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Most of the cities in Texas are going to be tough regarding property taxes. I’m in Houston and I pay 7K annually on one rental, 6K annually on another rental, etc. it’s a cashflow killer so the deals have to be really really good or great future appreciation.
When we lived there it was about 2% of property value. I wouldn’t invest in Austin. ROI isn’t there.
Austin property taxes are very high. It’s a property rich district so they send part of their taxes to poorer districts.
not a good area in general to invest in RE? The rent is not that high, and it seems a huge chunk of the revenue will just go to property taxes (and mortgage)
I was paying nearly $10k a year for a house I bought for $350k in Dallas.
Subject Expert
Texas has no income tax, so they need to make it up somewhere else. Therefore, property taxes are higher. I wouldn’t be surprised if Austin had incrementally more taxes too than other Texas cities
Also note that different neighborhoods have different tax rates. We bought new construction in drippings springs and our rate is lower compared to neighborhood next to us.
I had a house in Carrollton and had to pay the school system tax for our Carrollton school and also Dallas DISD.
Any state without income tax is going to likely to have higher property and sales taxes. Someone has to pay for the schools and roads and those states have made the decision that it should be homeowners and shoppers instead of workers.
Rent has nothing to do with government assessments though? My point is that government needs money to function. In some states they take a balanced approach to raise money through sales, income, and property taxes. When you remove one of those revenue sources the schools and roads don’t get any cheaper, so you have to make the money somewhere else. You’re right that a savvy landlord will pass those costs on to the renter and the market should reflect that, but the question was more aimed at “why are taxes so much higher in TX” and it’s because there is no income tax.
Yes they’re that high.
We have 2 rental properties in San Antonio:
- 1 we bought for $205k and pay $5-6k each yr in property tax
- 1 we bought for $235k and pay $6-7k each yr in property tax
Now compare that with our home in TN:
- we bought for $580k and pay $1200 each yr in property tax
It’s wild how expensive TX is for property taxes.
I don’t know Texas law, but in my experience property taxes for investment property is based on, in some way, cash flow. I appeal property tax assessments every year in multi family as a matter of course. You may want to do a bit of due diligence to make sure that in Austin your taxes on an income producing property are assessed independently of the income.
Yes