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How You Can Lower Your Property Tax Rates

What’s one thing you can almost always count on when it comes to property taxes?
They are always increasing.

Here in Dallas-Fort Worth, that’s exactly what we’ve been noticing. On average, housing prices have shot up 19% and we’ve seen a similar increase reflected in property tax bills.

Jack and I were curious if there was anything that we could do to lower these property tax rates.

Before we could really start, we needed to answer a deeper question that loomed on the horizon. How were these seemingly arbitrary tax rates even set up in the first place?

It was time to do some research and go down some rabbit holes. When the internet didn’t provide many results on how tax rates were set up, we resorted to calling around instead.

The tax rate itself is a percentage of whatever the county appraises your house to be worth. For my property in Fort Worth, I have a property tax rate of 2.68% which means that I pay a tax worth 2.68% of whatever the county believes my house is worth.

Alright, easy enough.
But why were those percentages so vastly different across areas in the same vicinity? Within the metroplex alone, the rates vary from 1.6% to 3.2%. When you factor in a house that could be priced upwards of $1 million and over, that tax rate can have a dramatic effect.

So where exactly did those numbers come from?

There are a handful of smaller taxes that make up the total amount:

  •  County tax
  •  City tax
  •  School district tax
  •  County water tax
  •  Hospital Tax
  •  College tax

Apparently, tax rates are set by something called a taxing unit. A taxing unit can take many forms depending on the organization. At the city level, the city council is the taxing unit. For a school district, the unit is a board. However, beyond that, the taxing units become a little less transparent. Even the people I called at those organizations couldn’t really deliver a clear answer. They seemed just as lost as I was, but, to be fair, they don’t usually get these kinds of questions.

Despite the lack of clarity, my brain could still somewhat fill the gaps in how the property tax rates are set. It’s a process that I think everybody needs to be aware of.

  1. Every year, all the taxing units get together and hold a public meeting and say, “Hey, we’re going to set the tax rate at this amount because this is our budget and we need this much amount of money.”
  2. The tax assessors provide an estimate of how many properties they think are going to be paying taxes that year.
  3. Based on that number, a new property tax rate is generated. Once all the necessary parties approve, everything is set.

Here’s the keyword: public.

That’s right – you can go to these public meetings and protest these higher property tax rates.
As soon as you put in a formal protest, a vote will take place. If you can get more than 50% of the people present at the meeting to agree, then you’ll have made it.

Wondering why more people don’t do this?
I think it’s because no one really knows about it.

In the past few years, property tax rates have increased alongside the increasing house prices. Are you getting increased benefit? Most likely not. That’s why trying to lower the tax rate is worth exploring.

As Jack says, the easiest way to make a change in your local community is through the local government. 

Enjoyed the housing insight you learned today? Then you’re in luck. Here at Tom’s Texas Realty, it’s our number one goal to help you reach your potential as comprehensive and money-conscious homeowners. For more tips and tricks, be sure to sign up for our newsletter today!