Property Taxes: A Simplified Breakdown for Home Owners

Everyone knows that the only certain things in life are death and taxes.

Today, we’re talking about the worse of the two – taxes, of course.

Yes, no one loves taxes, even after they figure out why they’re required to pay them. That’s right, you have no shot of ever escaping the inevitability of paying taxes. And, if you own a home or a piece of land, you’re going to be paying property taxes.

If you were to spend the time reading the tax code, you might be a few years older by the time you finished (and hardly wiser for it). What you really need is a far more understandable explanation of what property taxes are, and how they’ll affect you.

You’re in luck: if you keep reading, and you can see a simplified breakdown of exactly how those tricky taxes work.

What Are Property Taxes?

If you live in the United States, the revenue used to fund public services like the police force, fire department, infrastructure, and schools is generated largely by property taxes.

For local governments, according to Britannica, around half of the revenue they raise comes from property taxes. Every small town in the country would be struggling to survive if it weren’t for the money they bring in thanks to the home and business owners in their areas.

Property that can be taxed includes real estate not owned by any government agency. Essentially any house or company with a physical address is going to be handing over a chunk of change each year to their local governments. Religious organizations and places that are generally seen to benefit the public good tend to be exempt from these taxes.

When Do I Pay Property Taxes?


In most states, property taxes are paid twice a year, in advance. For Texas property taxes, the deadline for paying your property taxes is January 31st, and you are considered delinquent by February 1st.

Most people who own property try to pay their property taxes way in advance, before the previous year ends as a means of deducting those payments from their income taxes.

If you’re buying a home, at the end of the sale, you’ll probably have to pay some money for property taxes to the seller rather than to the government. The buyer is basically reimbursing the seller for the property taxes they had to pay from the beginning to the end of the sale. Because of this, the settlement date for closing a home sale will usually be in the middle of a tax period.

How are Property Taxes Calculated?

Each property is divided into either assessment areas or assessment units. An elected or appointed local official called a tax assessor serves their local government by assessing the value of every taxable property in their assigned assessment area.

The way your local government figures out what you owe them each year is based on a formula of taking the assessed value of your home and multiplying it by the previously determined standard tax rate. Anything you’re exempted from is then subtracted from what you owe.

Fortunately for tax assessors, they aren’t required to actually visit every single property in their area. Instead, they simply compare the market value of other, similar properties to the one they’re assessing and apply the same general tax.

So, it all comes down to how your property has been assessed, and the local government’s tax rate. But maybe you aren’t pleased with what you’ve been forced to pay. Let’s find out if there are any ways to change that number.

How Can I Lower My Property Taxes?

One thing you’ll start to notice about your property taxes is that they seem to be rising steadily year after year. And even once you pay off your mortgage, you’ll still be paying them.

Fortunately, there are a few ways to lower your tax rate:

Study Your Property Tax Card: All you have to do to find out exactly how much you’re being charged for your property is go to your city hall and ask for a copy of your property tax card. This will show you all the information you need to know. It will also allow you to search for any discrepancies that may be falsely inflating what the assessor believes you should be paying.

Check With Your Neighbors: When you do some research into your property taxes, you should also look into what your neighbors are paying. If you’re paying considerably more than them – incorrectly, by your estimate – request a new assessment and make this clear to the assessor.

Limit Construction: If you don’t need to add a huge workshop, a deck, or a pool to your property, don’t. If you do, it will increase your tax burden. Before you ever add on to your property, call your tax assessor’s office and ask how much it’ll affect your taxes.

Don’t Worry About Looking Pretty: If your curb appeal is higher than your neighbors, or simply matches that of the rest of the neighborhood, you may have a higher property tax rate than if you stayed Plain Jane. And, trust me – you don’t want to remodel your kitchen until you’ve already had your assessment.

State Property Taxes

For the most part, every local government will have its own procedures for determining property taxes. A lot of what they do is looking at how much money they’ll be generating thanks to sales tax and state aid, and work with their budget to determine how much they need to fill all the holes.

The amount the local government needs to pad out their budget is called the tax levy, brought in through variable property tax rates. And because of how diverse the United States can be, property tax rates tend to vary wildly. And the way that money will be spent is just as varying.

For instance, Austin has a tax rate ranging from 1.8 to 3.3 percent of a home’s assessed value. This is a pretty standard rate for Texas property taxes, which are some of the highest in the nation, and the highest in the South for sure.

austin texas

Tip: If you are looking to live in the Austin area and would like to know exactly how high your property tax rate will be, check out this property tax calculator.

That wasn’t so difficult now, was it?

And I know, you may be tempted to block out all knowledge of your taxes until it’s time to pay up, grimace while writing the check, then forget it ever happened until next time. But if you live that way, you may never appreciate the real value of what you’re paying, and you may also miss out on a chance to lower how much you owe.

Property taxes can be pretty confusing for home owners, just like most things related to the real estate business can go over even the most educated person’s head. What you need in these tough times is a real estate expert.

And I’d love to be your expert. I have a wide range of expertise in the real estate business in the areas of Killeen, Austin, and Fort Hood, and would love to apply it to solve any and all of your problems. If you have any questions about property taxes (or anything else related to homeownership), feel free to contact me today.