Maximizing Your Rental Profits: A Guide to Protesting Your Property Taxes

As a property owner in Texas, it is important to understand how the homestead exemption works and why it does not apply to rental properties. If you own a rental property and have seen a significant increase in property taxes, you may wonder what you can do to challenge these rising costs.

Why the Homestead Exemption Does Not Apply to Rental Properties

The homestead exemption is a tax relief program designed to help homeowners who use their property as their primary residence. Under this program, a portion of the home's value is exempt from property taxes, which can result in significant savings for homeowners. However, the homestead exemption does not apply to rental properties.

There are a few reasons for this. First, the homestead exemption is designed to help offset the cost of living in a home, such as utilities, maintenance, and repairs. These costs are typically borne by the homeowner, not the tenant, so it makes sense that the tax relief would also be limited to homeowners.

Second, rental properties are considered investments rather than primary residences. As such, they are subject to different tax rates and rules than owner-occupied homes. For example, rental income is taxable, and property taxes on rental properties are typically higher than those on primary residences.

What Rental Property Owners Can Do to Challenge Rising Property Taxes

If you own a rental property in Texas and have seen a significant increase in property taxes, there are several steps you can take to challenge these rising costs. Here are a few tips:

#1: Understand the appraisal process. 

Property taxes are based on the appraised value of your property, so it is important to understand how the appraisal process works. You can request a copy of your property's appraisal from your county appraisal district and review it for accuracy.

#2: Be proactive. 

If you believe your property has been overvalued, you can file a protest with the appraisal district. The deadline for filing a protest is typically May 31st, so it is important to act quickly.

#3: Provide evidence. 

When filing a protest, it is important to provide evidence to support your claim that your property has been overvalued. This might include recent sales of similar properties in your area, as well as any repairs or renovations you have made to your property.

#4: Consider hiring a professional. 

If you are struggling to navigate the appraisal process on your own, consider hiring a professional to assist you.