PROPERTY TAXES

During my Neighborhood Listening Sessions, residents made it clear that they were frustrated with the amount of property taxes they pay.  I share that frustration -- who likes to shell out that much money, particularly if you don't feel you're getting quality services for the amount you're paying?  Unfortunately, one of the primary ways that Dallas funds all city services is through property taxes.  I also heard a lot of questions about how Dallas compared to other cities.  So I wanted to provide you with more information on City of Dallas property taxes.

First, not all of your property tax bill goes to the City of Dallas.  In fact, only about a quarter of your property taxes goes to the City.  The rest goes to DISD and the County.  Out of every dollar you pay, DISD collects $.57, the County $.18, and the City of Dallas $.25:

QUICK DIGRESSION:  SALES TAXES
Quick digression.  I know this is a discussion about property taxes, but I just have to mention our city's sales tax.  The maximum the State of Texas will allow cities to collect is a total of ¢8.25 on every dollar.  Out of that, the city only collects one cent.  Most goes to the State, and one cent goes to Dallas Area Rapid Transit:

BACK TO PROPERTY TAXES...
A couple of weeks ago, our City Manager briefed the Council on the 2006 Bond Election.  One of the things that I found particularly helpful was a chart she prepared comparing Dallas' tax rate with other cities in Texas.  (It's hard to compare Dallas to cities outside of Texas, because other states may have income taxes, different sales tax rates, etc., all of which make it nearly impossible to compare apples to apples.)  Here is that comparison based on 2005-06 tax rates (amount of money paid on $100 worth of home value):

PROPERTY TAX COMPARISON
SORTED BY PROPERTY TAXES PAID BY SENIOR ON $150,000 HOME
City Total Tax Rate Homestead Exemption Tax on $150,000 (Homestead Exemption Only) Senior Exemption (over 65) Tax on $150,000 (Homestead and Senior Exemptions)
1 Austin 0.443000 0% $665 $51,000 $439
2 Plano 0.453500 20% $544 $40,000 $363
3 Addison 0.476000 20% $571 $50,000 $333
4 Farmers Branch 0.494500 20% $593 $60,000 $297
5 Richardson 0.525160 0% $788 $30,000 $630
6 Irving 0.547900 20% $657 $30,000 $493
7 San Antonio 0.578540 0% $868 $65,000 $492
8 Mesquite 0.601480 0% $902 $65,000 $511
9 Denton 0.608150 0.5% $908 $25,000 $756
10 Carrolton 0.632875 20% $759 $60,000 $380
11 Houston 0.647500 20% $777 $53,240 $432
12 Arlington 0.648000 20% $778 $60,000 $389
13 Garland 0.666100 5% $949 $51,000 $609
14 Grand Prairie 0.669998 0% $1,005 $45,000 $703
15 De Soto 0.684990 0% $1,027 $30,000 $822
16 Duncanville 0.718000 0% $1,077 $26,400 $887
17 Dallas 0.741700 20% $890 $64,000 $415
18 Fort Worth 0.865000 20% $1,038 $40,000 $692
            (Taxes rounded to nearest dollar)

Yikes!  Dallas has the highest tax rate other than Fort Worth!  This is troubling, to say the least.  But the story doesn't end there.  The real question isn't just "What is the tax rate?" but "How much do you pay in taxes?"  That's really the bottom line, after all. 

An important component of how much you pay in taxes is the "homestead exemption."  A homestead exemption is intended to give homeowners a break (as opposed to owners of rental properties or second homes).  You can only claim a homestead exemption if you live in the home as of January 1st of the tax year.  A homestead exemption basically reduces the amount of your home value by a certain amount, so you only pay taxes on the reduced amount.  For example, if the homestead exemption is 10%, you only pay taxes on 90% of the value of your home.

Dallas has among the highest homestead exemptions in the state, at 20%.  That means you only pay taxes on 80% of the value of your home.  Only half the cities surveyed had a comparable homestead exemption.  Half, including large cities like San Antonio and Austin, have no homestead exemption at all, so they collect taxes on 100% of the value of your home.

So let's compare city property taxes paid on a home valued at $150,000, taking into consideration the homestead exemption:

PROPERTY TAX COMPARISON
SORTED BY PROPERTY TAXES PAID ON $150,000 HOME
City Total Tax Rate Homestead Exemption Tax on $150,000 (Homestead Exemption Only) Senior Exemption (over 65) Tax on $150,000 (Homestead and
Senior Exemptions)
1 Plano 0.453500 20% $544 $40,000 $363
2 Addison 0.476000 20% $571 $50,000 $333
3 Farmers Branch 0.494500 20% $593 $60,000 $297
4 Irving 0.547900 20% $657 $30,000 $493
5 Austin 0.443000 0% $665 $51,000 $439
6 Carrolton 0.632875 20% $759 $60,000 $380
7 Houston 0.647500 20% $777 $53,240 $432
8 Arlington 0.648000 20% $778 $60,000 $389
9 Richardson 0.525160 0% $788 $30,000 $630
10 San Antonio 0.578540 0% $868 $65,000 $492
11 Dallas 0.741700 20% $890 $64,000 $415
12 Mesquite 0.601480 0% $902 $65,000 $511
13 Denton 0.608150 0.5% $908 $25,000 $756
14 Garland 0.666100 5% $949 $51,000 $609
15 Grand Prairie 0.669998 0% $1,005 $45