The Homestead Trap

[Trevor Caswell]

In Texas, many homeowners claim a homestead exemption, which significantly lowers their property taxes.  Great for them, but here’s the catch: when that property sells, the exemption goes away.  The next owner or investor can see a big jump in property taxes once the county reassesses.  When running numbers, don’t assume the seller’s tax bill is what you’ll pay.  Always check the tax rate, valuation, and estimate your post-sale liability without the exemption.  And of course always be proactive, buyers are savvy and will uncover the difference. Having documentation ready helps prevent surprises during negotiations.

In a market where margins are already tight, overlooking property taxes could make or break your deal.

[Holly Brown]

Preach @Trevor Caswell! This is especially true with new construction homes, which are often assessed at very low values (usually land value) during purchase. What many buyers don’t realize is that once the county records the sale, the property tax assessment jumps significantly and with that, their mortgage payment. Unfortunately, builders’ lenders nor agents rarely warn new homeowners about this upcoming increase. They just want the sale.