Texas Property Taxes on New Homes | Mustang Meadows

Your First Property Tax Bill on a New Home: What Mustang Meadows Buyers Should Know

By Joe Zinda, The Zinda Team at V.I.P. Independent Mortgage, a preferred lender for Homes by Faircroft

One of the biggest surprises for new-construction buyers in Texas isn't the price of the home. It's the property tax bill in the second year. The good news is that it's predictable. With a little planning, you can avoid a jump in your monthly payment and make sure you get every exemption you're entitled to.

How Texas values a new home

Every Texas property is appraised based on its condition on January 1 of each year. For a new home, that date matters a lot:

• Not started on January 1: you're usually taxed on the land only for that year.

• Under construction on January 1: you're taxed on the land plus the portion of the home that was finished.

• Finished on January 1: you're taxed on the full value of the home and land.

In Waller County, the Waller County Appraisal District sets these values. The county, school district and other local taxing units then apply their tax rates.

Why the second year looks different

Say you close on your Mustang Meadows home in the summer. Your first tax bill may be based on the land alone, or on a partially built home. The next January, the appraisal district values the finished home, and your taxable value can jump.

For example, if the district valued your homesite at $60,000 on January 1 and values the finished home at $320,000 the next year, your taxable value rises more than fivefold, before exemptions. (These numbers are for illustration only.)

How this affects your mortgage payment

Most buyers pay property taxes through an escrow account that's part of the monthly mortgage payment. If your escrow is set up using the low first-year bill, it won't collect enough once the full value hits. At your annual escrow review, you'd then face a shortage: a lump sum to pay, or a higher payment for the next year to catch up.

The simplest step: ask your lender how to best be prepared and what your options are, so a change in your tax bill doesn't catch you off guard.

File your homestead exemption right away

A residence homestead exemption lowers the taxable value of your home. Under current Texas law:

• School districts must exempt $140,000 of your home's value for school taxes.

• Homeowners 65 or older or disabled get an additional $60,000 school exemption, and their school taxes are capped at that level going forward.

• Some counties and other taxing units offer their own optional exemptions as well.

You no longer have to wait until January 1 to apply. If you buy a new home that didn't already have a homestead exemption, you can apply as soon as you move in, and the exemption is prorated for the rest of that year. Since your builder didn't claim one, most new-construction buyers qualify.

How to file: submit the Residence Homestead Exemption application (Form 50-114) to the Waller County Appraisal District at waller-cad.org. The address on your Texas driver's license or ID should match your new home, so update it after you move in.

The 10% homestead cap

For qualifying homesteads, Texas generally limits how much the home’s appraised value can rise each year to 10%, plus the value of new improvements. This cap applies to the appraised value, not the tax bill. Two things to know:

• The cap starts the year after your home first qualifies.

• It doesn’t apply to value added by new construction. The jump from a partly built home to a finished one isn’t capped.

Frequently asked questions

Why was my first tax bill so low? Because the appraisal district valued your property as it stood on January 1, before the home was finished. Expect the next bill to reflect the completed home.

Can I apply for the homestead exemption the year I buy? Yes, in most cases. If the home didn't already have a homestead exemption, which is typical for new construction, you can apply right after moving in and receive a prorated exemption for that year.

What if I think the appraised value is too high? You can protest. The appraisal district mails a notice of appraised value each spring, and the notice explains how and when to file a protest.

I'm 65 or older. Does anything change for me? Yes. You qualify for an additional school district exemption, and your school taxes are capped at the level of your first qualifying year. Apply as soon as you're eligible.

Your next step

The right plan for property taxes keeps your payment steady and your exemptions in place. Contact The Zinda Team at V.I.P. Independent Mortgage for a payment estimate built on the completed value of your Mustang Meadows home, then visit the model at 31027 Cass River Lane in Waller.

Joe Zinda| NMLS# 322789 | 713-380-9441 | www.TheZindaTeam.com

V.I.P. Independent Mortgage, Inc. | NMLS # 145502 | Equal Housing Opportunity

This article is for general information only and is not tax or legal advice or a commitment to lend. Property values, exemptions and tax rates are set by the appraisal district and local taxing units and may change. Consult a tax professional or the Waller County Appraisal District about your situation. All loans are subject to credit approval and underwriting guidelines.