Understanding the Property Tax Process
With few exceptions, Tax Code Section 23.01 requires taxable property to be appraised at market value as of Jan. 1. Market value is the price at which a property would transfer for cash or its equivalent under prevailing market conditions if:
- it is exposed for sale in the open market with a reasonable time for the seller to find a purchaser;
- both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and
- both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.
Each county appraisal district determines the value of all taxable property within the county boundaries. Tax Code Section 25.18 requires appraisal districts to reappraise all property in its jurisdiction at least once every three years. Tax Code Section 23.01 requires that appraisal districts comply with the Uniform Standards of Professional Appraisal Practice if mass appraisal is used and that the same appraisal methods and techniques be used in appraising the same or similar kinds of property. Individual characteristics that affect the property’s market value must be evaluated in determining the property’s market value.
Before appraisals begin, the appraisal district compiles a list of taxable property. The list contains a description and the name and address of the owner for each property. In a mass appraisal, the appraisal district then classifies properties according to a variety of factors, such as size, use and construction type. Using data from recent property sales, the appraisal district appraises the value of typical properties in each class. Taking into account differences such as age or location, the appraisal district uses typical property values to appraise all the properties in each class.
Three common approaches that the appraisal district may use in appraising property are the sales comparison (market) approach, the income approach and the cost approach.
The market approach to value is based on sales prices of similar properties. It compares the property being appraised to similar properties that have recently sold and then adjusts the comparable properties for differences between them and the property being appraised.
The income approach is based on income and expense data and is used to determine the present worth of future benefits. It seeks to determine what an investor would pay now for a future revenue stream anticipated to be received from the property.
The cost approach is based on what it would it cost to replace the building (improvement) with one of equal utility. Depreciation is applied and the estimate is added to the land value.
A Notice of Appraised Value informs the property owner if the appraisal district intends to increase the value of a property. Chief appraisers send two kinds of notices of appraised value.
A detailed notice contains the description of the property; taxing units allowed to tax the property; preceding year’s appraised value; preceding year’s taxable value; current year’s appraised value; last year and current year exemptions; estimate of taxes based on previous year’s tax rates if the appraised value is greater in the current year; statutory language; explanation of how to protest; ARB hearing information; and an explanation that the appraisal district only determines a property’s value and does not decide on tax increases. A detailed notice is sent if:
- the value of a property is higher than it was in the previous year (The appraisal district’s board can decide that it will send detailed notices only if a property’s value increases by more than $1,000.);
- the value of a property is higher than the value the property owner gave on a rendition(see next section);
- the property was not on the appraisal district’s records in the previous year; or
- an exemption or partial exemption approved for the property for the preceding year was canceled or reduced for the current year.
Tax Code Section 25.19 requires the chief appraiser to send the notice of appraised value by May 1 or April 1 for residence homesteads, or as soon thereafter as possible. If a property owner disagrees with this value, the property owner may file a protest with the appraisal review board (ARB).
The notice of appraised value includes a protest form and information about how and when to file a protest with the ARB if the property owner disagrees with the appraisal district’s actions.
The appraised home value for a homeowner who qualifies his or her homestead for exemptions in the preceding and current year may not increase more than 10 percent per year.
Tax Code Section 23.23(a) sets a limit on the amount of annual increase to the appraised value of a residence homestead to not exceed the lesser of:
- the market value of the property; or
- the sum of:
- 10 percent of the appraised value of the property for last year;
- the appraised value of the property for last year; and
- the market value of all new improvements to the property.
Tax Code Section 23.23(e) defines a new improvement as an improvement to a residence homestead made after the most recent appraisal of the property that increases its market value and was not included in the appraised value of the property for the preceding tax year. It does not include repairs to or ordinary maintenance of an existing structure, the grounds or another feature of the property. Tax Code Section 23.23(f) states that a replacement structure for one that was rendered uninhabitable or unusable by a casualty or by wind or water damage is also not considered a new improvement.
The appraisal limitation only applies to a residence homestead. As stated in Tax Code Section 23.23(c), the limitation takes effect Jan. 1 of the tax year following the year in which the homeowner qualifies for the homestead exemption. It expires on Jan. 1 of the tax year following the year in which the property owners no longer qualify for the residence homestead exemption.
A rendition is a form that may be used by a property owner to report taxable property owned on Jan. 1 to the appraisal district. Both real and personal property may be rendered. The rendition identifies, describes and gives the location of the taxable property. Business owners must report a rendition of their personal property. Other property owners may choose to submit a rendition.
Persons filing renditions who are not the property owner, owner’s employee or affiliated entity or a secured party must have the rendition notarized.
If the total taxable value of personal property is less than $500 in any one taxing unit, the property is exempt in that taxing unit.
A property owner who files a rendition is in a better position to exercise his or her rights as a taxpayer.The property owner’s correct mailing address is established on record so taxing units send tax bills to the right address.The property owner’s opinion of his or her property’s value is on record with the appraisal district. The chief appraiser must send a notice of appraised value if he or she places a higher value on the property than the value listed on rendition by the property owner.
Rendition statements and property report deadlines depend on property type or location. The statements and reports must be delivered to the chief appraiser after Jan. 1 and no later than the deadline indicated below. Allowed extensions also vary by property type or location as referenced below.
Rendition Statements and Reports Deadlines Allowed Extension(s) Property located in an appraisal district in which one or more taxing units exempts Freeport property under Tax Code Section 11.251 April 1
- May 1 upon written request
- additional 15 days for good cause shown
Property generally April 15
- May 15 upon written request
- additional 15 days for good cause shown
Property regulated by the Public Utility Commission of Texas, the Railroad Commission of Texas, the federal Surface Transportation Board or the Federal Energy Regulatory Commission. April 30
- additional 15 days for good cause shown
- Property InspectionTax Code Section 22.07 authorizes the chief appraiser or a representative to enter the premises of a business, trade or profession to inspect the property to determine the existence and market value of tangible personal property used for the production of income and if it has taxable situs.
- PenaltiesA penalty of 10 percent of the total amount of taxes imposed the on the property for that year could be incurred for failing to timely file a rendition statement or property report.A penalty of 50 percent of the total amount of taxes imposed on the property for the tax year of the statement or report could be incurred for filing a false report or statement or for altering, destroying or concealing any record.
Tax Payer Rights
- Taxpayer Right, Remedies and Responsibilities
- Taxpayer Right, Remedies and Responsibilities (Spanish)
- What is an Appraisal District
- Texas Property Tax Exemptions
Paying Your Taxes
Taxing units usually mail their tax bills in October. Tax bills are due upon receipt and the delinquency date usually is Feb. 1. If Feb. 1 is drawing near and you have not received a tax bill, contact your local tax offices. Find out how much tax you owe and make sure your correct name and address are on record. Failure to receive a tax bill does not affect the validity of the tax, penalty or interest due, the delinquency date, the existence of a tax lien or any procedure the taxing unit institutes to collect the tax.
Your tax bill may include taxes for more than one taxing unit if these taxing units have combined their collection operations. Both the property owner and the owner’s designated agent must be mailed tax bills. If your mortgage company pays the property taxes on your home, the mortgage company will receive the tax bill.
The tax collector must give you a receipt for your tax payment if you ask for one. Receipts are useful for federal income tax purposes and for ensuring that your mortgage company has paid the taxes on your home. In addition, your tax receipt is evidence that you paid the tax if a taxing unit sues you for delinquent taxes.
In most cases, you must pay your property taxes by Jan. 31. Taxes that remain unpaid on Feb. 1 are considered delinquent. Penalty and interest charges are added to the original amount.
Taxing units must give you at least 21 days to pay after they mail your original bill. If your bill is mailed after Jan. 10, the delinquency date is postponed. You have until the first day of the next month that will provide at least 21 days for paying the bill. For example, if the taxing unit mails your tax bill on Jan. 15, your taxes will not become delinquent until March 1. The delinquency date will be printed on your bill.
Most property owners pay their property taxes before the year’s end so they can deduct the payments from their federal income taxes.
If you appeal your value to district court, binding arbitration or the State Office of Administrative Hearings, you must pay your taxes – usually the amount that is not in dispute – before the delinquency date. You may ask the court to excuse you from prepaying your taxes by filing an oath of inability to pay the taxes in question and arguing that prepaying the taxes restrains your right to go to court on your protest. The court will hold a hearing and decide the terms or conditions of your payment.
You have no legal right to withhold taxes or to put taxes in escrow to protest government spending or for any other reason. You must express your concerns in taxing unit budget hearings. You may, however, make a payment under protest, indicating so on the check or in a transmittal letter.
- You will have penalty and interest charges added to your taxes.If taxes go delinquent, the tax collector adds a six percent penalty and one percent interest on Feb. 1. Penalty continues to accrue at one percent per month until July 1. On July 1, the penalty becomes 12 percent. Interest will be charged at the rate of one percent per month, with no maximum. Private attorneys hired by taxing units to collect delinquent accounts can charge an additional penalty of up to 20 percent to cover their fees. If the delinquency date is postponed, penalties and interest begin accruing on the postponed delinquency date.
- You will receive delinquent tax notices.The tax collector will send you at least one notice that your taxes are delinquent. They often send additional notices and warnings.
- You may have the option to set up an installment plan.Some tax collectors will allow you to pay delinquent taxes in installments for up to 36 months. They are not required to offer this option except on a residence homestead.Before signing an installment agreement, you should know that the law considers your signature an “irrevocable admission” that you owe all the taxes covered by the agreement.
- You may be sued.The tax collector’s last resort is to take a delinquent taxpayer to court. Court costs will be added to the delinquent tax bill.Each person who owns taxable property on Jan. 1 is liable for all taxes due on the property for that year. A person who owned taxable property on Jan. 1 can be sued for delinquent taxes even if the property has been sold or transferred since then.
- You may face problems in selling your property.Each taxing unit holds a tax lien on each item of taxable property. A tax lien automatically attaches to property on Jan. 1 each year to secure payment of all taxes. This tax lien gives the courts the power to foreclose on the lien and seize the property, even if its ownership has changed. The property then will be auctioned and the proceeds used to pay the taxes. As a result of the tax lien, someone who purchases real estate cannot obtain a clear title until all the delinquent taxes owed on the property are paid in full. If you are buying a portion of a larger parcel of land, check the taxes on the larger parcel. You will not be able to clear a tax lien against your part unless taxes on the whole are paid.
Tax Code Section 33.011 requires or allows taxing units to waive penalties and/or interest in specific circumstances. In most instances, however, you must pay the tax no later than the 21st day after you know or should have known of the delinquency and you must request the waiver before the 181st day after the delinquency date.
- An act or omission of the taxing unit, its agent or the appraisal district occurred.A taxing unit is required to waive penalties and may waive interest on a delinquent tax if the taxing unit, its agent or the appraisal district caused your taxes to go delinquent.
- A religious organization acquires a delinquent property.A taxing unit may waive penalties and interest if the delinquent tax is owed on a property acquired by a qualifying religious organization before the first anniversary of the delinquency date and the religious organization pays the tax.
- A taxpayer unsuccessfully attempts to timely pay by mail.A taxing unit may waive penalties and interest if you attempted to pay the tax by mail prior to the delinquency date; you mailed the payment to an incorrect address that was correct the previous year; and it is within one year that the address ceased to be correct.
- A tax bill is returned undeliverable.A taxing unit is required to waive penalties and interest if a tax bill is returned undelivered by the U.S. Postal Service; the taxing unit does not send you another bill at least 21 days before the delinquency date to the current mailing address; and you establish that you furnished the current mailing address to the appraisal district prior to Sept. 1.A taxing unit is also required to waive penalties and interest if a tax bill is returned undelivered by the U.S. Postal Service because of an act or omission of the taxing unit, its agent or the appraisal district and the taxing unit or appraisal district did not send you another tax bill at least 21 days before the delinquency date to the correct address.
- Electronic funds transfer failed.A taxing unit is required to waive penalties and interest on tax payable by electronic funds transfer if you attempted to pay it prior to the delinquency date and there was an error in transmission of the funds.
- The property was previously omitted or otherwise erroneously exempted from the appraisal roll.A taxing unit is allowed to waive penalties and interest on a delinquent tax accrued by a prior owner if the delinquency is the result of taxes imposed because of a correction to your account because your property was previously omitted from the appraisal record; erroneously exempted from the appraisal roll; entered into the appraisal roll at an incorrect value; or listed on the appraisal roll under the wrong account number.
- A postmark or delivery date after the delinquency date is the fault of the carrier.A taxing unit is allowed to waive penalties and interest if you submit evidence that you delivered payment before the delinquency date to the U.S. Postal Service, but an act or omission of the postal service resulted in your payment being postmarked after the delinquency date.A taxing unit is allowed to waive penalties and interest if you submit evidence that you delivered payment before the delinquency date to a private delivery carrier, but an act or omission of the carrier resulted in your payment being received by the taxing unit after the delivery date.
Tax Code Section 31.02 allows eligible military personnel serving on active duty during a war or national emergency to pay delinquent property taxes on property in which the person owns an interest without paying additional penalty or accrued interest. The delinquent taxes become due 60 days after the earliest of the date the military member is discharged from active service; returns to the state for more than 10 days; returns to non-active duty status in the reserves; or the war or national emergency ends.
To view the Texas Property Tax Code in its entirety visit the Texas Window on State Government Web site.
Tax Office Contact Information:
Cotulla ISD Tax Office
310 North Main St
Cotulla TX 78014
County of La Salle Tax Office
Dora A. Gonzales
101 Courthouse Square, Ste. 102
P.O. Box 737
Cotulla Texas 78014