The appraisal district determines the value of all taxable property in the county. Before the appraisal can begin, the appraisal district compiles a list of the taxable property. The listing for each property contains a description of the property and the name and address of the owner.

January 1 marks the beginning of property appraisal. What a property is used for on January 1, market conditions at that time, and who owns the property on that date determine whether the property is taxed, its value, and who is responsible for paying the tax.

How is your property valued?

The appraisal district must appraise property at market value. Market value" means the price at which a property would transfer for cash or its equivalent under prevailing market conditions if:

(A) exposed for sale in the open market with a reasonable time for the seller to find a purchaser; (B) 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 (C) 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.

The appraisal district must repeat the appraisal process for property in the county at least once every three years.

To save time and money, the appraisal district uses mass appraisal to appraise large numbers of properties. In a mass appraisal, the appraisal district first collects detailed descriptions of each taxable property in the district. It then classifies properties according to a variety of factors, such as size, use, and construction type. Using data from recent property sales, the district appraises the value of typical properties in each class. Taking into account differences such as age or location, the district uses the typical property values to appraise all the properties in the class.

For individual properties, the appraisal district may use three common methods to value property: market, income, and cost approach.

The market approach is most often used and simply asks, “What are properties similar to this property selling for?” The value of your home is an estimate of the price your home would sell for on January 1. The appraisal district compares your home to similar homes that have sold recently and determines your home’s value.

The district uses the other methods to appraise types of properties that don’t often sell, such as utility companies and oil leases. The income approach asks, “What would an investor pay in anticipation of future income from the property?” The cost approach asks, “How much would it cost to replace the property with one of equal utility?”

Limitations of Value

The appraised home value for a homeowner with a homestead exemption in the preceding year and the current year, may not increase more than 10 percent per year since that home’s last reappraisal as the owner’s qualified homestead. In other words, an increase of your homestead appraised value may not be more than 10% per year. The market value may increase 25%, but your appraised value can only increase 10%

Property Tax Code Section 23.23(a) sets out the limitation on the appraised value of a residence homestead. It states that the appraised value 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.

The appraisal limitation applies in the year after the homeowner qualifies for the homestead exemption.

A General Timeline

Between January 1 and April 30, the appraisal district processes applications for tax exemptions, agricultural appraisals, and other tax relief.

Around May 15, the appraisal review board begins hearing protests from property owners who believe their property values are incorrect or who did not get exemptions or agricultural appraisal. The ARB is an independent panel of citizens responsible for handling protests about the appraisal district’s work. When the ARB finishes its work, the appraisal district gives each taxing unit a list of taxable property.

In August or September, the elected officials of each taxing unit adopt tax rates for their operations and debt payments. Several taxing units tax your property. Every property is taxed by the county and the local school district. You also may pay taxes to a city and to special districts such as hospital, junior college, water, fire, and others.