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According to hcad, my house appreciated 19k in 2 months! I just closed at the end of January and received my assessment and was dumbfounded. The fight is on!
You have to also understand why that is the case, and it is because Texas does not have a State Income Tax.
I think Tennessee has no income tax but does have a 6% tax on interest and dividends.
States without income tax must make up for the tax revenue somehow.
When people found out we were moving to TX from AZ, they frequently told us how lucky we were because TX has no income tax. I was thrilled at the idea, too, because when I did the math, it added an extra $100 back to our biweekly paychecks....$2600/yr. Cha-ching!!
However, reality hit when we really started to investigate total housing costs. In AZ, we had a brand new, very energy efficient 2700 sq ft house at $350k, with 20% down and our payments were $1500/month. To achieve that same house payment here in the Cypress area ($1500 mtg and add in the $200 we would have due to no income tax, so $1700/mo and 20% down) we're looking at around 20-30 year old house, likely in need of repairs/cosmetic upgrades, at around $275 in older subdivisions with no more than 3% tax rate. Of course, I wouldn't have to put as much down, but you can almost bet I'll be using it repair/upgrade the house....or paying the electricity bills because of older insulation materials/practices.
The real problem though, based on the current trajectory, is I fully anticipate my total monthly mortgage payment increasing significantly over the next 10 years due to the yearly tax increases. So what kind of house do I buy NOW if I want to protect my monthly housing costs from overtaking my budget in a few years? If I'm approaching it from that perspective, we're only able to look at houses in the same neighborhood, with around 2200 sq ft costing around $225k. (And just as an aside, this same house would cost me between $1700-2k to rent.)
Brand new, $350k house to a 30 year old $225k house, equating to arguably the same monetary investment from me. Hmmm.....suddenly that income tax is actually looking much more appealing!
First world problems, I know.
I also understand that the infrastructure needs to be paid for somehow, and I'm happy to do my part.
Additionally, I understand the multitude of variables between states and their various tax requirements; people from CA probably aren't as bewildered as I am!
I'm just wondering who is really benefiting from the "no income tax" deal? Because it certainly doesn't seem to be benefiting the people who are generating income and living in a house in TX. And in fact, I'm wondering if it will start driving them out?
Is it more of a marketing tool used to bring people to TX, because it is certainly known and lauded outside the state?
Has an income tax model been shown to be less beneficial than the current set up?
Hangster- I'm not asking you specifically to provide all the answers.....your post just brought all of my questions out!
When people found out we were moving to TX from AZ, they frequently told us how lucky we were because TX has no income tax. I was thrilled at the idea, too, because when I did the math, it added an extra $100 back to our biweekly paychecks....$2600/yr. Cha-ching!!
However, reality hit when we really started to investigate total housing costs. In AZ, we had a brand new, very energy efficient 2700 sq ft house at $350k, with 20% down and our payments were $1500/month. To achieve that same house payment here in the Cypress area ($1500 mtg and add in the $200 we would have due to no income tax, so $1700/mo and 20% down) we're looking at around 20-30 year old house, likely in need of repairs/cosmetic upgrades, at around $275 in older subdivisions with no more than 3% tax rate. Of course, I wouldn't have to put as much down, but you can almost bet I'll be using it repair/upgrade the house....or paying the electricity bills because of older insulation materials/practices.
The real problem though, based on the current trajectory, is I fully anticipate my total monthly mortgage payment increasing significantly over the next 10 years due to the yearly tax increases. So what kind of house do I buy NOW if I want to protect my monthly housing costs from overtaking my budget in a few years? If I'm approaching it from that perspective, we're only able to look at houses in the same neighborhood, with around 2200 sq ft costing around $225k. (And just as an aside, this same house would cost me between $1700-2k to rent.)
Brand new, $350k house to a 30 year old $225k house, equating to arguably the same monetary investment from me. Hmmm.....suddenly that income tax is actually looking much more appealing!
First world problems, I know.
I also understand that the infrastructure needs to be paid for somehow, and I'm happy to do my part.
Additionally, I understand the multitude of variables between states and their various tax requirements; people from CA probably aren't as bewildered as I am!
I'm just wondering who is really benefiting from the "no income tax" deal? Because it certainly doesn't seem to be benefiting the people who are generating income and living in a house in TX. And in fact, I'm wondering if it will start driving them out?
Is it more of a marketing tool used to bring people to TX, because it is certainly known and lauded outside the state?
Has an income tax model been shown to be less beneficial than the current set up?
Hangster- I'm not asking you specifically to provide all the answers.....your post just brought all of my questions out!
Hi, first, welcome to Texas As for property taxes, the idea that the taxes will increase significantly and continually is not always true. The tax is assessed on the market/appraised value of the home. And as we have seen with the rise of house value, the taxes go up. But, this is also true for falling values, the taxes will go down. For example, this year, our appraisal came in almost over $32K LOWER than last year, so our taxes will be less. This is before protesting, and I have always been able to reduce my taxes a bit more by protesting. So the home values do go up and down, and the taxes do go up and down with the economy and home values. The good thing is, in a down year, it can lower by much more than 10%, but the appraise value can only rise by no more than 10% if you have homestead. This helps to keep the values down. For example, in 2008 when the economy went down, I was able to lower the value of my previous home from $320K all the way down to $242K. that's a drop of $78K or 24%. As the economy got better, they can only increase my appraisal by a max of 10%. So overall, the time that I stayed in that home, my effective tax rate didn't change much, it actually decreased on a whole. So the thinking that your taxes will climb continually is not always true. Now in certain parts of town that are always highly desirable, that may be true, but that's the cost of living in those areas.
When people found out we were moving to TX from AZ, they frequently told us how lucky we were because TX has no income tax. I was thrilled at the idea, too, because when I did the math, it added an extra $100 back to our biweekly paychecks....$2600/yr. Cha-ching!!
However, reality hit when we really started to investigate total housing costs. In AZ, we had a brand new, very energy efficient 2700 sq ft house at $350k, with 20% down and our payments were $1500/month. To achieve that same house payment here in the Cypress area ($1500 mtg and add in the $200 we would have due to no income tax, so $1700/mo and 20% down) we're looking at around 20-30 year old house, likely in need of repairs/cosmetic upgrades, at around $275 in older subdivisions with no more than 3% tax rate. Of course, I wouldn't have to put as much down, but you can almost bet I'll be using it repair/upgrade the house....or paying the electricity bills because of older insulation materials/practices.
The real problem though, based on the current trajectory, is I fully anticipate my total monthly mortgage payment increasing significantly over the next 10 years due to the yearly tax increases. So what kind of house do I buy NOW if I want to protect my monthly housing costs from overtaking my budget in a few years? If I'm approaching it from that perspective, we're only able to look at houses in the same neighborhood, with around 2200 sq ft costing around $225k. (And just as an aside, this same house would cost me between $1700-2k to rent.)
Brand new, $350k house to a 30 year old $225k house, equating to arguably the same monetary investment from me. Hmmm.....suddenly that income tax is actually looking much more appealing!
First world problems, I know.
I also understand that the infrastructure needs to be paid for somehow, and I'm happy to do my part.
Additionally, I understand the multitude of variables between states and their various tax requirements; people from CA probably aren't as bewildered as I am!
I'm just wondering who is really benefiting from the "no income tax" deal? Because it certainly doesn't seem to be benefiting the people who are generating income and living in a house in TX. And in fact, I'm wondering if it will start driving them out?
Is it more of a marketing tool used to bring people to TX, because it is certainly known and lauded outside the state?
Has an income tax model been shown to be less beneficial than the current set up?
Hangster- I'm not asking you specifically to provide all the answers.....your post just brought all of my questions out!
To add to what was said, one thing I tell my boss who is from out of state, and others moving here, is with the property tax YOU can decide about how much you want to spend on taxes, vs being told how much income tax you will have to pay to the state. If a family making say $200K annually is paying 5%, say $10K in state income taxes, they could alternatively choose to live in a cheaper neighborhood with a lower 2.x% tax rate in a $200K house and only pay $4-5K in taxes, and save the rest. Granted most people in that income bracket will probably buy a much more expensive home and pay higher property taxes, but at least they do have the option to save money.
According to hcad, my house appreciated 19k in 2 months! I just closed at the end of January and received my assessment and was dumbfounded. The fight is on!
If you showed them what you paid on your closing statements, they will bring it back to that value. If, after the $19k, you still paid more, don't show them those papers!
I bought the house in December 2015. I do have the residential homestead exemption applied to my account.
2016 appraisal value is 14.30% higher than 2015 appraisal value listed on HCAD.
2016 market value is 10.93% higher than 2015 market value listed on HCAD.
Both 2016 appraisal and market values are same in dollar amounts on HCAD.
And these values are 1.29% higher than the actual price I paid for the house in December 2015.
Is it possible by protesting I can get the appraisal value capped at 10% max. higher than 2015, irrespective of how much I paid when I bought the house?
If yes, what is the best way to approach it? on my own? or hire someone to do it?
How much do they charge typically to represent you?
To add to what was said, one thing I tell my boss who is from out of state, and others moving here, is with the property tax YOU can decide about how much you want to spend on taxes, vs being told how much income tax you will have to pay to the state. If a family making say $200K annually is paying 5%, say $10K in state income taxes, they could alternatively choose to live in a cheaper neighborhood with a lower 2.x% tax rate in a $200K house and only pay $4-5K in taxes, and save the rest. Granted most people in that income bracket will probably buy a much more expensive home and pay higher property taxes, but at least they do have the option to save money.
THat is what we did.
Decided what we were willing to pay, bought a trashed out house in a very good neighborhood in an unincorporated part of Harris county. We redid it like we wanted.
We closed in November, protested the sales price of 325 by telling HCAD I got taken in by a real estate and paid too much. They dropped the value to what I thought it should have been. TWo years later, we got the value down to 255.
Fifteen years of taxes on a starting point of 255 instead of 400 adds up.
I bought the house in December 2015. I do have the residential homestead exemption applied to my account.
2016 appraisal value is 14.30% higher than 2015 appraisal value listed on HCAD.
2016 market value is 10.93% higher than 2015 market value listed on HCAD.
Both 2016 appraisal and market values are same in dollar amounts on HCAD.
And these values are 1.29% higher than the actual price I paid for the house in December 2015.
Is it possible by protesting I can get the appraisal value capped at 10% max. higher than 2015, irrespective of how much I paid when I bought the house?
If yes, what is the best way to approach it? on my own? or hire someone to do it?
How much do they charge typically to represent you?
Thanks
asaMac98
In the year of purchase, the 10% cap doesn't apply, so any comparison to what the house was valued at by HCAD is moot. In the year of acquisition, this is HCAD's opportunity to true-up the tax value to market. The homestead cap will apply in future years.
Yes, you can always hire someone to protest. It's tough if HCAD knows you just bought, because they are going to want to see your closing statement since that's ostensibly FMV. That's what happened with us--bought in December 2014, and HCAD increased the value to greater than our purchase price. We protested and were only successful in getting back down TO our purchase price, but not below. I looked at the house we sold, and they barely adjusted it, so the buyers of our old house won that round!
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