With New Property Tax Law, Increased Land Values And Commercial Cap Cause Substantially Larger Tax Bills
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By Glenn Goodrich
Founder/CEO, PropertyTax.io
In November 2023, Texas voters passed Proposition 4, significantly altering the landscape of property taxation with an increase in the homestead exemption from $40,000 to $100,000. While this legislative change was widely celebrated, less noticed was a new 20 percent cap on non-homesteaded real estate valued under $5 million, impacting commercial properties across the state.
In Dallas County alone, this adjustment has removed approximately $4.8 billion in commercial taxable value, translating into a substantial $100 million loss in tax revenue — a cost that will now burden homeowners with higher tax rates.
This comes on the heels of value notices hitting homeowners’ mailboxes last week, shocking many and leaving many unanswered questions.
Why did my land value increase so much?
North Texas was a hotbed of real estate activity in the past few years, leading the country in value appreciation. Interest rates have dampened further aggressive increases, but appraisal districts are playing catch-up, with Dallas notably adjusting values upward after a recovery from a significant data breach last year.
Land value increases are a blanket statement from appraisal districts indicating that an area’s market value has risen from the previous year. Challenging land values is tough and efforts in a protest are better spent elsewhere — focus on providing recent sales data and photos proving your property’s condition is not as nice as what the appraisal district has recorded. Firms like PropertyTax.io gather all this evidence for you and use it to lower the value on your behalf.
Is it worth protesting my value if my ‘cap’ value is substantially lower than my ‘market value’?
It’s important to understand the ‘notice of appraised value’ you received in the mail from the appraisal district to decide if a protest is worthwhile.
Your appraisal notice contains two values: ‘market’ and ‘cap’ (sometimes referred to as the assessed value). The ‘cap’ value for homeowners reflects the 10 percent homestead limit in value increase from the previous year.
When you file a protest, you can only dispute the ‘market’ value. Your tax bill, however, is based on your ‘cap’ value. Lowering your market value below your ‘cap’ value is what will save you money on your tax bill this year. This is the primary goal in a property tax protest, but it’s not always possible to lower your ‘market’ value below the ‘cap’ value, begging the question: Is a protest still worth it?
If you’re in Dallas where properties are revalued every two to three years, a successful protest could offer long-term savings by setting the bar lower for next year. Some counties revalue all their parcels every year, whereas a longer-term approach doesn’t offer as much benefit.
A word of caution if you are hiring a firm to protest the value for you: Be sure that you fully understand how they are compensated as it relates to the tax savings they can produce for you. My firm, PropertyTax.io, does not charge a fee unless we reduce the ‘market’ value below the ‘cap’ value, therefore we work many accounts for free.
I would avoid flat-fee upfront companies altogether. Paying a firm an upfront fee does not incentivize them to maximize your savings, and it often leads to paying for a service that did not save you money.
Have increased property values nullified tax savings from the increased homestead exemption?
Unfortunately for many, the increased homestead exemption benefits have been somewhat offset by these higher property valuations. My advice? Engage fully in the property tax process — whether by filing a protest yourself or by hiring experts like us at PropertyTax.io. Attend local budget meetings, push for higher homestead exemptions at the local level, and make your voice heard.
Tune into this episode of Dallas Dirt as host Candy Evans discusses how property tax appraisals work, what criteria is used to successfully protest a valuation, and why homeowners lag behind commercial real estate in rightfully lowering their tax appraisals.
Propertytax.io Offers Tips for Protesting Your Property Taxes – Dallas Dirt
Get involved and hold the government accountable.
This year’s tax changes may feel overwhelming, but there are remedies. By becoming actively involved in the tax protest process and understanding your rights and options, you can ensure that your financial burdens are not only fair but minimized. For a personalized consultation or to learn more about how we can help, visit PropertyTax.io.
Stay informed, stay engaged, and let us help you manage the complexities so you can keep more of your hard-earned money.
Glenn Goodrich is the founder and CEO of PropertyTax.io. Find out more about how PropertyTax.io can save you money on your property tax bill here.
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What makes sense that higher amounts changed nothing more but raise tax values of homes not lowering them. Truly the taxed amounts of value is what the home is sold and bought upon the original ownership. Not hyper inflated values by assessors.