Property Tax Appraisals Rising in Austin Area

Home owners will be receiving their property appraisal notices from your County Tax Assessor this month or in May. Most will see value increases due to the continued strong job growth and low unemployment in Austin and surrounding areas. Job growth and employment drives the real estate market more than any other factor. There was an article in today’s Austin Statesman about it, which I will provide a link to below.

But first, there seems to be a lot of confusion about how property taxes in Texas are calculated. This discussion comes up with almost every buyer we help, especially those relocating from outside Austin. Often, buyers make the mistake of using the “Estimated Property Tax” field that shows up on MLS listings to help rate a property. Often I’ll hear, “this property has a much lower tax amount than that other property – our payment would be $120/mo. less”, to which I respond, “ignore that number you see on the listing, it means nothing. Ignore it completely. Don’t even look at it. It’s not valid data”. Nice, huh? That our MLS Maestros clutter our MLS printouts with completely useless and bogus data.

Why would our Austin MLS listings show a field called “Est Taxes” that can’t be trusted? Without going into a sidebar tirade about incompetence, failed leadership, computer programming, and other issues, let’s just say it’s “garbage in, garbage out”.

The estimated tax amount shown on the MLS Listing is based on the current tax rate multiplied against the appraised value set by the County, not market value. It’s not uncommon to see a $280,000 home with a $220,000 appraised value. So, a buyer purchasing a $280,000 home with an appraised value of $220,000, would see on the MLS Listing an estimated tax amount that is $1350/yr below what they will actually pay if the appraised value catches up to market value the following year.

How should a buyer determine the property tax amount to use in estimating monthly house payments?

Buyers should, in figuring a budget and house payment, use the market value of the home instead of the current appraised value. By doing so, you’ve acknowledged the highest possible tax amount (it’s easy to protest and get the value lowered to the price paid if it’s over-appraised) and accepted it, instead of being falsely fooled by a lower number that may very well increase the following year. Under no circumstance should the estimated tax seen on an MLS listing be given any creedence in measuring one property against another, since to do so would be comparing one bogus number against another. Nor should it be trusted in calculating a monthly payment.

Where do you find the correct tax rate to use?
The County websites have this data. For example, if you visit the Travis County Tax Website and look up an address, you can see the breakdown of the current tax rates that apply to a particular property. Even so, tax rates are reset every Fall, based on budget changes, new school bonds, etc. So a perfect number upon which to rely is in fact rather elusive, but using the current tax rate multiplied against the market value is a safe method because it most likely yields a number bigger than that which you will actually pay. Better a happy surprise than an unhappy one, right?

Todays Austin Statesman Article about Tax Appraisal Increases

How to Protest Your Property Value at Travis County Appraisal District

6 thoughts on “Property Tax Appraisals Rising in Austin Area”

  1. Also, keep in mind, that the current owner might have special exemptions besides Homestead like “65 or older”, “veteran”, etc which buyer might not be eligible for.

  2. An easy way to figure out property tax is to take the purchase price of the house, subtract $50,000, and then multiply the result by .027 (For city of Austin with no MUD). The tax rate may vary by jurisdiction, but I have seen nothing over .034 and nothing below .025 . The tax rate is actually lower in the city than in the suburbs.

  3. > The tax rate is actually lower in the city than in the suburbs.

    Hi Barry,
    I live in Travis County, in the Austin ETJ, and our tax rate out here in Oak Hill is 1.85%, which is about the lowest rate I can find anywhere around Austin.

    I’m not completely following your formula above, about subtracting $50K, etc. It may work out as a rough estimate but I think it’s safer to somply multiply the current rate by the appraised value (or the market value if you’re a buyer trying to determine potential highest payment amount. This doesn’t factor in homestead the exemptions, but it’s a simple easy approach that will yield a fairly accurate, if a bit high, number.



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