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Understanding Property Taxes

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Property Taxes in Texas

All homeowners pay a property tax based on a percentage of the appraised value of the home. Texas has no state income tax, so property taxes in each county are a major source of income for civic ventures including fire, police and EMS; as well as funding the public school system and county road and infrastructure maintenance. 

How Are My Taxes Calculated?

There are three basic steps to property tax allocation in Texas. 

  1. The county tax assessor sets the appraised value of each taxable property in a county or district on January 1st.
  2. Property owners are notified of the appraised value of their property and have the opportunity to dispute the tax amount, usually between the months of May to June. 
  3. Actual property tax bills are sent to property owners in October and collection by local agencies begins. Taxes must be collected by January 31st of the following year to avoid steep penalties.

What If I Have a Mortgage?

If you have a mortgage on your home, property taxes are most likely paid out of an escrow account by your mortgage company. Ideally, you are pre-paying each month a set amount to cover the following year’s property taxes. These amounts are calculated by taking your previous tax burden and dividing by 12. This means your projected taxes are not exact and escrow accounts could end up with an overage or shortage at the end of the year. Although not exact, this process does allow the homeowner to save over time and not be faced with a large lump sum tax bill at the end of the year. 

Which title, escrow, or real estate transaction questions do you have? As your trusted title company for over 50 years, we’re happy to share our wealth of knowledge. When it’s time to sell or buy, we hope you’ll let your real estate agent know you want to close at Mid-Coast Title Company.

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