Investors' Guide to Getting Ready for Tax Season - Texas

This post is all about getting ready for tax season when you have investment properties. I live and work in Bexar County, Texas, so this might not be applicable to everyone.  Even if you have an accountant who does your taxes for you, you will still need to gather some information for them and complete some applications yourself. Read on or watch the video below to learn how I get ready.

DISCLAIMER: I am NOT an accountant. You should always seek professional advice from a licensed CPA based on your specific situation.

Tax Exemptions

Texas generally has pretty high property taxes, but there are several exemptions available. Most of these require that you live in the property, so they may not apply to all investors. There are exemptions available for people age 65+/disabled, Disabled Veterans, Surviving spouses of first responder or military personnel, and the most common one, Homestead Exemption.

Homestead Exemption – Deadline April 30, 2021

If you live in your home, you should qualify for this. You only have to apply for it once (unless you move), so if you bought a house in the past year or have never applied for it, then this applies to you. The deadline to file is April 30, 2021, so if you haven’t done it yet, now is the time.

To complete the paperwork, you should go to the Bexar County Appraisal District website (bcad.org – you need to be familiar with this website as an investor because this is where you look up who owns properties, what the property taxes are, etc). Go into the Forms tab, click EXEMPTIONS and go to the Homestead Exemption form. You must print it out, fill it out, and mail it in.

Protest Your Property Taxes

Another key part of tax season for me is preparing to protest property taxes for my home and all of my investment properties. Ok, so you’re actually protesting the valuation of your home by the Appraisal District, but because the tax rates are based on the valuation of your home, if you lower the valuation, you will lower the taxes. You should protest your property taxes each year because it lowers your tax bill over time, it is easier to sell a home with a lower tax bill, and because it is just plain easy! If you have been following me for any amount of time, you know that I’m passionate about saving money, especially on taxes. I’ve got a whole blog post for a more in-depth take on Protesting Your Property Taxes, as well as a playlist on my Youtube Channel that gives step-by-step instructions.

Set Up an Online Account

In order to file your protest online, you’ll need a username and password that they will ONLY send you in the physical mail. You will need to go to the BCAD.org website and click on the Online Services Portal tab. Here you can create a new account or login to an existing account.

Update Your Address – Deadline March 30, 2021

Update your address with BCAD by March 30, 2021 so that you’ll receive the “Notice of Appraised Value”. Notices start to go out on April 1. If you don’t do this, the Notice will go to your tenants and you may not be able to get it from them.

On the same Forms page of the BCAD website, you can click on Application/Forms and find the link for “Change of Address Form“. You need to print, fill it out, and mail it in. If you own multiple properties, you can change all of your addresses at once to receive all of your notices to the same place.

Filing Your Protest – Deadline May 15, 2021

You’ll receive “Notice of Appraised Value” for each of your properties at your mailing address. They are usually mailed out in the first week of April (note that in 2020 they were delayed due to COVID and this year they could be delayed due to the winter storm in February).

You can file the protest completely online. Check out my YouTube series to walk you through the entire process. The deadline to file your protest is May 15, 2021. Also, if you need evidence to support your protest of the valuation of your home, I’m happy to pull some comps from similar homes in your area. Go to protest.cassievillela.com to let me know you need help and I’ll get them to you.

CPA or DIY?

This is one of the age-old debates of tax season – should I hire a CPA or do it myself? I see a lot of people who don’t want to pay a CPA, but there is so much you can miss if you decide to go the DIY route. A CPA who specializes in real estate will be familiar with all of the relevant tax codes to keep you legal and help make sure you don’t overpay. If you do it yourself, you are likely to miss deductions or make mistakes, especially if you own real estate or other investments.

In my experience, my CPA has saved me as much or more on my taxes as it costs to pay them. That’s money well spent to me. It gets really complicated really quickly when you have any type of investments, so it is really best left to the pros.

Items to Gather for Preparing Your Taxes

These are the things a CPA will ask you for when they are preparing to file your taxes. Keep a lookout for all of these things and put them together as they come in.

• All Closing Statements – 2-page document that details all of the costs of closing (sales price, realtor fees, property tax, etc). You get this when you close on a home.
• Mortgage Interest Statements – your bank or mortgage company will send you this statement around the end of the year.
• Property Tax Statements
• Expenses for Maintenance/Repairs*
• Property Management Fees*
• Income*
• Business Related Mileage* – track this if you’re going on showings, driving around with your realtor, etc.

*I track these things in Stessa, which is a program that Bigger Pockets recommends a lot. It is really easy to use and it is free.

Final Thoughts

I hope the resources and reminders I’ve gathered for you here are helpful. Tax time can be stressful, but if you’ve got a plan and have backup from the right pros, you can avoid a lot of heartache and save money on your taxes.

Let me know what you think and if there’s anything you’d add to the list of things to help prepare for tax season as a real estate investor!

Like what you see? Join me every other Tuesday at 7pm CST for San Antonio Real Estate Market Updates, Investing Topics, and Networking! Register at investors.cassievillela.com