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Where your state ranks when it comes to property taxes

ATX area real estate prices out of control1
As this recent report from my local Community Impact newspaper shows, Austin's housing market is en fuego. That's good news for sellers, but bad news for homeowners sticking around and seeing the increased prices drive up our property tax bills.

My relationship with my neighbors, regardless of where we've lived, has been … interesting. They all and always intrigue and annoy me on a daily basis. To be fair, I suspect they feel the same about me.

Right now, however, my real beef is with my former neighbors. Specifically, the ones who recently sold their homes in Austin's astoundingly (some say unsustainably) hot real estate market.

They made out and got outta here like bandits. And they left the rest of us in the neighborhood holding the property tax bag.

Texas taxes based on values: Despite recent caps on the percentage of real estate tax increases a jurisdiction is allowed to enact, that doesn't matter when a home's appraised value is going through the roof. The essentially same system is used by most property taxing governmental entities.

Texas' tax code (§23.010) requires taxable property to be appraised at market value as of Jan. 1. Market value is the price at which a property would transfer for cash or its equivalent under prevailing market conditions.

And while appraisals by the taxing districts aren't done every year — the law says at least once every three years — home values have been heading up for a while even before the 2020-2021 explosion.

So even with homestead and other exemptions and protesting the appraisal, many of us homeowners are facing frustratingly high property tax bills. There's not much you can argue when your former neighbor down the block sold his house, which is more-or-less the same as yours, for close to three times what you paid.

Since the hubby and I aren't planning to sell soon, although rising property taxes and new neighbors who are annoying and intriguing in new ways might speed up our timetable, we're stuck. The best move right now is to sock away a bit more each month so we can cover our coming, higher 2021 tax bill.

Real estate escalating everywhere: We are not alone. Various studies and surveys have found homes selling at higher prices from coast to coast.

That means those new, and many of the existing, homeowners will be facing some big property tax bills.

Howe big?

"Because property taxes are tied to housing values, it makes sense that the actual dollar amounts of property taxes tend to be higher in places with higher housing prices," writes Janelle Cammenga, a policy analyst with the Tax Foundation, at the organization's blog.

The nonprofit tax policy group based in Washington, D.C., (another place we once lived and dealt with escalating property taxes even all those years back) has created a map that takes housing value into account to give a broader perspective of just how high property taxes are across the United States.

The map and Cammenga's discussion of states' effective tax rates on owner-occupied housing earn this weekend's Saturday Shout Out.

State-property-tax-comparison-map_Tax-Foundation_July-2021

"Some states with high property taxes, like New Hampshire and Texas, rely heavily on them in lieu of other major tax categories," notes Cammenga. Heads up, all y'all who are planning on moving here!

In the Tax Foundation's current property tax rankings, Texas comes in 6th. But that's based on 2019 data. I suspect we might move up the list when current year prices are factored.

And despite my innate, over-exuberant, and admittedly often misplaced Lone Star State pride, this is not one area that I, as a Texas homeowner, want to come in first.

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Comments

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Kay Bell

James, we're trying it, sort of. In 2019, a law took effect requiring voter approval before local governments increase their property tax revenue by more than 3.5%. But the hot housing market is making up for that limit. And yes, a lot of our older neighbors are bailing out; good for them for finding a tax-friendlier place to move to. Also, I admit that I'm am the curmudgeonly, if not also annoying, neighbor on the block. The nicer hubby offsets me! Kay

James B

Sounds like Texas needs its own version of California's Proposition 13 to limit skyrocketing property taxes based on skyrocketing valuations. Prop 13 is not perfect but has has acted to hold down the insatiable government thirst to get more money. Otherwise, no senior could ever stay in their home in the expensive areas of CA, like the one I live in.

Humorously, I add that if you are annoyed by one neighbor, you likely have an annoying neighbor. If you are annoyed by all of your neighbors...well, maybe you are that annoying neighbor.

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