 $15,000.00 $10,000.00 $10,000.00
Dallas City 0.797 20.00% $64,000.00 $64,000.00
Fairview Town 0.36   $60,000.00 $60,000.00
Farmersville City 0.642901   $10,000.00 $20,000.00
Farmersville ISD 1.34 $15,000.00 $10,000.00 $10,000.00
Frisco City 0.46191   $60,000.00 $60,000.00
Frisco ISD 1.42 $15,000.00 $10,000.00 $10,000.00
Frisco MUD #1        
Garland City   8.00% $51,000.00 $51,000.00
Gunter ISD   $15,000.00 $10,000.00 $10,000.00
Josephine City 0.552679   $10,000.00 $10,000.00
Lavon City 0.4557   $10,000.00 $10,000.00
Leonard ISD   $15,000.00 $10,000.00 $10,000.00
Lovejoy ISD 1.535 $15,000.00 $14,000.00 $10,000.00
Lowry Crossing City 0.229777   $15,000.00 $15,000.00
Lucas City 0.374177 8.00% $50,000.00 $50,000.00
McKinney City 0.5855   $50,000.00 $50,000.00
McKinney ISD 1.54 $15,000.00 $10,000.00 $10,000.00
Melissa City 0.61   $10,000.00 $10,000.00
Melissa ISD 1.54 $15,000.00 $10,000.00 $10,000.00
Murphy City 0.565   $50,000.00 $50,000.00
Nevada City 0.176981   $10,000.00  
New Hope Town 0.21   $50,000.00 $50,000.00
Parker City 0.37708   $30,000.00  
Plano City 0.4886 20.00% $40,000.00 $40,000.00
Plano ISD 1.3734 $15,000.00 $10,000.00 $10,000.00
Princeton City 0.728394   $25,000.00 $25,000.00
Princeton ISD 1.4736 $15,000.00 $10,000.00 $10,000.00
Prosper ISD 0.52 $15,000.00 $10,000.00 $10,000.00
Prosper Town 1.67   $10,000.00 $0 
Richardson City 0.63516   $55,000.00 $55,000.00
Rockwall ISD   $15,000.00 $30,000.00 $10,000.00
Royse City     $6,000.00 $5,000.00
Royse City ISD   $15,000.00 $25,000.00 $10,000.00
Sachse City 0.770819   $50,000.00 $50,000.00
Saint Paul City 0.411781   $40,000.00  
Seis Lagos Utility Dist 0.460371 20.00% $25,000.00 $25,000.00
Trenton ISD   $15,000.00 $10,000.00 $10,000.00
Van Alstyne City     $5,000.00 $0 
Van Alstyne ISD   $15,000.00 $10,000.00 $10,000.00
Westminster City        
Weston City 0.3   $20,000.00 $0 
Whitewright ISD   $15,000.00 $10,000.00 $10,000.00
Wylie City 0.8989   $30,000.00 $30,000.00
Wylie ISD 1.64 $15,000.00 $10,000.00 $10,000.00

Dallas

 

Rockwall

 

Tarrant

 

Copyright 2007-2012 T.E. Sumner

 
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