Slight of hand

Our central appraisal district has re-appraised all of the properties in the county.

Many homeowners are seeing their appraised values going up.  State law limits the amount of the increase to 10% of last year’s appraisal.

A common misconception is that property tax bills will automatically go up as a result of an increased appraisal.

Actually each taxing entity is required to calculate the “effective tax rate”.  From the state comptroller’s web site:

The effective tax rate is the rate the taxing unit needs to generate about the same amount of revenue it received in
the year before on properties taxed in both years.

Thus if every homeowner’s appraisal goes up 5% the effective tax rate will have to go down 5%.

Where one might see a tax increase is if their home value goes up more than the average increase of all of the other home owners.

When our local elected officials publish their new tax rates don’t make the mistake of looking at the rate (percentage) they publish.

If home values go up 5% and the taxing entity’s rate stays the same as last year they are increasing taxes 5% even though the rate is the same.

We deserve better

Brutus

9 Responses to Slight of hand

  1. good governance oxymoron says:

    I believe the scenario below is why Gov. Abbott wants to limit annual local governments’ property tax revenue growth to 2.5 percent and require voter approval from two-thirds of the voters before a taxing entity can increase their tax rate higher.

    CAD acknowledges they only do the minimum required by law and that is appraise once every 3 years although in the interim they increase commercial and some homes including those that saw increases above 10% but historically it has not been enough to trigger a drop in the city’s tax rate. Certainly not on any of my tax bills.

    So even though the city may have to drop their tax rate the year of the appraisal, they can and do increase the rate significantly over the 2 year interim before the next full appraisal. At least this is the pattern in my tax bill.

    Using the numbers that were given in the report (see link and note at end of comment) on average city wide single family home values increased $9700.03 per home.

    The 167,322 single-family homes in the City Limits alone generate an additional $1,623,028,376.12 in taxable value which at the current rate would be an additional $13,039,945.57 in tax revenue to the city.

    The current tax rate for the city is .803433. 7.6% of that rate is .061061

    That would mean, if the initial numbers hold, that the City would have to lower it’s tax rate to 0.742372 this budget cycle to comply with state law.

    HOWEVER, since subsequent interim appraisal increases are nominal, in the following year’s budget cycle the city can raise the tax rate back up to .803433 and tax the additional $1.6 billion+ generated by single family homes.

    This would increase the city’s tax revenue to over $13 million from single family homes alone.

    === Story Link ==
    Home values way up in El Paso County

    http://www.elpasoinc.com/news/local_news/home-values-way-up-in-el-paso-county/article_a19b74ae-40ed-11e8-a9d0-2b9dbdfec94c.html

    According to the story link initial numbers show home values countywide are up 7.6%

    Countywide, there are 202,495 single-family homes with an average market value of $132,832.

    Citywide, there are 167,322 single-family homes, with an average market value of $137,332.

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  2. Duped says:

    Also don’t make the mistake I did…a few years ago I remodeled adding about 400 sq feet to my home. Because the remodel had an official inspection, I just trusted it was registered with the city inspection and appraisal district. Because the central appraisal district does not have enough man power to physically measure houses or the owner is not home, they “estimate” the amount of square footage which doubled my remodel due to over hang around my house from an aerial view. The extra 400 sq feet placed me in a higher tax bracket. I could not go retro the two years to fix the square footage and so now am waiting for my 2018 hearing to have them actually measure my home and adjust the square footage. ugh…trickery. Not to mention, they made me have two different hearings instead of fixing it all at once. (wasted taxpayer money and I had to take 2 days vacation) Sad that I didn’t notice it sooner. Lesson learned: Check your square footage.

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    • Tickedofftaxpayer says:

      I’ll tell you a sadder story. They had my house square footage measured wrong by nearly 1,000 sf because they measured the exterior and didn’t account for a 2-storey great room. When valuation shot up I noticed the error and appealed. Two years later there was another unexplained tax spike. I paid for an appraisal to fight that one. Turns out they had upgraded their computer system and uploaded a very old backup which still had the old incorrect sq ft estimate. That means that everyone who corrected errors in that timeframe effectively lost their correction. Wonder how many people are overpaying their taxes due to that screwup? They never made a public announcement about it.

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      • Duped says:

        I totally understand. I felt so stupid…but how was I to know? I definitely don’t remember receiving that important letter they mail to let you know the updated changes. I file everything. The overhang and exterior thing really upsets me and I agree with you that there are many, many people that don’t know this and don’t know to check. It’s sad.

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    • help me out here says:

      Help me out here. Are you saying there are “tax brackets” for property taxes? I thought brackets were related to income taxes. Maybe I am wrong, but I don’t think the property rate differs based on the value of your home. As I understand it, the same rate (not dollars) is applied to all residential properties, but maybe I am wrong.

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      • good governance oxymoron says:

        Property rates can differ depending on the school district the property is in and the tax rate each school board sets for the year.

        The only “tax brackets” would be which exemptions the resident owner (Over 65 etc.) or property use (i.e. Agricultural) qualifies for, but the tax rate is the same only the amount taxed differs.

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  3. Rico Suave says:

    Who here THINKS/ Believes/ prays local taxes will stay the same or decrease ????

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  4. Communism Sucks says:

    If anyone thinks they will recalculate in a way that doesn’t result in taxpayers paying more money they fundamentally misunderstand government, and also misunderstand the concept of this area needing more taxpayer dollars to cover the debt from past and present overspending.

    This will happen to the point that enough actual taxpayers leave and the remaining taxpayers refusing to pay the yearly increases, resulting in the future filing of bankruptcy by the City of El Paso. This will probably happen in the next ten to twelve years, but certainly within the next twenty years.

    The remaining “quality of life bond” debt will be incurred soon and will accelerate an already bad situation.

    There simply does not exist enough income per capita to sustain the debt and overspending by local government. The largest employers in this area are taxing entities, and they shall start shrinking at some point, which will further accelerate the unsustainable debt load.

    Enjoy the new Hunt/Foster arena, as soon as the city spends enough on out-of-town lawyers to insure that it will be built and given to their private interest soccer hobby team.

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  5. Old Fart says:

    BRUTUS, this was an important piece of information, so thanks for including it; specifically:

    “A common misconception is that property tax bills will automatically go up as a result of an increased appraisal.

    Actually each taxing entity is required to calculate the “effective tax rate”. From the state comptroller’s web site:

    The effective tax rate is the rate the taxing unit needs to generate about the same amount of revenue it received in
    the year before on properties taxed in both years.”

    Watch each taxing entity to ENSURE they don’t try to ‘pull a slight of hand’ in reference to this part of your post: “Actually each taxing entity is required to calculate the “effective tax rate”

    If they don’t highlight the recalculated effective tax rate, some free gravy can be picked up here.

    Thanks.

    Like

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