Property taxes in Texas can be pretty complicated. Not only are there more laws and caveats in Texas than most states, but this is also the state where we see the most consultants supporting companies in their appeals and management of bills.
Proportionately, it’s also more financially risky to overpay on Texas property taxes. Property taxes in Texas are some of the highest in the country, with an average effective property tax rate of 1.81%.
Because the Texas commercial property tax system is so complex and the size of the tax bills can drastically impact a company’s bottom line, we’re sharing everything you need to know about commercial property taxes in Texas.
Texas Property Tax Assessments
Several of the rules governing property taxes statewide are laid out in the Texas constitution, also ensuring uniformity in legal application and protecting the rights of property owners.
Fortunately, there is no state-assessed property in Texas, so all property taxes will come from local authorities. There can be several taxing units that set their own rates, such as county, city, school districts, hospital, and special districts.
What are Central Appraisal Districts?
Assessing authorities in Texas are called Central Appraisal Districts (often shortened to CADs) and the assessor is called a CAD Chief Appraiser.
CADs ensure that all property in a county is given a single appraised value. This ensures that various government bodies apply the same uniform value for your property rather than assigning different values to the same parcel in the same year.
How are property values determined in Texas?
The assessment ratio is 100% in Texas, meaning property tax rates are applied to the full appraised value.
Property is taxed based on its current market value (what it would sell for if a buyer and seller seek the best price). Texas intentionally excludes outlier changes to the actual price of the property or comps due to temporary inflation or deflation of the price. These anomalies might occur if, for example, a seller experiences financial distress that causes them to sell at a lower price, or a company that urgently needs a property pays much more than surrounding parcels are actually worth.
The exceptions to applying the current market value are for agriculture and timberland, which are assessed based on their production. This normally helps reduce the property tax liability for these parcels for the benefit of the owner.
Do valuations differ by property type in Texas?
Properties in Texas are assessed separately based on their property type:
Real estate
Real estate in Texas is defined as all buildings and land. It doesn’t include the things on or inside the property or buildings.
Real estate property is assessed every year, but if your value changes by less than $1500, CADs are not legally required to send a notice.
Assessment notices are mailed in the spring, usually late March to early April (mainly April). The appeal deadline is May 15 (or 30 days after the notice is mailed if it is mailed late).
Business personal property (BPP)
BPP in Texas is defined as temporary or movable property such as furnishings, office machines, computers, telephones, vehicles, and other such items that are used by a company or person to operate a business. Essentially, it’s the things inside the real estate.
BPP is assessed every year, and notices of change in value are usually mailed in May after the first batch of real estate notices have gone out—but this can vary based on the CAD.
For personal property, companies are required to submit rendition statements, usually by April 15. A rendition is a list of the taxable inventory as of January 1 that year.
Mineral property
Texas has a lot of mineral property! Depending on the CAD, the subcategories can be called oil, gas, industrial, or utility.
Mineral property is also assessed every year, but most CADs have a third party vendor that helps assess this type of property since it’s so complex.
Notices are almost always mailed later than real estate and personal property. May to June is a pretty common timeframe.
Texas Property Tax Bills
When are appraisal rolls certified in Texas?
The state deadline to certify appraisal rolls is July 20, but a CAD can’t certify if more than 5% of the total appraised value is under protest. If that happens, the Certified Appraisal Rolls will be delayed beyond their deadline until the protested total appraised value falls below 5%.
When are property tax bills mailed in Texas?
Tax bills are typically mailed out to parcel holders in October or November. Bills are due for payment by January 31 (or 21 days after the bill is mailed if they are mailed late).
Depending on the county, the county might collect all property taxes and send one bill, or the taxing units might bill separately. Even within one county, different cities could operate differently (with one sending bills through the county and the other doing it themselves). So, it’s important to stay on top of your Texas parcel list and note which bills you’ve received and which you haven’t!
What happens if you miss your property tax bill deadline in Texas?
If you miss your bill deadline, you’ll owe a 6% penalty in the first month, with an additional 1% added on each month (up to a total of 12%). You’ll also get 1% interest tacked on each month. So if you are 3 months late, you’ll owe an 8% penalty and 3% interest.
Some taxing authorities in Texas do incentivize early payments by offering a 3% discount if the bill is paid in October.
What is the property tax rate in Texas?
Tax rates are usually set between August and December. Texas does limit how much the property tax rate can increase each year to 3.5% without voter approval, a restriction which was only imposed in 2019.
More Information about Texas Property Taxes
For more information about Texas property taxes, download our State-by-State Guide to Real Property Taxes. The guide includes details on tax rates, mailing dates, appeal and bill deadlines, assessment cycles, and penalties for each of the 50 states.
