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Know Your Property’s Value for Proper Tax Accounting

Farmer in Texas

When you buy real property in Texas, one of the perks you get is that there is no state property tax. However, you do need to pay property taxes to your local government.

Properties in Weatherford, TX, for example, are subject to Parker County tax regulations. Property tax rates may vary from one locality to another, so it’s best to check with your municipality on what the current rate is. In addition to the city or county tax, special taxation districts may also be added. Exemptions or benefits, such as a homestead cap loss, may be applied to lower your tax bill.

While the mechanics and components in determining individual property taxes may vary from one municipality to another, it all starts by getting your property’s appraised value.

In Texas, appraised value can mean your property’s market value or its Agricultural/Timber Use Value. Here are important details about these two classifications.

Agricultural/Timber Use Value

Properties in Texas that qualify for agricultural/timber use are often subject to lower taxes than other property types. The property will be assessed not according to its market value but on the land’s potential to produce agricultural and timber products. This is known as “productivity value” and is generally lower than market value.

To qualify for this incentive, you must apply for a special appraisal with your county’s Comptroller office. Your property must meet the given criteria, which include:

  • The property must be mainly devoted to timber production or agricultural use, including producing crops, livestock, poultry, fish, and others
  • The level of intensity of agricultural or timber production must be consistent with what is generally accepted in your local area
  • The land must have been used mainly for agricultural or timber production in at least five of the last seven years

Check hereto learn more about the requirements for qualifying as agricultural or timber land.

Market Value

If your property does not fall within the agricultural/timber use classification, it will be taxed according to its market value.

An assessor will estimate your property’s market value using one of these three methods:

  • The Replacement or Cost Method
  • This method is applied to an improved lot or land parcel. It determines the building’s or improvement’s value by assessing how much it would cost to replace it. It takes the building’s depreciation into account, as well as the material and labor costs of building the property (for new properties), or the building’s value if it were empty (for older properties). The estimated value of the building is then added to the value of the land.

  • The Income Method
  • This approach considers the amount of income your property would receive if it were rented out, and how much an investor would buy your property for based on its rental income potential. It also accounts for expenses that comes with running a rental property, including management costs, maintenance, taxes, and insurance.

  • The Sales Comparison Method
  • The estimated value of your property is determined by looking at the sale prices of recently sold properties in your area. The properties to be used for comparison must be similar to yours in terms of size, features, and condition. The prices are then adjusted based on the differences between your property and the comparable properties. For example, if a similar property has a swimming pool and yours doesn’t, the sale price will be adjusted down. If the comparable property has three bedrooms and yours has four, the sale price will be adjusted up.

Have your property appraised with HBS Real Estate

We’re among the top real estate companies in Weatherford, TX and the surrounding areas. We perform valuations and other appraisal services for various purposes, including pricing your property for sale, estimating your property tax obligations, right-of-way appraisals, and others.

Check out this page for more information, or call us at 817.550.6666. You may also leave us a note here.