On the flip side is the Hidden Property Tax issue. When Texas homeowners get their annual appraisal notice they assume they will pay taxes on the price they paid for the home, but as prices rise, so do these property taxes. It starts with the property value being decided. Homeowners are free to contest the value if they feel it is too high and don’t want to be taxed on that amount. Local tax units figure out how much they actually need from homeowners by multiplying the current year’s value times what tax rate is needed to produce the amount they need. Then they collect the taxes from homeowners.
As our homes increase in value, the tax rate should be lowered to match the increase and what local tax units need. This is called the effective tax rate. If the rate is not lowered enough, homeowners will get an increase in their tax bill. This is called the “Hidden Property Tax”.
Over the last 20 years, property taxes have increased so much that many homeowners were forced to sell their properties. Local tax entities have been raking in the money based on appraisal increases, not rate increases. They don’t have to raise the rate when the appraisal values keep going up.
This is why it’s extremely important to always check your Notice of Appraised Value from the Appraisal Districts each time you receive it so you can protest the value if you feel it’s unfair or incorrect. Too often, homeowners don’t keep tabs on these things and prices increase without them knowing it until it’s too late and they have a large bill.