Tax Bill or Bills?

Texas is a big place, and just how your tax bill looks can change from county to county. In some counties, multiple taxing bodies are consolidated on one bill, while others may send you up to three bills based on the taxing units. You pay the same amount of tax either way, so if you receive multiple bills, don’t think you are being overcharged. The three main components are the county, the school district, and your Municipal Utility District (MUD), though the MUD can be replaced by other types of water districts. If your bill contains all of these taxing bodies in one consolidated list, then each will be broken down for you to see where your taxes are going. If you receive bills piecemeal, then each statement will only contain charges for the corresponding body. Despite being issued by different bodies, all of these bills are due at the same time.

County Taxes

If your bill is consolidated, these charges will usually appear under the county section. If broken down into multiple bills, the county bill is usually the first to arrive. Money collected for the county is used on general county programs, including the police, firefighters, emergency services, local colleges, flood control, and a litany of other services. On your bill, each of these major programs will be broken down, so you can see where your money goes. County taxes can also have exemptions applied, typically the homestead exemption. There is no state-mandated amount for county exemptions, so this can vary broadly between counties. If you have an exemption, but it is not applied, this needs to be corrected immediately, as you are paying far more than you should.

School District

Once the largest bill by far, recent legislative changes in Texas over the past few years have lowered school property taxes significantly, at least if you have a homestead. Many school taxes can be eliminated entirely with a homestead exemption and an over-65 exemption being paired together. A standard homestead exemption removes $140,000 in assessed value from your home, while an over-65 exemption will deduct another $60,000 in taxable value. With the new exemption laws, even young homeowners will generally find their school district taxes as the lowest portion of their tax burden. These taxes fund schools, teachers, pensions, and athletics. Some politicians have pledged to erase these taxes entirely, replacing them with state funding.

MUD or Related Entities

Not every Texan has a MUD, but they are fairly common across the state. Many young homeowners are blindsided by this tax, as they tend to be far more obscure than school districts or the county government. MUDs handle water, sewage, and other utilities, and are usually formed because a bond was issued for your area for various pieces of utility infrastructure. MUDs do not use exemptions, unlike other taxing bodies, which often leads to them being the most expensive components of your tax burden. In larger cities, the functions of a MUD are often subsumed by the city government and various water districts.

The Property Tax Payment Deadline is January 31

No matter how your bills are broken down, you have until January 31st to pay your taxes in full. After that, penalties and interest quickly start adding up. Starting at a 6% penalty and 1% interest on February 1. Penalties will increase by 1% each month until July, when they jump to 12%. Interest will then add 1% a month after that. Law firms will be contracted to collect, which quickly adds more fees on top of the growing pile. This makes paying on time a paramount priority, and it should be the No. 1 priority for any Texas property owner. If you cannot make the payment right away, there are a few options, depending on your circumstances, to help defer payment or spread it out over time.

Payment Plans

There is no official state payment plan for most taxpayers. For homeowners under 65 who are not disabled, the payment plan will come down to the county and taxing unit responsible for the bill. In Harris County, for instance, payment plans can be 12, 24, or even 36 months long. This prevents penalties and collections, though it does have an interest rate that increases by 1% each month. This can be for both current or delinquent taxes. Many major metro areas have similar plans, though again, this is up to your local government’s discretion. There are more firm rules for those over 65, qualified disabled veterans, or disabled homeowners. If you fit one of these criteria, then you can instead break your payment into four parts, starting on January 31. Payments are then due on the 31st of March, May, and July.

Deferments

Those over 65, the disabled, and qualifying disabled veterans, have another option exclusive to them. Property tax deferments allow homeowners that meet the criteria to put off paying taxes indefinitely. Once this agreement is reached, you will no longer have to pay annual property taxes. However, the taxes are still accruing in the background, along with interest, and come due when you sell the property, transfer it to someone else, or pass away. As long as you stay in your home, you will not have to worry about losing it thanks to taxes. Active military members deployed outside of Texas may also defer taxes.

Property Tax Loans

If you are having trouble covering costs, then you could consider obtaining private property tax loans. These function as any other loan, with various types of interest plans and collateral requirements. Home equity loans may be a safer option to use and are usually a highly versatile tool for homeowners as it is. Private loans are ideal for appraisal districts and taxing units that do not use payment plans. If you are exploring this option, it is useful to shop around before committing.

Lowering Your Taxes

The only two ways to reduce your property taxes in Texas are to either use exemptions or utilize property tax appeals. While exemptions can be applied retroactively, filing most appeals must be done between your notice of appraisal in April and the deadline of May 15. Texas is quickly embracing appeals, with many areas seeing over 30% of all properties being disputed every year.

O’Connor is Here to Help

We know that is a lot of deadlines and information to process. We at O’Connor are here to assist you however we can. As one of the largest property tax consulting firmss in America, we have an arsenal of resources at our disposal. Based in Houston, we have been helping clients in Texas for over 50 years and know the ins –and outs of every appraisal district. While we are known for our appeals, we can provide you with many other services, at no upfront cost to you.

When you join us, we will review your assessment and identify any errors. We will help you apply for exemptions that you might be missing, correct obvious mistakes by the appraisal district, ensure you are ready for any deadline, and handle any appeal or lawsuit you may need. You will only pay if we are able to lower your taxes, and even then, which is a contingency fee based on your savings. We will also analyze your assessment and taxes every year, appealing where necessary. We love nothing more than saving our clients money and are always happy to reduce your taxes to the fairest level possible.