Property Taxes GOVT 2306, Module 11

The property tax, which is also known as the ad valorem property tax, is a levy assessed on real property, such as houses, land, business inventory, and industrial plants. It is the most important source of tax revenue for local governments in Texas. Property Taxes

Assessed Property Values A county appraisal district assesses the value of each piece of property in the county, including houses, apartments, businesses, factories, plants, and undeveloped land.

Property Values Average Percentage Change, 2015

Property taxes go up as property values climb and vice versa. Home Sale Prices What effect, if any, will these data have on property taxes in Harris County? Property taxes go up as property values climb and vice versa. The Great Recession What was going on during this period?

2015 Home Sales

Tax Exemptions Local governments may grant property tax breaks, called exemptions, to certain categories of taxpayers, such as homeowners, elderly residents, and veterans with disabilities.

Homestead exemption The most common exemption is the homestead exemption, a property tax reduction granted homeowners on their principal residence. Note: The homestead exemption is ONLY for homeowners and ONLY for their principal residence. It does not apply to rent houses and business property.

Proposed Tax Cut Texas homeowners currently receive a $25,000 homestead exemption from school property taxes — for example, the owner of a $100,000 house would only pay school taxes on $75,000. Which of the following Texans benefits from the exemption? A) A college student renting an apartment B) A homeowner in Midtown C) A young couple renting a house in the Heights D) The owner of a bike repair shop in the Village. E) All of the above Only B would benefit.

Property Tax Rates State law sets a maximum property tax rate of $1.50 per $100 of valuation for general law cities and $2.50 per $100 for home rule cities. Most cities set tax rates well below the maximum rate allowed.

Houston Tax Rate The property tax rate for the city of Houston is 0.60112 per $100 valuation with a 20 percent homestead exemption.

Home on Mosley Court 3505 Mosley Ct. 77004 4 bedrooms/4.5 bath 3,693 sq. ft./ lot 2,138 sp. ft. Asking price--$629,900 How much do you think it is going for?

Tax Bill Calculation Assessed value - homestead exemption Taxable value x tax rate tax owed $600,000 - 20 % $480,000 x .60112 per $100 $2,885.38 Note: That is the property tax owed the city of Houston for one year. The county, school district, etc. collect property taxes as well.

How Taxes Change What, if anything, can cause a property owner’s tax bill to go up or down? Property tax bills change when the assessment changes or the tax rate changes.

Local Tax Rates City of Houston: $0.63108 Houston ISD: $1.1967 Harris County: $0.41923 Harris Co. Flood Control District: $0.02733 Port of Houston Authority: $0.01342 Harris Co. Hospital District: $0.1700 Harris Co. Educ. Dept.: $0.005422 Houston Community College: $0.101942 Can you figure the total tax bill for the $600,000 home on Mosley Court?

Quiz Uncle Wilbur can claim a homestead exemption on which of the following properties? His auto repair shop on San Jacinto St. His home on Marshall St. His rent house on Dallas St. All of the above The answer is B.

What You Have Learned What are property taxes? What units of government do property taxes support? What property is subject to property taxation? What are exemptions? How are property taxes figured? How can property taxes change?