REAL ESTATE
How homestead exemption caps impact Austin homeowners
Home appraisals plateau, but owners see larger taxable value increase
The homestead exemption caps the assessed value of a property from increasing more than 10% each year. Even if a property’s appraised value does not increase by 10%, the assessed value will continue to increase until the two numbers are equal. Below is a simpli ed version based on the median increase in assessed property values in Travis County.
BY KATY MCAFEE
seen extraordinary market value increases in some markets,” said Krebs, adding many residents are seeing increased market values by 15%-20% for the rst time in the past two or three years. While the homestead exemption cap protects homeowners from rising market prices heavily impacting their tax bill, it does not mean the remaining value beyond 10% simply goes away, Krebs said. Rather, the remaining value is applied to next year’s bill. For example, even if a resident’s homestead value goes up by 18% one year, the homestead exemption cap ensures their assessed value can only go up by 10%. However, even if the homeowner’s appraised value remains at or decreases, the assessed value can increase up to 10% until the assessed value is equal to the appraised value.
After a historic increase in property values in 2022, Austin homeowners might have expected a break from tax increases in 2023 as home appraisals only rose 0.08% compared to a 48.9% surge in 2022. However, many homeowners who had their assessed home value limited by a homestead exemption in 2022— which limits assessed values from increasing more than 10% per year— will still see large increases as their assessed values catch up, said Lynn Krebs, a research economist for the Texas Real Estate Research Center. The appraised value refers to how much money the Travis Central Appraisal District determines a resi- dent’s property is worth. The assessed value refers to the value a home is taxed on before the exempt amount is deducted. “In the last couple of years, we’ve
Assessed value year over year
Appraised value year over year
+0.1%
+49%
+16%
+10%
+10%
+10%
*2021
2020
2022
2023
2021
2022
2023
*2020
*NOTE: ONLY APPLIES TO 2021 AND THE YEARS PRIOR; THE 10% CAP DOESN’T APPLY UNTIL AFTER A YEAR OF HOME OWNERSHIP SOURCES: TEXAS REAL ESTATE RESEARCH CENTER, TRAVIS CENTRAL APPRAISAL DISTRICT COMMUNITY IMPACT
The amount homeowners pay is also dependent on the tax rate set by local entities. The city, the school
district and the county will set them in the fall, and property owners will get their bills this fall.
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