Property taxes - Why so high? (Austin, Commerce: sales, buying a house, buying)

[burlshoe114]

One more question for the pile:

I love everything I am seeing about Austin so far. Except for the property tax rate. Property taxes in Austin are about double what they are in Seattle. Why is this? $8,000 in taxes a year is $80,000 over ten years. $160,000 over twenty. Ouch!
How do I ask this politely? What does an Austin resident receive in exchange for this high tax amount? Is there a give-and-take? Like, in exchange for the property taxes, do you not have to pay sales tax or income tax?

I've heard that Austin generates revenue for the DOT by having toll roads. What other taxes are there?

[TexasHorseLady]

Texas has no income tax. The tax money to provide the amenities we demand from our government has to come from somewhere. Thus, property tax and sales tax.

[burlshoe114]

Thanks for the response!
What is the sales tax rate in Austin?
I was just suprised with the property tax rate. I know the city had to run on something other than goodwill, but I was just curious why it seemed so much higher than other cities of larger or comparable size.

[TexasHorseLady]

Sales tax is 8.25% in Austin, I believe, inclusive of everything. (It varies slightly around the area as different cities have different amounts.)

Here's the Chamber of Commerce page on taxes (http://www.austinchamber.com/DoBusiness/TaxesAndIncentives/index.html - broken link) in this area that you might find helpful.

[verybadgnome]

It is a matter of higher property taxes compensating for a lack of state income taxes. The downside is that many people in gentrifying areas are being forced out of their sometimes paid-for homes. They do try to limit the impact with a annual 10% increase cap and special senior privileges but there is definitely some hardship on account of this. What is not fair is that there are huge, huge tax breaks given for the agriculture exemption for which some folks with a couple acres get a few paltry cows and call it a "working farm." The upside to that is that t-bones at HEB are cheaper for everyone but the downside is that city dwellers have to make up the difference as I believe there is no equivalent exemption for them. The AG lobby is huge in Texas and we do stupid things like rice farming b/c of it.

Also get your homestead exemption. It will take $15k off your assessed value if you live in the house IIRC.

[meredithT]

The property taxes don't seem high to me, but I live in NJ. We pay state income tax AND high property taxes. Texas is better.

[orngkat]

We had the fortune or misfortune of buying a house in Central Austin over ten years ago when prices were somewhat reasonable. The property taxes have risen so high that it is not a sustainable situation for us as we get older and have less income. So, like many others, we will be moving to more affordable housing at some point in the future.

[XLadylawX]

Believe it or not, there is an upside to high property taxes. It has been proven that it provides a more stable source of funding for governmnet spending (infrastructure and police). This means there are no wild feast and famine years like in California where the economy and infrastructure of the state are in a complete shambles. I truly believe that Texas has whethered the current bad economic times, in part, because of its method of taxation.

Still, I would support a change in state law that would place the breaks on property tax increases for those of a certain age so that they are not forced to move from their homes in their golden years.

[hoffdano]

Texas' taxation scheme is of course imperfect. Some of the problems with a property-tax centric system are mentioned above. I am worried about my property taxes when I retire.

But no tax scheme is fair to everyone. And as already said - the property tax is a less volatile source of government revenue than corporate and personal income tax.

Note too that the property tax in Texas is NOT a state tax. Property taxes are local taxes. The money (with the exception of Chapter 41 school recapture) stays near you.

[zach5150]

Originally Posted by orngkat

We had the fortune or misfortune of buying a house in Central Austin over ten years ago when prices were somewhat reasonable. The property taxes have risen so high that it is not a sustainable situation for us as we get older and have less income. So, like many others, we will be moving to more affordable housing at some point in the future.

I don't know your age, but I just wanted to point out the "over 65 exemption" if you were not aware of it. I believe, if I remember correctly, that you can "freeze" the property value of your home at age 65 so that the assessed value will not go up as long as you live in the home after age 65.

Here's more information for you as well as the original poster on property taxes in Texas.

Texas Property Taxes: Taxpayers' Rights, Remedies, Responsibilities