Taxpayers' Rights, Remedies and Responsibilities

Taxpayers' Rights,
Remedies and Responsibilities

The property tax provides more tax dollars for local services in Texas than any other source. Property taxes help to pay for public schools, city streets, county roads, police, fire protection, and many other services.
Property taxes are local taxes. Your local officials value your property, set your tax rates, and collect your taxes. However, state law governs how the process works.
Property taxes are based on the value of the property. For example, the property tax on a vacant lot valued at $10,000 is ten times as much as one valued at $1,000.
The Texas Constitution sets out five rules for the property tax.
H Taxation must be equal and uniform.
All property must be valued and taxed equally and uniformly. This applies to similar types of property — for example, all residential homes — and to differing types of property — for example, commercial properties and utility properties. No single property or type of properties should pay more than its fair share of taxes.
H With some exceptions, all tangible property must be taxed on its current market value. The exceptions include agricultural land and timberland.
A property’s market value is the price for which it would sell when both buyer and seller want the best price and neither one is under pressure to buy or sell. Land used for farming and ranching can be valued on its capacity to produce crops or livestock, instead of its value on the real estate market. This appraisal is known as agricultural appraisal. Special timberland appraisal is also available to property owners whose land produces timber for products.
H All property is taxable unless a federal or state law provides an exemption for it.
An exemption may exclude all or part of a property’s value from taxation.
H Property owners have a right to reasonable notice of increases in appraised property value.
H Each property in a county must have one appraised value. The Legislature may provide for exceptions for a property that is part of a governmental unit — such as a school district — whose boundaries cross county lines.

How does the system work?

There are three main parts to the property tax system in Texas:
H An appraisal district in each county sets the value of your property each year. A chief appraiser is the chief administrator.
H An appraisal review board (ARB) settles any disagreements between you and the appraisal district about the value of your property.
H Local taxing units, which include the county, city, school district, and special districts, decide how much money they will spend. This determines the total amount of taxes that you and your neighbors will pay.
The system has four stages: valuing the taxable property, protesting the values, adopting the tax rates, and collecting the taxes.
January 1 marks the beginning of property appraisal. What a property is used for on January 1, market conditions at that time, and who owns the property on that date determine whether the property is taxed, its value, and who is responsible for paying the tax.
Between January 1 and April 30, the appraisal district processes applications for tax exemptions, agricultural appraisals, and other tax relief.
Around May 15, the appraisal review board begins hearing protests from property owners who believe their property values are incorrect or who did not get exemptions or agricultural appraisal. The ARB is an independent panel of citizens responsible for handling protests about the appraisal district’s work. When the ARB finishes its work, the appraisal district gives each taxing unit a list of taxable property.
In August or September, the elected officials of each taxing unit adopt tax rates for their operations and debt payments. Several taxing units tax your property. Every property is taxed by the county and the local school district. You also may pay taxes to a city and to special districts such as hospital, junior college, water, fire, and others.
Tax collection starts around October 1 as tax bills go out. Taxpayers have until January 31 of the following year to pay their taxes. On February 1, penalty and interest charges begin accumulating on most unpaid tax bills. Tax collectors may start legal action to collect unpaid taxes on February 1.

What is the taxpayer’s role?

You can play an effective role in the process if you know your rights, understand the remedies available to you, and fulfill your responsibilities.
H Know your rights:
You have the right to equal and uniform tax appraisals. Your property value should be the same as similar properties.
You have the right to have your property taxed on its market value or its agricultural or timber value if it qualifies.
You have the right to receive all tax exemptions or other tax relief for which you qualify and apply timely.
You have the right to notices of changes in your property value or in your exemptions.
You have the right to know about a taxing unit’s proposed tax rate increase and to have time to comment on it.

H Understand your remedies:
If you believe your property value is too high, or if you were denied an exemption or agricultural appraisal, you may protest to the ARB. If you don’t agree with the review board, you may take your case to court.
You may speak at public hearings when your elected officials are deciding how to spend your taxes and setting the tax rate.
You and your fellow taxpayers may limit major tax increases in an election to roll back or limit the tax rate.

H Fulfill your responsibilities:
You must apply for the general, over-65, disabled, or any local-option homestead exemptions before the deadlines in the appraisal district where your property is located. If your property is located in a taxing unit that overlaps into two or more counties, you need to apply in each county appraisal district.
You must apply for other exemptions, agricultural appraisal, and other forms of tax relief before the deadlines.
You must see that your property is listed correctly on the tax records with your correct name, current address, and property description.
You must pay your taxes on time.

Appointing an Agent

You may represent yourself in any property tax matter. Or, you may appoint a representative — commonly called an “agent” — to handle specific duties. You don’t need an agent to file for exemptions on your home — just get an application form from your appraisal district.
To appoint an agent, you must give that person written authorization to represent you. You must use a special “Appointment of Agent” form (Form No. 50-162), available from the appraisal district or the Comptroller’s office. No form is necessary if the person is your attorney, mortgage lender, employee, or a person who is simply acting as a courier.
The agent may represent you in one or more areas that you designate on the form: to file notices of protest, to present before the ARB, to negotiate on any value disputes, to receive notices or tax bills, or to handle any other specific action. The agent also may represent you for general tax purposes.
The form asks for a date when your authorization to this person ends. If you don’t give an ending date, the agent continues to represent you indefinitely, until you file a statement ending the appointment, or you appoint a new agent.

Savings on Home Taxes

An exemption removes part of the value of your property from taxation and lowers your taxes. For example, if your home is valued at $50,000 and you qualify for a $15,000 exemption, you pay taxes on your home as if it was worth only $35,000. Other than exemptions for disabled veterans or survivors, these exemptions apply only for your homestead. They do not apply to other property you own.

Does your home qualify for exemptions?

H You must own your home.
To qualify for a general or disabled homestead exemption, you must own your home on January 1. If you are 65 years of age or older, you need not own your home on January 1. You will qualify for the over-65 exemption as soon as you turn 65, own the home, and live in it as your principal residence. You will receive the exemption as of January 1.
Your homestead can be a separate structure, condominium, or a mobile home located on leased land, as long as you own it. Your homestead can include up to 20 acres if the land is used as your yard.
A residence may be owned by an individual through an interest in a qualifying beneficial trust and may be occupied by a trustor of a qualifying trust.
If you are not the sole owner of the home, you will receive only a portion of any qualified exemption, based on your percent of ownership. For example, you own a 25-percent interest in a homestead valued at $100,000, for a total value of $25,000. You will receive 25 percent of a $15,000 school homestead exemption, or $3,750.
H You must use the home as your principal residence on January 1.
If you have more than one house, you can only get exemptions for your main or principal residence. You must live in this home on January 1.
If you temporarily move away from your home, you can still get an exemption if you don’t establish another principal residence and you intend to return. For instance, if you enter a nursing home, your home still qualifies as your homestead if you intend to return.
Renting part of your home or using part of it for a business doesn’t disqualify the rest of your home for the exemption.
Note: Texas has two distinct laws for designating a homestead. The Texas Tax Code offers homeowners a way to apply for homestead exemptions to reduce local property taxes. The Texas Property Code allows homeowners to designate their homesteads to protect them from a forced sale to satisfy creditors. This law doesn’t protect homeowners from tax foreclosure sales of their homes for delinquent taxes.

What home exemptions are there?

H School taxes — all homeowners
You will qualify for a $15,000 homestead exemption on your home’s value for school taxes.
H County taxes — all homeowners
If your county collects a special tax for farm-to-market roads or flood control, you will receive a $3,000 exemption for this tax. If you qualify for local-option exemptions for age 65 or older homeowners, or disabled homeowners (next section), you will receive only the local-option exemptions.
H Optional exemptions — all homeowners
Any taxing unit, including a school district, city, county, or special district, may offer an exemption for up to 20 percent of your home’s value. The amount of an optional exemption can’t be less than $5,000, no matter what the percentage is. For example, if your home is valued at $20,000 and your city offers a 20-percent exemption, your exemption is $5,000, even though 20 percent of $20,000 is just $4,000.
Each taxing unit decides whether it will offer the exemption and at what percentage. This percentage exemption is added to any other home exemption for which you qualify. The taxing unit must decide before July 1 of the tax year to offer this exemption.
H Age 65 or older homeowners
If you are age 65 or older, your residence homestead will qualify for more exemptions.
You will qualify for a $10,000 homestead exemption for the school taxes on your home’s value, in addition to the $15,000 exemption for all homeowners.
If you qualify for both the $10,000 exemption for over-65 homeowners and the $10,000 exemption for disabled homeowners (see the following section), you must choose one or the other for school taxes. You cannot receive both.
In addition to the $10,000 exemption for school taxes, any taxing unit — including a school district — can offer an additional exemption of at least $3,000 for taxpayers age 65 or older.
Once you receive an over-65 homestead exemption, you get a tax ceiling for that home on your total school taxes. The school taxes on your home cannot increase as long as you own and live in that home. The tax ceiling is the amount you pay in the year that you qualify for the over-65 homeowner exemption. The school taxes on your home may go below the ceiling, but the school taxes will not be more than the amount of your ceiling.
However, your tax ceiling can go up if you improve your home (other than normal repairs or maintenance). For example, if you add a garage or a game room to your home, your tax ceiling can go up. Also, your tax ceiling will change if you move to a new home.
When a homeowner who has been receiving the tax ceiling on school taxes dies, the ceiling transfers to the surviving spouse if the survivor is 55 or older and has ownership in the home. The survivor should apply to the appraisal district for the tax ceiling to transfer. The ceiling remains in effect for as long as the spouse lives in the home.
A tax ceiling does not expire when the owner conveys the interest in the home to a trust, if the owner-trustor occupies the home.
When you no longer live in the home as your permanent residence, you will no longer qualify for the over-65 exemption for the remaining portion of that year. Taxes will be prorated based on the number of days that elapsed after you no longer qualified that home for the exemption to the end of the year.
If you purchase another home, you may qualify for the over-65 exemption when you live in the new home as your principal residence. You may transfer the percentage of school tax paid based on your former home’s over-65 school tax ceiling to the new home. For example, if you currently have a tax ceiling of $100, but would pay $400 without the tax ceiling, the percentage of tax paid is 25 percent. If the taxes on your new home are $1,000, the new school tax ceiling would be $250, or 25 percent of $1,000. You may request a certificate from the appraisal district for the former home to take to the appraisal district for your new home.
• When homeowners who have been receiving the age-65-or-older exemptions die, the exemptions transfer to their surviving spouses. The surviving spouses must be 55 or older at their spouse’s death and must live and have ownership in the home. The survivors should apply to the appraisal district to transfer the exemptions. If your spouse dies in the year of his or her 65th birthday but has not applied for the over-65 exemption, you may apply for the over-65 exemption as the surviving spouse. The exemptions remain in effect for as long as the survivors own and live in the homes.
Homeowners age 65 or older who apply for the exemptions may also pay their home taxes in installments. See Paying Your Taxes for details.
If you are a homeowner age 65 or older, you may defer or postpone paying any delinquent property taxes on your home for as long as you own and live in it. To postpone your tax payments, file a “tax deferral affidavit” with your appraisal district. You may suspend any lawsuit by filing an affidavit with the court. The deferral is for all delinquent property taxes of the taxing units that tax your home.
A tax deferral only postpones paying your taxes. It doesn’t cancel them. Interest is added at the rate of 8 percent a year. Once you no longer own your home or live in it, past taxes and interest become due. Any penalty and interest that was due on the tax bill for the home before the tax deferral will remain on the property and also become due when the tax deferral ends.

H Homeowners with disabilities
A person with a disability also may get exemptions. “Disabled” means either (1) you can’t engage in gainful work because of physical or mental disability or (2) you are 55 years old and blind and can’t engage in your previous work because of your blindness. If you receive disability benefits under the federal Old Age, Survivors, and Disability Insurance Program through the Social Security Administration, you will qualify.
Disability benefits from any other program do not automatically qualify you for this exemption. Contact your appraisal district for assistance on what information you will need.
If disabled, you will qualify for a $10,000 exemption for school taxes, in addition to the $15,000 exemption for all homeowners.
And, any taxing unit can offer an exemption of at least $3,000 from the home value of taxpayers with disabilities.
Homeowners who are disabled and apply for homestead exemptions also may pay their home taxes in installments. See Paying Your Taxes for details.

Are you a disabled veteran or survivor?

You may qualify for a property tax exemption if you are either (1) a veteran who was disabled while serving with the U.S. armed forces or (2) the surviving spouse or child (under 18 years of age and unmarried) of a disabled veteran or of a member of the armed forces who was killed while on active duty. You must be a Texas resident.
You must have documents from either the Veterans’ Administration or the branch of the armed forces that show the percentage of your service-related disability. Your disability rating must be at least 10 percent.
If you are a surviving spouse or child, you must have the veteran’s disability records. You may need other documents such as proof of marriage or age.
This exemption ranges from $5,000 to $12,000, depending on the extent of the disability. This exemption is not only for a home — you can apply it to any property you own on January 1. However, you may pick only one property to receive this exemption for the taxing units that tax the property.
The disabled veteran’s exemption is different from a disabled homeowner’s exemption.

What should new homeowners do?

H Before you buy a home, you or your mortgage company should get a tax certificate for the home from all taxing units that tax it. The tax certificate will show if delinquent taxes are owed. You can’t get a clear property title until you have paid all delinquent taxes.
H Your mortgage company may pay property taxes on your home out of an escrow account. If this is the case, make sure the tax collectors send the original tax bills to the mortgage company. You may want to request a receipt to see if the mortgage company pays the taxes on time and for federal income tax purposes.
H You should apply to the appraisal district for a residence homestead and any other exemptions. You must apply to the appraisal district that appraises your home. If your property is valued by more than one appraisal district, you must file the general, disabled, or over-65 homestead exemption in each district office.
H If you sold your previous home in Texas, make sure it’s listed under the new owner’s name and address.
H If your home is new, you should receive a notice of appraised value from the appraisal district in April or May. Contact the appraisal district if you don’t receive this notice.
HIf you no longer qualify for the general, over-65, or disabled homestead exemption, you should notify the appraisal district in writing. If you fail to notify the appraisal district and don’t pay your taxes, your home will have a 50-percent delinquent tax penalty instead of 12 percent, plus interest.

How to File for an Exemption on Your Home

Get an application form at your local appraisal district office. Fill out only one application. There is a separate application for the disabled veteran’s exemption.

Return the form to the appraisal district office after January 1, but no later than April 30. Making false statements on your exemption application is a criminal offense.

Provide necessary information. For example, if your home is a mobile home, you must have a copy of the title to the home or a verified copy of the purchase contract.

If your property is valued by more than one appraisal district, you must file an application in each appraisal district office. This occurs when your property is located in a taxing unit that is also in a neighboring county. Contact the appraisal district if you aren’t sure.

You may file for a homestead exemption up to one year after (a) the date you paid the taxes on the home or (b) the date the taxes became delinquent, whichever date is earlier. You will get a new tax bill with a lower amount or a refund if you already paid. Late filing does not apply to the disabled veteran’s exemption.

If you are 65 this year, you may file for the over-65 exemption up to one year from the date you turned 65.

If the chief appraiser asks you for more information, you will have at least 30 days to reply.

If the chief appraiser denies or modifies your exemption, he or she must tell you in writing within five days. This notice must explain how you can protest before the appraisal review board.

Once you receive a homestead exemption or a disabled veteran’s exemption, you don’t have to apply again unless the chief appraiser asks you to apply or unless your qualifications change. If you move to a new home, you will have to fill out a new application. If you become disabled on or before January 1, you should file a new application.

The chief appraiser may require a new application by sending you a written notice and an application form. If you don’t return the new application, you can lose your exemptions.

Savings on Agricultural Land Taxes

Agricultural appraisal lowers the value of land owned by qualified farmers and ranchers. It values rural land based on the land’s capacity to produce crops, livestock, or timber, instead of its value on the real estate market. This lower value reduces property taxes on the land.

What land qualifies?

Taxpayers may qualify for agricultural appraisal under two different laws. The newer law is called “open-space valuation” or “1-d-1 appraisal” (after Article 8, Section 1-d-1 of the Texas Constitution). Nearly all land that receives agricultural appraisal is under this law. Details on the older law — known as “1-d” or “agricultural use” — are available from your appraisal district.
For “1-d-1 appraisal,” the land must meet the following:
H The land must be devoted principally to agricultural use. Agricultural use includes production of crops, livestock, poultry, fish, or cover crops. It also can include leaving the land idle for a government program or for normal crop or livestock rotation. Land used for raising certain exotic animals (including exotic birds) to produce human food or other items of commercial value and cutting wood for use in fences or structures on adjacent agricultural land also qualifies. Using land for wildlife management is an agricultural use. Such land was previously qualified open-space land and is actively used for wildlife management. Wildlife management land must be used in at least three of seven specific ways to propagate a breeding population of wild animals for human use. Contact your local appraisal office for details.
Timberland must be used with the intent to produce income and be devoted principally to the production of timber.
Both agricultural land and timberland must be devoted to production at a level of intensity that is common in the local area.
The land must have been devoted to agricultural and/or timber production for at least five of the past seven years. However, land within the city limits must have been devoted continuously for the preceding five years, unless the land did not receive substantially equal city services as other properties in the city.

H If your land qualified for agricultural appraisal and you change its use to a non-agricultural use, you will owe a rollback tax for each of the previous five years in which your land got the lower appraisal. The rollback tax is the difference between the taxes you paid on your land’s agricultural value and the taxes you would have paid if the land had been taxed on its higher market value. In addition, 7-percent interest is charged for each year from the date that the taxes would have been due.
The chief appraiser determines if a change to a non-agricultural use has been made and sends a notice of the change. If you disagree, you may file a protest with the ARB. You must file the protest within 30 days of the date the notice was mailed to you. The ARB decides your case.
If you don’t protest or if the ARB decides against you, you owe the rollback tax. The owner who changes the land’s use gets the rollback tax bill.

How to File for Agricultural Appraisal
Get an application form at your local appraisal district office.
Fill out the form completely and return it to the appraisal district office after January 1, but no later than April 30. Remember, making false statements on your application is a criminal offense.
If your property is valued by more than one appraisal district, you must file an application in each appraisal district office. If you don’t, you could end up paying taxes on your property’s full market value to one or more taxing units. This occurs when your property is located in a taxing unit that is also in a neighboring county. Contact the appraisal district if you aren’t sure.
If you need more time to complete your application form, submit a written request to the chief appraiser before the April 30 deadline. The chief appraiser can grant up to 60 extra days if you have a good reason for needing extra time.
If you miss the April 30 deadline, you may file an application any time before the ARB approves the appraisal records (usually about July 20). However, in such a case, you will be charged a penalty for filing late. The penalty is 10 percent of the tax saving you obtained by getting agricultural appraisal for your land. Once the ARB approves the records, you can’t apply for agricultural appraisal for that year.
If the chief appraiser asks you for more information, you will have at least 30 days to reply. You may ask for more time but you must have a good reason. If you don’t reply, the chief appraiser must deny your application.
If the chief appraiser denies or modifies your agricultural appraisal, he or she must tell you in writing within five days. This notice must explain how you can protest to the ARB.
Once you receive agricultural appraisal, you don’t have to apply again in the following years unless your qualifications change. However, the chief appraiser may request a new application to verify that you still meet the qualifications. If you get a notice to reapply, be sure to do so. If you don’t, you will lose your eligibility. If you become the owner of land that is already qualified, you must reapply in your own name by April 30. If you don’t, you will lose your eligibility. You must notify the appraisal district in writing by April 30 if your land’s eligibility changes. Failure to do so results in a penalty charge.
The agricultural appraisal is based on an estimate of the typical annual income during the five-year period preceding the year before the appraisal. The agricultural appraisal may change annually based on this income

New Business/Going Out of Business

If you own a new business, you must render your income-producing personal property. This property includes furniture, fixtures, equipment, and inventory. See the next section on “renditions.” You will pay taxes on the property that you own on January 1 of the tax year. Motor vehicle dealers, boat and outboard motor dealers, manufactured housing retailers, and heavy equipment dealers should check with their local appraisal district or county tax office for details on how to pay taxes on their inventory.
The appraisal district staff may enter your premises and inspect the property to determine what taxable personal property you own and its value. Such an inspection is during normal business hours or at a time agreeable to you and the appraisal district staff.
If the total taxable value of your business personal property is less than $500 in any one taxing unit, then the property is exempt in that taxing unit. For example, if your office equipment in the city is worth $300, then you will not pay city property taxes on that equipment. However, if the total value of all equipment you own within the school district or county boundaries is $500 or more, then you will pay school and county property taxes on that equipment. No application is required for this exemption. However, you may render your property to the appraisal district to claim a property value under $500. See What is a Rendition? at the end of this page.
If you go out of business after the first of the year, you will still be liable for taxes on the personal property that you owned on January 1. You aren’t relieved of the taxes because you no longer own the property.

Valuing Property

The appraisal district determines the value of all taxable property in the county. Before the appraisal can begin, the appraisal district compiles a list of the taxable property. The listing for each property contains a description of the property and the name and address of the owner.
State law requires chief appraisers who appraise the same properties for different taxing units to exchange information on the properties’ ownership, description, and other data. When filing information, property owners with property in more than one appraisal district must file with each appraisal district office. The chief appraisers will mail these owners a notice each year about this process.
The appraised home value for a homeowner, who qualifies that homestead for exemptions in the preceding year and the current year, may not increase more than 10 percent per year since that home’s last reappraisal as the owner’s qualified homestead.
Property Tax Code Section 23.23(a) sets out the limitation on the appraised value of a residence homestead. It states that the appraised value for a tax year may not exceed the lesser of : (1) the market value of the property; or (2) the sum of: (A) 10 percent of the appraised value of the property for the last year in which the property was appraised for taxation times the number of years since the property was last appraised; (B) the appraised value of the property for the last year in which the property was appraised; and (C) the market value of all new improvements to the property.
The appraisal limitation applies in the year after the homeowner qualifies for the homestead exemption.

How is your property valued?

The appraisal district must repeat the appraisal process for property in the county at least once every three years.
To save time and money, the appraisal district uses mass appraisal to appraise large numbers of properties. In a mass appraisal, the appraisal district first collects detailed descriptions of each taxable property in the district. It then classifies properties according to a variety of factors, such as size, use, and construction type. Using data from recent property sales, the district appraises the value of typical properties in each class. Taking into account differences such as age or location, the district uses the typical property values to appraise all the properties in the class.
For individual properties, the appraisal district may use three common methods to value property: market, income, and cost approach.
The market approach is most often used and simply asks, “What are properties similar to this property selling for?” The value of your home is an estimate of the price your home would sell for on January 1. The appraisal district compares your home to similar homes that have sold recently and determines your home’s value.
The district uses the other methods to appraise types of properties that don’t often sell, such as utility companies and oil leases. The income approach asks, “What would an investor pay in anticipation of future income from the property?” The cost approach asks, “How much would it cost to replace the property with one of equal utility?”

What if your property value rises?

A notice of appraised value tells you if the appraisal district intends to increase the value of your property.
Chief appraisers send two kinds of notices of appraised value. A detailed notice contains a description of your property, its value, the exemptions, and an estimate of taxes that might be owed. This notice is sent:
H if the value of your property is higher than it was in the previous year (the appraisal district’s board can decide that the district will send detailed notices only if a property’s value increased by more than $1,000);
H if the value of your property is higher than the value you gave on a rendition (see next section); or
H if your property wasn’t on the appraisal district’s records in the previous year.
If the conditions for the above notice do not apply, the chief appraiser will send a short notice without the tax estimate if your property was reappraised, changed hands, or if requested by you or your agent.
The chief appraiser must send you the notice of appraised value by May 15 or as soon thereafter as possible. If you disagree with the value, you have until May 31 or 30 days from the date the notice is delivered (whichever is later) to file a protest with the ARB.
The notice of appraised value explains how you can file a protest with the ARB if you disagree with the district’s actions. The notice will include instructions on how and when to file a protest and will include a protest form.