Jump to content

Texas Property Tax Bill Agreed To


tokamak

Recommended Posts

House and Senate reached a deal on property tax cuts. Seems like it's basically Patrick & the Senate's plan that won out.

Has Abbott said if there will be more special sessions? I was kind of hoping the tax cut stuff would continue to drag out, so there wouldn't be time for any additional fuckery.

Link to comment
Share on other sites

What are the real implications.  I have only read that memo but it raises some questions.

  • What is the impact on corporate property taxes?  
  • What is the real effect on homestead properties and is there a breakdown by property value?  Does it only affect high value properties (rich donor class)?
  • What is the impact on public school funding?  I could imagine this as possibly a Trojan horse, one-two punch, along with Abbott’s priority of sending public education tax dollars to private schools to effectively “defund public schoolS.

 

  • Hook 'Em 4
  • Like 1
Link to comment
Share on other sites

1 hour ago, Longhorn94 said:

anyone have a practical example of how this "tax cut" plays out? let's say you own a home that is homesteaded and appraised at $1M, what savings, if any, will you actually see?

This.  From the "highlights", for a regular citizen, all I see is less money for schools and a $100k exemption (does this pre-empt the current 10% cap?)

  • Hook 'Em 1
Link to comment
Share on other sites

I'm sure they'll raise property taxes or remove exemptions from businesses to offset the loss in revenue........we don't give one shit about funding education in this state. It's survival of the fittest. And the people in this state keep sending them back year after year. 

  • Rage+1 1
Link to comment
Share on other sites

2 minutes ago, mdmost said:

I'm sure they'll raise property taxes or remove exemptions from businesses to offset the loss in revenue........we don't give one shit about funding education in this state. It's survival of the fittest. And the people in this state keep sending them back year after year. 

well, duh, thats because the most important and urgent issues facing this state are: 1. making sure liberals don't take away all of our guns; 2. making sure liberals dont kill all the babies; and 3. making sure liberals don't kill God; and 4. making sure liberals dont let all the mexicans into the state; and, and 5. making sure liberals can't vote.

  • Hook 'Em 4
  • Like 1
Link to comment
Share on other sites

Texas Trickle Down Economics. 

"Reducing property taxes, providing relief to small business owners, and reforming our appraisal system will ensure economic growth and prosperity, and this agreement is a significant victory for all Texans."

Don't worry, this time's it's definitely not a stupid idea. 

  • Haha 3
  • Rage+1 1
Link to comment
Share on other sites

On first blush this seems like a really bad compromise, less rate compression than the original House bill and less total relief dollars than any of the previously offered "plans". Only 3 years worth of relief for the 20% appraisal cap, then what, appraisals shoot back up? Homestead exemption going up to $100K without a plan to limit rate increases on anything not covered by homestead. Shouldn't be surprised by absolutely zero effort made to provide any help to renters, my friend who works for a state rep says "in theory" some of the compression and homestead savings should trickle down to renters but we all know how thats gonna go...

 

  • Haha 1
Link to comment
Share on other sites

Big nothingburger. Fortunately, our far right friends will be quite pissed. Unfortunately, our spineless leadership will look to appease them in other, more ridiculous ways and they will fall for it completely.

  • Hook 'Em 1
  • Rage+1 1
Link to comment
Share on other sites

16 minutes ago, pacman said:

Big nothingburger. Fortunately, our far right friends will be quite pissed. Unfortunately, our spineless leadership will look to appease them in other, more ridiculous ways and they will fall for it completely.

Cold to quite cold.

  • Haha 4
Link to comment
Share on other sites

The gist of it, I think:

  • homestead exemption going up from $40k to $100k
  • approximately $12bn in school district "rate compression". This is the state forcing school districts to reduce their tax rates for operations and the state uses its money to make them whole. Public schools aren't getting fucked...yet. No word of course on what happens when the state money runs out.
  • Some unspecified cuts to the franchise tax.
  • Introduces a pilot "circuit breaker" program where the property tax bill can't be higher than a certain percentage of income. Details very light on how this will be implemented (most states that do it have a state income tax, so they know how much income people have)

Here's the Trib's article: https://www.texastribune.org/2023/07/10/texas-legislature-property-tax-cuts-deal/

  • Hook 'Em 3
Link to comment
Share on other sites

1 hour ago, TexasEd said:

What is the impact on public school funding?  I could imagine this as possibly a Trojan horse, one-two punch, along with Abbott’s priority of sending public education tax dollars to private schools to effectively “defund public schoolS.

Legislature got a shit-ton of pushback from rural school districts, so Abbott's dream of wrecking public education won't come to fruition this time around.  For every public social media post from small districts like Alpine putting Abbott and Co. on blast, there's a whole lot more back-channel messaging being sent to the legislature.

Link to comment
Share on other sites

12 minutes ago, tokamak said:

The gist of it, I think:

  • homestead exemption going up from $40k to $100k
  • approximately $12bn in school district "rate compression". This is the state forcing school districts to reduce their tax rates for operations and the state uses its money to make them whole. Public schools aren't getting fucked...yet. No word of course on what happens when the state money runs out.
  • Some unspecified cuts to the franchise tax.
  • Introduces a pilot "circuit breaker" program where the property tax bill can't be higher than a certain percentage of income. Details very light on how this will be implemented (most states that do it have a state income tax, so they know how much income people have)

Here's the Trib's article: https://www.texastribune.org/2023/07/10/texas-legislature-property-tax-cuts-deal/

Had been having some pretty healthy debate with a friend who works in the Lege about why Texas couldn't do more to provide targeted relief for renters as part of this property tax relief boogaloo including what other states without income taxes have done, and incentivizing landlords to provide the documentation needed to give their renters relief as a condition of them getting property tax relief. His standard answer was always "well we don't have an income tax so we don't know who to send money to" and lo and behold when there some political will to do so (keep all the fixed income, old blue hair, rural folk voting red) the state is gonna try and figure out how to do it... who'd have thunk...

  • Hook 'Em 1
Link to comment
Share on other sites

I haven't read through the nuts/bolts of the legislation but I'll give it a shot on my understanding as a semi-insider in the industry...

 

the 100k homestead exemption is just an increase on the current homestead exemption that applies to the overall ISD rate for homestead properties. The 10% annual cap on assessed value across all assessment offices (city/county/isd etc) is still in play. 

 

the 20% cap on non homestead property is a doozy, no idea why they chose 3 year timeframe on it and no idea how it will work in practice with the gory details. in theory it appears that if your (non homestead) goes up more than 20% in one year, the increase in value will be capped at 20%. I would assume it will be similar to homestead cap where the assessed value will just play catchup the following year even if the market value is flat. i guess this is a good thing as it prevents small biz from getting totally effed by a rogue value increase, but caps across the board are a terrible idea with our system. 

 

as for the ISD funding, there isn't any actual lost revenue to the ISD's the state is just filling the void from the rate compression (ignore the fact schools are grossly underfunded in general). it's essentially the state stepping in to cut a check to make ISD's whole. the BIG issue with this is it's set to expire in 2025 and we damn well won't have another $30bn in surplus to cover this check again, so what happens then, i have no effing idea. but in typical government style we'll just worry about that then - or as the GOP will probably do, just have ISD's slash their budgets.

 

renters are the losers here of course. The dems tried a Hail Mary with their plan but it had no shot in hell. Their plan of having renters report their paid rent to the state would require such an insane amount of administration that it’s hard to imagine working. 

Edited by bluto
  • Hook 'Em 2
Link to comment
Share on other sites

5 minutes ago, bluto said:

the 100k homestead exemption is just an increase on the current homestead exemption that applies to the overall ISD rate for homestead properties. The 10% annual cap on assessed value across all assessment offices (city/county/isd etc) is still in play. 

Ok. So chop $100k off my assessment and cap an increase at 10% on that new value?

Link to comment
Share on other sites

Better with an example…

Your personal residence was 500k last yr, 2023 bumped the market value to 600k. Your assessed value would be capped at 550k across city/county/isd etc bc of the homestead cap. Then you would apply your homestead exemptions from the various entities (some counties/cities grant it, the state mandates the isd homestead exemption amount) to that 550k value. So you would pay isd tax rate * 450k for the school portion 

Edited by bluto
  • Hook 'Em 2
Link to comment
Share on other sites

1 hour ago, tokamak said:

where the property tax bill can't be higher than a certain percentage of income. Details very light on how this will be implemented (most states that do it have a state income tax, so they know how much income people have)

This effectively turns Texas into an income tax state does it not?  But with the pols still able to claim there’s no income tax here?

Link to comment
Share on other sites

The gist of it, I think:
  • homestead exemption going up from $40k to $100k
  • approximately $12bn in school district "rate compression". This is the state forcing school districts to reduce their tax rates for operations and the state uses its money to make them whole. Public schools aren't getting fucked...yet. No word of course on what happens when the state money runs out.
  • Some unspecified cuts to the franchise tax.
  • Introduces a pilot "circuit breaker" program where the property tax bill can't be higher than a certain percentage of income. Details very light on how this will be implemented (most states that do it have a state income tax, so they know how much income people have)
Here's the Trib's article: https://www.texastribune.org/2023/07/10/texas-legislature-property-tax-cuts-deal/
So use money from urban poors (renters) to give relief to wealthy and middle + rural poors (landowners)
  • Hook 'Em 2
Link to comment
Share on other sites

3 minutes ago, Pato del Muerto said:

This effectively turns Texas into an income tax state does it not?  But with the pols still able to claim there’s no income tax here?

I don't think so. The suggestion I saw was that it would only be available to pretty low-income folks, and they'll probably have to do something like send in their federal tax return and sign an affidavit for verification. It's gonna be an administrative clusterfuck.

On the school funding, @bluto said it better than I did. State money to make school districts whole has a time limit on it. When that money runs out, are we thinking that the state lege will raise taxes back up to fill the gap for schools?

Link to comment
Share on other sites

To answer @Longhorn94 what you'd see on a $1M house

school tax is around 1.5%, and there's a $40k deduction so you're currently paying:

$1,000,000 - $40,000 = $960,000 * 1.5% = $14,400
with new law:
$1,000,000 - $100,000 = $900,000 * 1.5% = $13,500

so savings of $900/year. Which will be completely wiped out by increase in your property's value next year so you'll still pay more taxes next year than this year.

  • Hook 'Em 3
  • Rage+1 1
Link to comment
Share on other sites

That circuit breaker talk regarding this 20% cap, that tribune article looks like it’s off in its analysis. Reading the actual bill it’s just a standard 20% value cap like the 10% homestead cap, just applied to non homestead property under 5M in value. That 5M is set for 2024, then the following yrs will fluctuate based on state CPI figure. 

Edited by bluto
  • Hook 'Em 1
Link to comment
Share on other sites

20 minutes ago, blacklab said:

To answer @Longhorn94 what you'd see on a $1M house

school tax is around 1.5%, and there's a $40k deduction so you're currently paying:

$1,000,000 - $40,000 = $960,000 * 1.5% = $14,400
with new law:
$1,000,000 - $100,000 = $900,000 * 1.5% = $13,500

so savings of $900/year. Which will be completely wiped out by increase in your property's value next year so you'll still pay more taxes next year than this year.

 

thx @blacklab! but someone up above said the 10% cap is still in place. so if that is true, it will be a small savings but still a savings.

Link to comment
Share on other sites

29 minutes ago, blacklab said:

To answer @Longhorn94 what you'd see on a $1M house

school tax is around 1.5%, and there's a $40k deduction so you're currently paying:

$1,000,000 - $40,000 = $960,000 * 1.5% = $14,400
with new law:
$1,000,000 - $100,000 = $900,000 * 1.5% = $13,500

so savings of $900/year. Which will be completely wiped out by increase in your property's value next year so you'll still pay more taxes next year than this year.

yeah, i love tax cuts. i mean, i never see tax cuts, somehow it always seems to go the other way, but i'm assured that if it went the other way it'd still go the other way? i dunno. am i on cr? good. 

Link to comment
Share on other sites

1 hour ago, hayden_horn said:

yeah, i love tax cuts. i mean, i never see tax cuts, somehow it always seems to go the other way, but i'm assured that if it went the other way it'd still go the other way? i dunno. am i on cr? good. 

The only true way to win is to move the fuck out of this state.  Which I plan on doing ASAP.

  • Hook 'Em 3
  • Drool 1
Link to comment
Share on other sites

39 minutes ago, Longhorn94 said:

 

thx @blacklab! but someone up above said the 10% cap is still in place. so if that is true, it will be a small savings but still a savings.

1M - 40k = 960k x .015 = 14,400

1.1M - 100k = 1M x .015 = 15,000

As he said, you'll likely pay more. 600k current year home value is the breakeven point for actual year over year tax bill drop versus increase in this very simple analysis. 

Edited by Huckleberry
Link to comment
Share on other sites

Is this going to cause a bunch of 2nd/3rd/4th homes that are "investment properties" or Airbnbs to hit the market.due to increased taxes?  If so, that could cause the real estate values to drop and give a reduction in home appraisal values. 

Link to comment
Share on other sites

2 minutes ago, Dutchrudder said:

Is this going to cause a bunch of 2nd/3rd/4th homes that are "investment properties" or Airbnbs to hit the market.due to increased taxes?  If so, that could cause the real estate values to drop and give a reduction in home appraisal values. 

I believe those taxes would decrease, or at least get the 20% increase cap. 
 

Link to comment
Share on other sites

26 minutes ago, Pato del Muerto said:

I believe those taxes would decrease, or at least get the 20% increase cap. 
 

So they would catch up to the market value faster, but that only matters when the market increases significantly. I guess that makes a little sense, but I would like to see the homestead cap reduced to 5% to allow homeowners some insulation from these crazy market fluctuations. 

I really wish they would make it cost more for landlords and vacation homes. Make it less lucrative to make money off of housing so home prices stabilize and we don't have tons of big money flowing into a basic need for profit. All that money drives up home prices and makes everyone in Texas pay more for their property taxes, which will continue to rise regardless of whether or not wages and cost of living goes up. 

Link to comment
Share on other sites

13 minutes ago, Dutchrudder said:

I really wish they would make it cost more for landlords and vacation homes. Make it less lucrative to make money off of housing so home prices stabilize and we don't have tons of big money flowing into a basic need for profit. All that money drives up home prices and makes everyone in Texas pay more for their property taxes, which will continue to rise regardless of whether or not wages and cost of living goes up. 

Is there a way to do this without fucking over renters even more than we are already?

Link to comment
Share on other sites

1 hour ago, Huckleberry said:

1M - 40k = 960k x .015 = 14,400

1.1M - 100k = 1M x .015 = 15,000

As he said, you'll likely pay more. 600k current year home value is the breakeven point for actual year over year tax bill drop versus increase in this very simple analysis. 

That math is off as that .015 rate will compress by 11 cents roughly the next yr with the isd rate buy down. So it will be more like 13,900 in taxes in that scenario for yr 2. 

Edited by bluto
Link to comment
Share on other sites

3 hours ago, Biff Tannen said:

Ok. So chop $100k off my assessment and cap an increase at 10% on that new value?

The state homestead exemption was already $40k, and the 10% cap was already in place. For a homeowner the main consequence is the $40k -> $100k increase in homestead exemption for school district tax rates. At a 1% rate that's $600 annually.

Link to comment
Share on other sites

10 minutes ago, safe sex said:

Is there a way to do this without fucking over renters even more than we are already?

It won't fix the issue, but I like what Canada is trying by banning foreign individuals and companies from purchasing homes. The idea is to take away a significant portion of the real estate investment companies that are dumping tons of cash into the system and driving up home prices for everyone. It also means less homes for rent, which should translate to more homes for purchase. That should help drive down the cost of homes in general. 

https://www.forbes.com/advisor/ca/real-estate/foreign-homebuyers-ban/#:~:text=On January 1st%2C 2023%2C the,went into effect in Canada.

 

Another option in the US would be to change Capital Gains taxes on home sales. I believe the federal exemption is 250k profit, which makes investment in homes very lucrative if you plan to flip it. If there was a way to carve out that exemption for those who don't live in the home, you could reduce the for-profit incentive of buying homes. 

You could also go after mortgages for these types of rented homes. They are essentially businesses applying for a home loan, but not getting the type of interest rates that a business would have, nor the repayment schedule. Prevent mortgages from being written for 2nd+ homes and you could stop a lot of them from ever becoming a business and driving up the market costs.

 

Link to comment
Share on other sites

Does it make sense to anyone to hold school spending constant in a time of high inflation?

I would be OK with this if there was an accompanying bill to kill Robin Hood payments and allow local school districts to set whatever tax rates they wish, so long as voters approve.  Maybe not so much for I&S taxes, because folks might borrow too much, but if a town wants to set their O&M taxes high and pay their teachers a lot they should be able to do that.

Link to comment
Share on other sites



×
×
  • Create New...