How do taxes work in Texas?


OK...we get more questions about this subject than any other. First things first...we have no rules to go by...don't ask "what is the tax rate for Cinco Ranch?"....it does not work that way. As an example Cinco Ranch has tax rates before exemptions as low as 2.5% and as high as 3.7% depending on the neighborhood you live in!

 

Lets examine how property taxes work here in the Houston area so you can have a better idea of what you will pay when you buy.

1. The taxes are based on the CAD (Central Appraisal District) value. The CAD usually uses the price you paid for the home in the first year, after that they assess each year based on comparable sales in your neighborhood.

2. The tax rates are before exemptions. If you live in the home, you qualify for a Homestead Exemption.  If you are over 65, you qualify for a Senior Exemption.  If you have a disability as defined by the CAD, you may qualify for a Disability Exemption.  In all 3 of these cases, you will need to apply for the exemption.  Each one of the taxing entities will decide how much or if they will give you a reduction for your qualified exemptions (the percentage off value will vary depending on the area you live in).

3. The tax rates are based on school taxes, county taxes, MUD (Municipal Utility District) taxes, drainage districts, and flood control areas. You can be taxed by some or all of these entities and added all together they make up your tax rate.

4. Not long ago Texas passed Property Tax Relief. This relief has lowered tax rates for Texas home owners by about 15%.

Here is an example of how your taxes will work.
We will base it on a home CAD value of $200,000.

Example CAD Value: $200,000

Example Tax Rate: 3.0% x $200,000 = $6000 

Example Homestead Exemption: (save about 10%)=$600 Savings

Total Tax Bill For This Example Will Be Approximately $5400

 

We understand this is a very confusing tax system. We would be happy to take whatever time is necessary to fully explain it to you. Please to not hesitate to call  Bob at 281-904-6772 or e-mail us with any questions! We love the Katy TX real estate area and are excited to help you love it too!