Texas Property Tax
Editor’s note: Read on to learn about the tax implications of real property in the Lone Star state.
In addition to state income taxes, any individual who owns real property is subject to state real property taxes. Texas doesn’t impose state-level income tax, but Texans are subject to real property (and other taxes) in Texas.
Real property tax is a system of taxation that requires owners of land and buildings to pay an amount of money based on the value of their land and buildings.
Texas has the sixth highest real property tax rate in the U.S. In fact, the average real property tax rate in the Lone Star State is 1.83%.
Who Owes Texas State Property Taxes?
If you own real property in Texas, you will be required to pay taxes on it. So, if you own any real property as an individual or a business, you pay real property tax on it. Even if the property was gifted to you through an estate or you own a rental real property, you are still required to pay tax for it.
There is no minimum or maximum amount of real property taxes you could owe in Texas. Whether you have a $50,000 or $5,000,000 house, you will owe real property taxes in Texas.
If your real property was purchased mid-year, there is a chance your realtor will work it out that you and the seller split the cost of real property taxes within the calendar year. Your mortgage interest statement provides documentation if this is the case or not.
How is This Tax Calculated?
Real property tax rates vary from state to state. In fact, state and local governments use various methods to calculate your real property tax base. In Texas, real property taxes are assessed based on the market value of your property. View more information on how Texas properties are assessed.
Your property’s value is determined by a tax assessor. The assessment is based on the market value of the real property, which can be calculated by sales comparisons, the cost method, or the income method.
The state typically assesses the real property value by estimating the real property cost. Some states tax the entire assessed value of the real property (before deductions and credits). Others tax a part of the assessed value.
Assessments can be performed every year or even just once every five years depending on local laws. If you receive an assessment, you will get your estimated value first, then your real property tax bill.
What are The Taxes Used For?
The money collected by Texas is used for multiple public services throughout the state. It could be used for:
- First responders and other law enforcement
- General government services
- Local levies
- Municipal infrastructure and land construction or improvements
- Municipal employees’ pay
- Resident services like garbage pickup
- Recreational services
- Protective services
How Do You Pay Texas Real Property Tax?
If you pay your mortgage, you are likely already paying your Texas property taxes. A standard mortgage payment usually includes:
- Homeowner’s insurance
- Texas real property taxes
Look at your current mortgage statement and determine if your Texas real property taxes are paid as part of your monthly mortgage. It will likely be listed as a line item on the statement.
You can check with the Texas government at https://comptroller.texas.gov/taxes/property-tax/pay/index.php for more information.
When Are Real Property Taxes Due in Texas?
Texas property taxes are due upon receipt of the tax notice but may be paid without penalty and interest until January 31. The last day to pay taxes without penalty and interest is January 31. Payments are commonly made by mail and must be postmarked by the U.S. Postal Service on or before January 31.
Where to Go for Texas State Property Tax Help
Real property taxes can be confusing. Determining how the real property tax is calculated and the proper amount is important, otherwise, you may be paying too much, too little, or not at all. Beyond this, there are federal tax deductions you may qualify for. But to determine how much the deduction is, who gets it, and when can be tricky.
If you’re looking for additional support with your Texas state property tax questions and allowable real property tax deductions, look no further than H&R Block Virtual. We’ll pair you with a tax pro with state-specific expertise. You can have your taxes done by a real tax pro without visiting an office.
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