What Happens When Texans Protest Their “Mind-Boggling” Property Taxes?
texasmonthly.com
texasmonthly.com
Yet, the independent panel after not hearing any meaningful explanation from the district representative and hearing my examples of how numbers been all over the place, in the 3 to 0 vote voted to side with district's valuation recommendation...
I guess I will wait for the ARB's official letter and have to head to the court, since numbers just do not make sense.
Also, there should be carveouts (like we have in Toronto) for the elderly and disabled to have their taxes paid from the residual value of their home until they die, so our communities don't just push out our most vulnerable fifth of society when housing booms.
I’m also not sure “punishing” (well now you have to buy it) local municipalities results in better governance.
Also sounds like an invite for corruption. Evaluate high, sell to the city… now the locals are all on the hook.
It provides the proper incentive to align appraisals with market value and prevents the city from exploiting its citizens.
If the option to sell is at anytime through the year, there is the risk of city being on the hook when values tank across the board. If the exercise window is only say a month after the appraisal this risk is diminished.
I could see this system being used to exploit uneducated homeowners and essentially con them into selling below market value. Not sure how to lower the risk of this one happening.
2. I don't see the exploit? If they sell below market value then the government gets the profit.
Sounds like I lost all my property rights right there…
Hard to imagine the US government has 1.5 trillion lying around to pay people to stay home, but they figured it out.
"If you’re age 65 or older or fit one of several other categories, you don’t ever have to pay the property tax on your homestead right now at all. Get a tax bill? Forget it. If you file an affidavit, your tax bill is magically delayed. Nobody collects until you move on."
This is what happens when you don't have an income tax.
This is the gentry getting gentrified.
Similarly, I'm not too sympathetic to those (often elderly) who claim they can no longer pay taxes due to fixed incomes while home prices increase. The amount their taxes have increased are a fraction of the equity they've gained - they should be able to obtain some sort of "reverse mortgage" that pays the taxes in exchange for partial ownership of the home, which would then be settled at time of death by the heirs who'd just not inherit the home 100% clear.
What does bother me about ever increasing property taxes is the entitlement of the localities and states on that increased revenue without justification for the improved services they'll provide to taxpayers in exchange. In a city like Austin where home prices have increased close to 50% in just the last two years, that must mean the city and county's gross tax revenue has also increased by some proportion of that.
I think most states and localities should be forced to run like a typical well run HOA where all costs and planned expenditures are 100% transparent. Taxes should only rise on properties when there is a justified cost increase, and should not automatically go up when values do.
Each time a house sells, property value jumps to the newly appraised value the following year. Sale prices are not public record in Texas, but oddly enough the amount borrowed can be found. So it's possible to impute sale price if you're willing to assume a given percentage down. Once you get the "homestead" exemption, appraised value may not go up more than 10% a year. And it does. Like clockwork. There are exemptions for over 65, disabled, etc, but they are flat dollar amounts instead of percentages or freezing annual tax increases.
In short your assumption that gentrification drives valuation increases isn't wrong - any property sale regardless of the reason (in a rising market) does exactly that - but as a property owner in Texas I can personally state that every year I didn't protest my valuation always went up the maximum allowed by law, not matter what was happening. Including during the 2008 crash! And thanks to the rule of 7, this means that every 7.2 years taxes double.
Realistically has the cost of supplying services from the state, county and city doubled over seven years? No, arguably not. We're only now seeing inflation that somewhat mirrors those cost increases. The assumption that taxes increase only as needed and required by the taxing entities is flawed. They will always find a use for any increase. The elderly are already allowed to defer taxes to when their estate is settled, no need for a reverse mortgage. But should they have to for arbitrary and capricious tax increases?
Is this a Texas-specific thing? If it is, I really think more states ought to roll it out, though it would increase complexity for the state who (I assume) becomes partial owners on the title of the home homeowners begin deferring their taxes.
Homes aren't just another asset and financial vehicle. They are, well, homes. Your link to the local community. Where your family has lived possibly for generations. Treat them like a disposable commodity, and you get present-day USA - a country of atomized individuals, without communities, that are a basic human need.
Yes. In many places most of that money goes to schools and is one of the reasons why public schools in wealthy suburbs are better than schools in less affluent areas.
The municipality (the county, in the region of the country I'm in) sets the budget for the year, then each property's owner pays taxes in the amount of the fraction of the property's assessed value divided by the total assessed value of all property in the county times the annual budget.
E.g. if the county's annual budget is $1,000, and there are three properties in the county assessed at $200,000, $300,000, and $500,000, then the property taxes for each property are $200, $300, and $500, respectively.
Our county happens to have pretty conscientious governance: all properties in the county are re-assessed every two years and budget increases are in-line with inflation, so property taxes have increased very gradually since we moved in ~17 years ago. If the county doesn't have the workforce to assess all properties in the county as frequently and there are large increases in assessed values then property taxes can (temporarily) be significantly increased, which might be what is happening around Austin.
If you own more than one apartment/house and don't use or rent out the other.
Second, companies owning apartments/houses.
Ah and third, property with foreign owners (not immigrants ofc but owners living abroad buying up property in the US).
I'm not trying to come off as a communist or something, I just believe giving the widest opportunity for people to have their own home. So even if you are broke as a rat, you still have a place to stay safe.
That rule about paying the full amount on year one is... odd.
[1]https://www.boe.ca.gov/proptaxes/homeowners_exemption.htm
This is generally solved by limitations on bankruptcy that prohibit you from being kicked out of your sole home due to debts, tax or otherwise, except if that house was bought on a mortgage.
However, there are certain advantages to taxing specifically wealth (as opposed to income or consumption), and a huge proportion of wealth is in real estate, for very many (I'd say most, but I don't have the exact stats) people the majority of their wealth is real estate, and it does make sense for people owning a much more expensive property to pay more taxes.
And of course if you sell the property, no matter what there should be taxed earnings.
For limitation rules, I think they a part of the problem.
If you for whatever reason are on a financial decline, property tax adds to the kick in the face until you reach the very bottom.
Then if you manage to begin crawl back out of the abyss, that boot will start planting itself repeatedly your face again, stopping you on your way back to normal.
....So, y'know, not helpful for 99% of all homes in America.
For example, if you want police, fire department, schools, sewage and water supply, etc., it makes sense to tie that taxation to your house directly since those are features and benefits of where you choose to live.
What's happening in Texas with valuations seems absolutely mind-bogglingly stupid though. When you have neighbors with identical lots and similar single family homes valued 200k+ difference in property valuation, there's a problem.
True, but that should be addressed with income tax, so that situations like losing a job for some time (not that impossible these days) doesn't force someone to sell the house.
In my country the main home is exempt, but from the 2nd one on there's a property tax on which I fully agree. I would go even further and tax more the 2nd+ houses that aren't offered for rent, so that there is enough offer that the demand doesn't drive prices up also for houses for sale.
That may be a local phenomenon having no equivalent in the US, but I observed the tendency to keep a lot of houses empty and unused, some well connected construction entepreneurs build entire condos then keep them empty for years after they're completed. My only possible explanation is that they're keeping the offer low in order to keep the demand high, therefore driving or keeping the prices up. Well thought taxes should address this problem without hitting the poor, but some of those people are so well connected with politicians that this is not going to happen anytime soon.
Property taxes may work fine for the FAANG-employed high income citizen, but it is a way worse deal for medium/low income as well as retirees.