How Do Property Taxes Work?

How Do Property Taxes Work?

How Do Property Taxes Work in North Texas?

understanding property taxesThe financial aspect of purchasing a home can be complex, particularly for first time home buyers and for those who are moving to a new area such as Allen, TX. One of the factors that can greatly affect a home owner’s monthly payment is the property tax rate. Making the decision to buy requires that the purchaser is aware of current local and state taxes, as well as how those rates may change over time.

In the state of Texas, the effective real estate tax rate in 2017 is 1.9%. On a home with an assessed value of $136,000, that rate amounts to $2,578 in state tax annually, or $215 per month. But that’s not the total tax payment; in addition to state taxes, local taxes also apply.

In 2016, the tax rate for Allen, TX was 2.39%, which is inclusive of the city tax, school district tax and Collin County taxes. For a $136,000 home, applying the local tax percentage amounts to $4,066 annually, or $339 per month.

When we combine the state and local taxes for our area, the total per month tax bill in our example is $554, which becomes part of the monthly mortgage payment if a property owner decides to utilize an escrow account. While that may seem like a big chunk of change, Texas residents benefit and save in other ways: we have no vehicle property tax or state income tax!

Collin County, TX, which encompasses cities such as Allen, McKinney, Frisco, Plano and Richardson, offers a tax estimator tool to help current and prospective property owners estimate local taxes. In addition, real estate agents can assist by explaining what types of taxes apply in the local area; and of course, lenders and title companies go over those figures in detail before the home closing.

If you have questions about property taxes and the benefits of living in and around Allen, TX, our team is always available – just ask us!