A Solution for Rising Property Taxes?
With property tax protest season in full swing, Realtors all over the Metroplex are busy running comps and offering advice to homeowners who are headed into their tax protest hearings. And no wonder. With property values rising quickly, many homeowners are finding themselves paying more and more taxes every year. Unfortunately, salaries are not rising as quickly as tax bills. As Realtors, we need to stay active and advocate property tax reform to protect our clients and the health of the market. That’s why we supported Proposition 1 to increase the homestead exemption and prevent sales tax on homes. As it is, Texans pay some of the highest property taxes in the country; many are being forced out of their homes as values rise.
In Dallas County, Dallas Judge Clay Jenkins and others are considering cutting the property tax rate. That’s a great start. But we’d like to see more. Judge Jenkins’ proposal to lower the property tax rate is not ultimately is not a proposal to lower taxes. Rather, his proposal would equate to a smaller annual tax increase. Lowering the property tax rate still allow the amount of tax that homeowners pay to increase every year as long a property values are on the rise.
Currently, property taxes are calculated by multiplying property values by the tax rate. When value rise, so do your taxes. When property values rise every year, as they have done lately, that means your tax bill gets bigger every year, too.
We’d like to see a more predictable model for homeowners and offer some relief from large tax bills. First, we’d like to see a local homestead exemption by county. This proposal would offer immediate tax relief to homeowners. Additionally, we advocate an effective tax rate. An effective tax rate will fluctuate with the market so that homeowners will have a predictable, stable tax bill regardless of how the market is doing. Local governments will know how much they are going to collect from homeowners, and any additional revenue will only be derived from new and omitted properties. Texas state law requires property taxes to be based on property value, but the law does not require the rate to be set. By using an effective tax rate we can satisfy Texas state law and can offer homeowners a predictable way to plan their budgets.
We’d like your help to advocate for responsible taxing policy. Please visit http://www.thehiddenpropertytax.com/ to learn more about the effective tax rate and how you can help make this happen.