Property tax
Texas property taxes for investors
Property tax is usually the largest ongoing cost of a Texas rental after the mortgage. Texas has no state property tax; the tax is set locally, reassessed every year, and can be challenged, so it pays to understand how it works.
Rules change often. The Texas Legislature revisits property tax frequently, and voters approve constitutional amendments that change exemptions. Check current law with the Texas Comptroller or your appraisal district, and talk to a tax professional before relying on anything here.
Who does what
- The appraisal district in each county decides your property's value. It does not set tax rates.
- Local taxing units (county, city, school district and special districts such as utility, hospital and community college districts) each set a tax rate, and your bill combines them.
- The appraisal review board hears protests from owners who disagree with the value.
- The tax assessor-collector, usually the county's, sends bills and collects payment for many of the taxing units.
- The Texas Comptroller publishes guidance and forms but does not collect property tax.
The yearly cycle
| When | What happens |
|---|---|
| January 1 | Property is valued as of this date, and exemption eligibility is generally determined |
| Before February 1 | Last year's taxes must be paid to avoid becoming delinquent |
| Spring | Appraisal districts send notices of appraised value |
| Before May 1 | General deadline to apply for exemptions such as the homestead exemption |
| May 15, or 30 days after the notice (whichever is later) | Deadline to file a protest |
| Summer | Protest hearings; the appraisal review board approves the records, usually in July |
| Late summer to autumn | Taxing units adopt budgets and tax rates |
| Autumn | Tax bills are mailed |
Dates can shift when they fall on weekends, and some depend on when notices are delivered. Always check the dates printed on your own notices.
Valuation and the annual protest
Property is valued at market value as of January 1 each year. If you disagree with the appraised value, you can protest on the grounds that the value is above market or unequal compared with similar properties. The deadline is generally May 15, or 30 days after the appraisal notice is delivered, whichever is later (Tax Code §41.44). Protests can often be filed online.
- Check the facts first. Square footage, condition, year built and features on the appraisal record are sometimes wrong, and errors are the easiest corrections.
- Gather evidence. Recent sales of comparable properties, repair estimates, photos of condition, and for rentals the income and expenses if you are arguing value from income.
- Attend the informal review. Many protests settle with an appraiser before a formal hearing.
- Go to the review board if needed. Further appeals, such as binding arbitration or district court, exist for owners who still disagree.
The full process, including evidence, burden of proof and appeal deadlines, is in how to protest a property tax appraisal in Texas.
Caps and exemptions
| Rule | Applies to | Effect |
|---|---|---|
| Residence homestead exemption and 10% cap | Your own principal residence only | Reduces taxable value (the school district exemption is $140,000 after the 2025 amendment) and limits yearly increases in the homestead's appraised value to 10% plus new improvements. Rentals do not qualify. |
| Non-homestead "circuit breaker" limit | Other real property valued at or below a threshold ($5 million for 2024, adjusted for inflation) | Limits yearly increases in appraised value to 20% plus new improvements, starting in the tax year after the first year the owner owns the property on January 1. Enacted in 2023 for the 2024–2026 tax years; the section is written to expire December 31, 2026 (Tax Code §23.231). |
| Agricultural and open-space valuation | Qualifying land in agricultural use | Values land on its productive capacity rather than market value, with an additional tax if the use changes. |
How these interact when a home becomes a rental is covered in Texas homestead exemption rules.
Paying the bill
Taxes are due when the bill is received and become delinquent if not paid before February 1 of the following year (Tax Code §31.02). Under §33.01, a delinquent tax incurs a penalty of 6% for the first month plus 1% for each additional month until July 1, when the total penalty becomes 12%, and interest of 1% per month. Further collection costs can be added later. If your mortgage has an escrow account, the servicer pays from it, but you should still check the bill and your appraisal notice every year.
Unpaid property taxes are a lien on the property and can ultimately lead to a tax foreclosure sale. See Texas foreclosure auctions.
Budgeting for a rental
- Estimate taxes from the current combined rate and a realistic value, not the seller's last bill. The appraisal district's record shows the market value, the exemptions on the property and the taxing units.
- Remember the seller's homestead exemption and cap disappear when you buy the property as a rental.
- Check whether the property is in a municipal utility district or public improvement district, which can add a significant rate or assessment.
- Plan to protest every year, or budget for a property tax consultant.
- Keep records: property tax is deductible as a rental expense on your federal return. See taxes on rental income.
Common questions
Why does Texas rely so heavily on property tax?
Texas has no personal income tax, so local governments and school districts rely heavily on property tax. The rate on your bill is the sum of the rates of every taxing unit where the property is located.
Can a rental property get a homestead exemption?
No. The residence homestead exemption is only for an individual's principal residence. A rental may benefit from the circuit breaker limit in the years it applies.
Does buying a property raise its appraisal?
The appraisal district values property at market value each year, and a sale is evidence of market value. Texas is not a mandatory sales price disclosure state, but districts gather sales data from other sources. Budget as though the value will move toward what you paid.
Who pays the property taxes in the year of a sale?
Under the standard TREC resale contract, taxes for the current year are prorated through the closing date. See title insurance and closing.
Related guides
- How to protest a property tax appraisal
- Texas homestead exemption rules
- LLCs for rental property — owning through an entity has tax consequences of its own.
Official guidance: Texas Comptroller, property tax.
Last reviewed 2026-09-17