Three Year Pilot Program

Continuing with what’s in the Texas property tax reform bills, next up is the component I think is the least impactful. It’s a three-year pilot program to cap the amount of appraisal increases on smaller commercial and investment properties.  For properties valued at $5 million or less, there will be a 20% cap on the annual increase in taxable value (by the way, that $5 million threshold will be adjusted for inflation).  Other than 2021, has there been a year in which values increased more than 20%?  Not many.  So in order for this to kick in, the value of a qualifying property would need to increase by more than 20% in one year.  For example, imagine a small commercial property valued at $2 million.  The value would have to go above $2.4 million before any relief kicks in.  Again, I just don’t think we’ll see that many properties affected.  But it’s the first time Texas is addressing an increase cap for non-homestead properties, so we’ll see how the pilot program goes.

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