Many people think the Texas constitutional limitation on taxable value increases is limited to 10% in any one year.  It doesn’t work that way.

Section 23.23(a) of the Texas Property Tax Code titled “Limitation on Appraised Value of Residence Homestead” provides that the taxable value of your residence homestead may be less than its market value.  It states

“(a) The appraised value of a residence homestead 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…

(c)The limitation provided by Subsection (a) takes effect as to a residence homestead on January 1 of the tax year following the first tax year the owner qualifies the property for (a homestead) exemption…

The limitation expires on January 1 of the first tax year that neither the owner of the property when the limitation took effect or the owner’s spouse or surviving spouse qualifies for an exemption under (homestead).”

Thus, if your residential homestead has not been reappraised in two years, its value can be increased 20%; in three years, 30%.

And if you have improved the property (by adding a room, for example) the value of improvements falls outside the limitation.

So, if you are the (temporary) beneficiary of the 10% limitation — your taxable value is less than your market value — should you protest your property taxes in May?  It depends:

• If your benefit — the difference between your market value and your (lower) taxable value is less than 10% of your market value, then your (temporary) benefit is going to disappear this year.  Yes, you should protest.
• If your benefit is more than 10% you might still protest just to keep down the plateau from which future increases will be levied.
• If your benefit is more than 20% it might be worthwhile to wait a year unless you feel that the true market value of your property is less than its taxable value.  In that case, you should protest to get the market value below the taxable value and reap the tax reduction this year as well as for some years to come.
  

At Property Tax Protest we’ll consider your overall taxable condition — not just your market value — before we’ll take your case.