Jun 05
The Buzz About The Tax Cut
Two years ago, the State Legislature of Texas passed a school finance reform law, lowering school property taxes over a three year period by nearly $7 billion. This has raised questions about homeowners as to what this translates into in terms of benefits or detriments.
First of all, the tax cut applies only to public school taxes and reduces the amount paid by 17c per $100 of the home’s value for 2006 and another 33c for 2007. Many school districts had hit their tax cap of $1.50, so the decrease is necessary.
A concern among homeowners is the appraisal on their property will rise to compensate for the smaller amount of tax collected for public schools. However, even if a property’s value rises 10% a year, the homeowner will still be paying less in taxes.
In this example, a property appraises at $150,000 in 2005. Take away the homestead exemption of $15,000 and the taxable value is $135,000. At $1.50 per $100, the homeowner pays $2,025 in the 2005 tax year. In 2006, the home is appraised at $165,000, with $150,000 of that value taxable. So, at $1.33 per $100, the homeowner pays $1,995. And, in 2007, the house is appraised at $181,500, $166,500 of which is taxable. At $1.00 per $100, the homeowner pays a mere $1,665, $832.50 less than without the reduced taxes.
Still, if homeowners suspect the district is boosting home values to recover lost taxes, they can file a protest with the appraisal review board. Then, if the homeowner still feels they are being treated unfairly, they can submit their case to arbitration under a fairly new law, enacted on January 1, 2006, written to give homeowners an alternative to the district court route.