Real Estate Agent · Houston, TX · Member since 2026 · 31 posts · 5 votes
Out-of-state buyers often underwrite off the seller's last tax bill. For a rental in Texas, that bill can be well under what you'll pay, because the seller's homestead exemption doesn't come with the house.
HISD is a clean example. Its homestead exemption is $140,000 plus 20% of appraised value, and the 2026 rate is $0.8421 per $100. On a $350,000 home:
1) Owner-occupant: $210,000 exempt, about $1,179 a year in school tax.
2) Rental, no exemption: about $2,947 a year.
3) The gap: about $1,768 a year, or $147 a month, on school tax alone.
If the seller is 65 or older, HISD exempts another $65,000, so the seller's school tax drops to about $632 and your gap grows to about $2,316 a year, or $193 a month.
This also applies to the 10% annual appraisal cap, which is for homesteads. A rental doesn't get that one.
Before you offer, check which exemptions are on the account, then rebuild the bill with none, using every taxing unit's current rate. Other units can have their own homestead exemptions, so the real gap can be bigger.
If you're looking at a specific Houston property, drop the zip and price below and I'll tell you what the taxes and flood history look like.
This is the one I see trip up out-of-state buyers the most. Same story up here in Montgomery County, plus MUD and other special district rates on top, so I always rebuild the tax bill with no exemptions before we ever write an offer. Texas investors don't get a homestead, so the seller's bill is just a starting point.
Lauren, same process here. Rebuilding with no exemptions is the only version of the number I trust. Two more things on the seller's bill can fool a buyer even after the homestead comes off:
1) The school tax ceiling. HCAD says once an over-65 or disabled owner qualifies, their school taxes won't increase unless they improve the home. An investor has no homestead, so that lower school line isn't coming with the property.
2) The value itself. HCAD says the 20% circuit breaker limit comes off when the property sells, and it's only authorized through tax year 2026. So I price off market value, not the seller's appraised number.
Question on the Montgomery County side: are you underwriting MUDs at today's rate only, or also checking how much bond debt is left?
If you're looking at a specific Houston property, drop the zip and price below and I'll tell you what the taxes and flood history look like.
Lauren Cutchen 513 Reviews