property taxes in Texas

Everyone is concerned about residential property taxes, but what can we do about it?

In San Antonio, residential properties are entitled to a tax exemption, but only if the property is historically significant, needs substantial restoration to preserve it, and is actually restored. If a  property owner applies for the tax exemption and meets the various requirements, the owner’s tax base for the city’s ad valorem taxation is “frozen” for ten years at the value of the property before restoration. This tax exemption is non-transferable, which means the owner can certainly sell the property, but the new owner will not realize any tax savings. (San Antonio Code section 35-7070).

Our historic preservation officer mentioned to me more than a year ago that she would encourage City Council to adopt more generous tax exemptions. Unfortunately, the most recent revisions to the  city’s building code that I’ve seen do not contain any changes to the historic property tax exemption.

In reviewing city codes available on the Internet, I noticed that a number of Texas cities offer tax exemptions. Beaumont, for example, has a ten-year, non-transferable tax exemption. The Beaumont ordinance is almost identical to the one in San Antonio. (Beaumont Code section 25-58).

Waco also offers a similar tax exemption for historically significant properties in need of preservation. In Waco, the tax incentive is limited to properties where the value of the rehabilitation exceeds 30% of the assessed value of the structure. (Waco Code section 28-1141).

Other cities offer a tax exemption that is so limited it only benefits big companies. Fort Worth, for example, permits a tax exemption for residential historic properties when the cost of improvements exceeds $5 million. (Fort Worth Code section 32-41).

Cities outside Texas may offer tax exemptions or other forms of financial relief. For example, in Chicago, a special program targets Arts & Crafts bungalows built between 1910-40. Anyone who wants to buy or rehabilitate a historic bungalow can obtain a loan with a 3% down payment and no origination, appraisal, or application fees. Anyone who wants to rehab a historic bungalow is eligible for up to $3,000 in grants, discounts from material suppliers, free architectural assistance, and expedited services from the city departments. Special mortgage programs assist buyers or owners who earn less than median income.

I’ve often been told that the Texas ordinances (which don’t encourage much, in my opinion) are directly related to our multi-district methods of education and the lack of a state income tax. If that’s true, what’s going on in Austin?

In Austin, residential historic properties that are occupied by their owner are entitled to a tax exemption of the city’s tax assessment worth 100% of the structure and 50% of the land or real property. (Austin Code section 5-5-21). The owner must apply for the exemption each year and must authorize members of the Historic Landmark Commission to inspect the property to ensure that it’s being preserved and maintained as required by the city’s historic regulations.  (Austin Code section 5-5-22). A similar tax exemption is available for historic properties used for commercial purposes, but the exemption is limited to 50% of the structure’s value, and 25% of the real property. Keep in mind that the Austin tax exemption applies only to the city’s portion of the tax bill.

If it’s good enough for the State capital, would it be good enough for us?