Property Tax 101

Property Tax 101

In Texas, everyone who owns a home, building, or land pays an annual property tax bill. The amount is supposed to be based on the property’s market value.

For most homeowners, appraised values are pretty accurate.

Appraisal districts buy sales data for residential properties from realtors in many counties, and homes tend to be fairly consistent in value within neighborhoods. When the appraised values are wrong, homeowners can appeal, and the process is relatively simple and generally doesn’t involve huge sums of money.

However, large commercial property owners devote a lot of resources to driving down their property tax bill year after year, and their efforts pay off.

Commercial properties in the state are being taxed at an average of only 60 percent of the actual market value of their buildings, according to research by the Texas Association of Appraisal Districts and the Houston Chronicle.


Unlike most states, Texas law does not require sales prices to be disclosed to appraisal districts.

Commercial properties can be valued far below their purchase price – or well under the price for which an owner would be willing to sell – and appraisers, let alone the public, might never know.

Most large commercial property owners take advantage of the lack of information around the real value of properties and appeal appraisals each and every year.

If their appeals are not initially successful – and oftentimes even when they are – many large commercial property owners sue for further reduction on their taxes. Appraisal districts, with limited resources and an overwhelming number of appeals, often settle.

Commercial property owners just have to show that someone else with a “comparable” property is assessed less, regardless of whether that property’s assessment is accurate. As a result, valuations across all commercial properties are driven down.

When commercial property owners fail to pay their fair share, it puts increased pressure on homeowners to make up the difference.

Statewide, over the last five years, homeowners have carried the burden of approximately $5.6 billion more in property taxes because of the state’s largest commercial property owners’ manipulation of the property tax system.

How do we change this?

Even though the impact of our broken commercial property tax system is felt locally, solving the problem must happen at the state level, in the legislature. That’s why community leaders, public officials, and homeowners across Texas are uniting to call for reforms that will ensure that large commercial property owners pay property taxes based on the actual market value of their buildings.

It’s time for Real Values for Texas.

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