Property Taxes Fell to Around 1.9%
You may remember the battle over property tax rates fought last year and all of the drama that ensued. Only in Texas do you get two Republicans trying to out-tax-cut each other. Maybe there are other states that do it too, but it just made me want to eat more brisket while watching the whole thing unfold. Most people are into football, but I like tax legislation.
A common property tax rate that we ran into last year and many years before that was around 2.24%. Not every property in Travis County had that tax rate, but it was by far the most common. Different areas will have local taxes that can increase or decrease that number, but when I went to fill out a listing, I would use 2.24% until I looked up the real number, and most of the time I was right.
This year, that number is 1.8092%, yes 5 significant digits. So for the median home price in the Austin-Round Rock metro area of $440,000, your tax bill just went from $9,856 (no exemptions included), to $7,960. Once you add a homestead exemption, that number drops to $6,426. All in, that is around $3,500 of tax savings for the median homeowner. Did someone just buy your vote? That's what it cost!
Homestead Exemption Went Up Too
The homestead exemption on the home you live in used to decrease your taxable value by $40,000. So if your home was valued at $440,000 you would only pay tax on $400,000. Since the new tax law passed, homeowners decreased their taxable value by $100,000, so in the example above you would only pay tax on $340,000 in value. So last year you would save (local tax rate dependent) $40,000 x 2.24% = $896 a year. Now the savings in tax is $100,000 x 1.809% = $1,809, essentially double.
And now for some charts. Look at that sweet per capita tax revenue, inflation-adjusted too just the way I like it.
So revenues are certainly up on a real basis. This chart also only goes to 2020, so it will be interesting to see it include 2024. Although you may not have received a check you are going to have some more money in your pocket, maybe not until 2025, but there may be a way to get access to these savings sooner.
Check on Your Escrow Account
If you have a mortgage the combination of the above tax breaks means you may over-save for your mortgage escrows in 2024. You can wait until 2025 and you will likely get a refund check, or if you are one of those proactive A-types (like my first daughter) then you may be able to reach out to your bank and let them know taxes will be much less this year.
Some banks may have already done this and are sending you a check this month. It all depends on your lender. They may tell you to pound sand or press '9.' But if you want to take a shot at lowering your mortgage payment there hasn't been this much moving the needle on property taxes in a long time.
As always, question everything and don't take suggestions as absolutes. These are written from a perspective of our experience and offer our insight, however limited. We're not perfect and get things wrong, but not on purpose.
