Single-family home values increased an average of just 2.4% this year, the lowest year-over-year change in more than a decade, according to the Bexar Appraisal District, which just mailed appraisal notices to 540,000 property owners in the county.
That increase stands in stark contrast to the last two years, when property value appraisals rose 16% last year and an eye-popping 28% in 2022 — reflecting a white-hot housing market with high demand and low inventory.
But those increases mean that many taxpayers are still playing catch-up this year, thanks to the state law that limits how much the taxable value of your homestead can rise each year by deferring market value increases above 10% to future years.
Other taxpayers — even those playing catch-up under the 10% homestead cap — could feel some relief, thanks to a school districts’ homestead exemptions, which more than doubled last year.
Terminology around valuations can be confusing. The Texas Property Tax Code requires appraisal districts to appraise property at “100% of actual market value as of January 1 each year,” while the taxable value comes from including various property tax exemptions, which can include those over 65, disabled persons, disabled veterans and surviving spouses of disabled vets and first responders.
Appraisal notices include this “market value,” or what the home is estimated to be worth if it was sold, and an appraised value, which reflects the taxable value of the home.
On the Bexar Appraisal District website, on an individual property’s info page, however, what is termed market value on the notice is listed as “appraised value,” while the appraised value on the notice is called the “assessed value” on the website. This story uses the terms on the appraisal notice.
The 10% homestead cap is designed to reduce the burden of a hot housing market on homeowners. So in 2022, for example, even if the market value of your home rose 28%, if you had a homestead exemption, your taxable value was capped at a 10% increase.
The taxable value then goes up by a maximum of 10% each year until it catches up to what the district determines is the market value of the home. So while this year your home’s market value may have gone up less than 10%, your taxable value could still go up the full 10%.
But that cap also keeps a lid on the taxable value of your home, especially after big increases like the ones seen in 2022 and 2023. If you’ve lived in your home for many years with the homestead exemption in place, said Chief Appraiser Rogelio Sandoval, you’ll be paying far less in taxes than someone in a comparably valued home who just purchased it a year ago.
“That’s why we always tell people, make sure you have that homestead exemption,” he said. Homestead exemptions can be applied retroactively for the previous two years. Starting this year, chief appraisers will be required to re-verify all homestead exemptions once every five years.
Because of the smaller increase in residential market valuations this year, fewer Bexar County homeowners received appraisal notices. Per state law, appraisal districts don’t have to send notices if the value of your home increased by less than $1,000 from the prior year. The Bexar Appraisal District sent 540,000 notices this year, Sandoval said, down from 687,000 last year and 715,000 in 2022.
With appraisal notices comes protest season, when property owners can appeal the market valuation of their homes or commercial properties. The deadline for owners to appeal is May 15.
Last year, the Bexar Appraisal District heard “a smidge under” 200,000 appeals, said Sandoval, the largest number in the 20 years he’s been with the district. Roughly 90% of those appeals were settled, he said, with the homeowner and district coming to an agreement on the valuation of the home.
Sandoval encouraged property owners to appeal their market valuation, because appraisal districts value properties at the neighborhood level in a process known as mass appraisals.
“I tell property owners, when we appraise property, we appraise it on the mass appraisal level,” he said. “But when you will file your appeal, that’s when we look at the specifics of your individual property.”
Sandoval said he prefers to use the word “‘appeal” over “protest,” to signal that the process is not adversarial. “We want to have a conversation with you,” he said.
It is possible to have the market value of your property reduced, yet still not shrink the amount of taxes you’ll end up paying, if the district’s market value of your home remains above its appraised value.
For example, your home’s market value could be appraised at $400,000, while the appraised, or taxable, value is just $260,000 because of the homestead cap. So even if the appraisal district agrees to lower the market value of your home to $350,000, you’re still paying taxes on the $260,000.
Sandoval emphasized that the appraisal district isn’t a taxing entity. “I tell property owners, I don’t talk about taxes, I talk about valuations.”
Taxing entities such as school districts, the city and county, University Health and the San Antonio River Authority all set their own tax rates, and each of those entities has different amounts that they exempt from taxes.
So in the example above, on the house appraised at $260,000, a homeowner won’t pay school district taxes on that total amount. The exemption used to be $40,000, but the state Legislature last year raised that exemption to $100,000. So for that home, with a market value of $400,000, just $160,000 would be taxed by the school district.
