New Build Tax Bills Will Jump: First-year prorations often reflect land value only (dirt). Once the completed house hits county rolls, taxable value and monthly payments frequently triple or quadruple.
Homestead Exemptions Are Always Free: Filing Form 50-114 directly with your county appraisal district costs $0. Never pay a third party to submit it.
File Immediately & Backdate If Needed: Submit your exemption as soon as you move in. You can also retroactively claim up to 2 prior years of missed exemptions on the form.
Year One Has No 10% Cap: The 10% annual homestead appraisal cap doesn't apply until January 1 of the full tax year after you qualify. Expect maximum value shifts in year one.
Watch April Mail to Prevent Escrow Shortages: Mortgage servicers recalculate escrow after taxes are paid, causing surprise payment hikes a year later. Review your Notice of Appraised Value in April to catch errors before the May 15 protest deadline.
Refinancing Can Reset Exemptions: Refinancing doesn't cancel your exemption, but changing deed vesting (such as transferring title to an LLC) can cause county systems to drop it. Re-verify your status after closing.
I have sat across the table at a lot of closings. The buyers are usually keyed up and ready for the keys. The stack is thick, the pen keeps moving, and by the time we get near the end of the title company paperwork most people have stopped reading and started thinking about the drive over to the house.
Then we reach the Tax Proration Agreement.
For a buyer of a brand new construction home, that page deserves more attention than it usually gets. Most buyers assume the tax figure they see at closing is roughly what they will pay from then on. On a new build it usually is not close.
The questions below are real ones. Homeowners asked them of our escrow officers at Destination Title Group, or of our partners at Bezit, whose work protesting property values for homeowners makes them a useful second set of eyes when this comes up. The questions tend to arrive a few months after closing, once the first tax bill shows up or the escrow payment changes. And in most cases the answer traces back to something we covered at the closing table on a day when nobody had the bandwidth for it.
Why First-Year Tax Bills on New Build Homes Triple
"The county website says the taxes on this address were about four thousand dollars last year. Why is everyone telling me to budget three times that?"
Because last year there was no house there.
If the home was not finished on January 1, the appraisal district cannot appraise a house that was not standing. It appraises the lot. So the prior year figure in county records for that address might read $2,000, or $3,000, or $4,500. That is a land number, accurate for what was on the ground at the time and useless as a forecast once a finished house sits on it.
At closing, when the current year's bill has not been issued yet, we prorate off the best information available. Sometimes that is last year's certified figure. Sometimes, later in the year, it is the district's market value multiplied by last year's rates. On a home brand new to the tax roll there is often no clean historical number at all, and our escrow team is doing that math by hand.
Then the next January 1 arrives, the house is standing, the district appraises the improvement, and the taxable value goes from a lot to a home.
Here is what that split looks like in practice. On one real North Texas account, numbers rounded, the land line came in around $125,000 and the improvement, meaning the house itself, came in around $400,000. The lot accounted for less than a quarter of the taxable value.
The year a house like that lands on the roll, the bill roughly quadruples, and it happens in a single January.
"My land value went down and my improvement value went up, and I have not touched the house."
We hear this one constantly, and it is not an error.
Those are two separate schedules and they move independently. Land is set on a neighborhood schedule, so when the district reworks a neighborhood the land line moves for everybody at once. The improvement line is about the structure itself.
"The same model two doors down is appraised thirty-six thousand lower than mine. Same builder, same floor plan."
This is my favorite one, because the answer teaches you to read your own notice.
Your appraised value is two numbers added together: land plus improvement. On the pair of homes behind that exact question, the improvement lines were about $9,000 apart. The other $27,000 of the gap was land, a neighborhood schedule difference that existed before either owner did anything.
So compare improvement lines with your neighbor. Totals bury the land difference, which is why people come to us convinced the district made a mistake on an account where nothing is wrong.
What to do about it, and it takes ten minutes. Before you close, look up two or three finished homes of a similar size in the same neighborhood, ideally ones completed a year or two ahead of yours, and see what they are actually taxed on. Your county appraisal district's site will show you, and so will a free lookup at bezit.co. Those numbers are your preview.
Most standard Texas contracts also let both parties settle up between themselves if the prorated amount used at closing differs from the actual bill. Read that paragraph rather than assuming it is boilerplate.
How to File a Free Texas Homestead Exemption (And Save)
This is the one that costs people the most money for the least reason.
The residence homestead exemption takes $140,000 off your home's value for school district taxes, and school taxes are the biggest line on a North Texas bill. Your city, county and college district may add local exemptions on top of that.
"Somebody offered to file my homestead for me. Is a fee normal for that?"
No. Filing the application with your appraisal district costs nothing. Not twenty five dollars, not two hundred fifty. It is a form you can submit yourself in about fifteen minutes.
If you would rather have someone handle it, that is fine. Bezit files them at no charge, and so do others. But the right price is zero, and any service quoting you a fee is charging you for a form the district gives away.
"I closed in June. Do I have to wait until next year?"
You do not. If you buy after January 1, you can receive the general residence homestead exemption for the applicable portion of that tax year as soon as you own the home and live in it, provided the previous owner did not already have the same exemption for that year.
File it when you move in. Do not sit on it until spring.
"I have owned this house three years and never filed. Is it too late?"
No, and this is worth real money.
April 30 is the deadline for the current tax year. Miss it and Texas still lets you file late and claim up to two prior years, measured from when those taxes became delinquent or from when you began occupying the property. The appraisal district recalculates those years and issues any refund that comes out of it.
The catch is that the prior years only come back if you list them on the application. There is a line on the form asking whether you are filing late and which years you want it applied to. Fill it in.
"Does it renew? I got a letter from the appraisal district asking me to confirm I still live here."
It renews on its own as long as the house stays your primary residence. But do not treat that letter as junk mail.
Texas now requires appraisal districts to verify residence homestead exemptions at least every five years. Exemptions do get removed for no reason other than a homeowner not replying. Answer it.
One more thing that almost nobody knows in year one. People hear that their value can only go up 10% a year and they relax. That limitation takes effect on January 1 of the tax year following the year you qualify. Your first year has no cap on it, and on a new build the first year is also the year the value moves the most. That is a rough combination to walk into unprepared.
How Mortgage Escrow Hides Texas Property Tax Increases
If your taxes are paid out of escrow, which is how most first time buyers are set up, you never write a check to the county and you never see the bill. That is convenient. It is also the reason the increase can reach you months after you could have done anything about it.
"I pay through escrow. Will my mortgage company just handle the new amount, or do I have to tell them?"
You do not have to tell them. The servicer pays the bill out of the account, runs an escrow analysis, usually in the spring, and adjusts your monthly payment based on what actually got paid. It gets handled without you. You also learn about it months after the fact.
"Will I see this reflected in this year's bill?"
Usually not. This is the question I most wish people asked earlier.
Here is how the calendar actually runs:
April: the appraisal district mails your Notice of Appraised Value. This is the only moment in the year when you can still do something about the number.
May 15: the deadline to protest that value, or 30 days after your notice was mailed, whichever is later.
Fall: tax bills go out.
January 31: taxes are due, and your servicer pays them from escrow.
Around March: the servicer runs its annual escrow analysis and finds the account was funded on an estimate that is now far too low.
Spring: your monthly payment goes up, twice over in effect. Once to cover last year's shortage, and again to fund the higher amount going forward.
That spring increase is the first time most homeowners learn their taxes went up. By then the protest window on the value that caused it closed roughly ten months earlier.
"My value went down and my payment still went up. How?"
That is the tax rate moving.
Your ISD, county, city and MUD each set their own rate. A protest can move your value. Nobody moves a rate, not a consultant, not us, not the appraisal district. So in a year when the rates climb, you can win a real reduction on your value and still end up with a higher bill than last year. Both things are true at once, and it makes for a frustrating phone call.
If you build one habit out of this article, make it this one: open the Notice of Appraised Value when it lands in April. It is the only piece of tax mail with a deadline attached, and the only one you can still act on.
Does Refinancing Cancel Your Texas Homestead Exemption?
"I refinanced and lost my homestead exemption."
This is the most persistent myth in my business.
Refinancing by itself does not remove it. The exemption is tied to who owns the home and who lives in it. Your lender has nothing to do with it, so change lenders all you like.
What can disturb it is a change to how title is held, which sometimes rides along with a refinance without anyone stopping to think about it. Adding or removing a spouse from the deed will do it. So will altering the vesting language, or moving the property into a trust or an LLC. When ownership on the deed changes, the district's system can treat it as a new owner and reset the exemptions on the account. A qualifying revocable trust is usually fine. An LLC generally is not, because the homestead exemption belongs to a person.
Two things to do after any refinance, both quick:
- Pull up your account on your county appraisal district's website and confirm the exemption is still showing. Do it a few weeks after closing rather than the same afternoon.
- Check what tax figure your new escrow account was set up with. A new servicer starts fresh, and if it based the account on a stale number you have quietly re-created the shortage described above.
What to Do Next
Managing your North Texas property taxes doesn't require becoming an expert—it just takes ten minutes at two key moments:
- Before You Sign at Closing: Look up two or three finished homes of a similar size in your neighborhood on your county appraisal district site or via bezit.co. Their actual tax bills are your best preview of what is coming once your completed home hits the tax roll.
- When April Mail Arrives: Open your Notice of Appraised Value the day it lands. Check that your homestead exemption is listed and review the proposed value immediately. May 15 is your deadline to protest - once that window closes, your escrow servicer will simply pass the full bill along to you next spring.
