What you should know:
April 28, 2025 - So far, 2025 is showing us that Property Taxes in Texas is ever-changing. The 89th Regular Legislative Session kicked off on January 14th with Property Tax as one of the main topics. Several new bills have been written and introduced to reduce property taxes for homesteaded and non-homesteaded properties. Only a few of these bills have gained much traction. Most notably, SB4 has proposed an increase to the Homestead Exemption as well as a possible M&O School Tax Rate compression change. However, we will know more in the coming weeks.
Not only have the last several years proved that Shelby County is experiencing increased growth with population, but we have seen an increase in new construction (residential and commercial) and a rise in Real Estate sales with higher sales prices county wide. Since 2020 we have seen real estate, in general, continue to sell for more than it ever has statewide. With that, every two years (unless every year is required), the State of Texas’ Comptroller’s office, through its Property Tax Division, conducts their Property Value Study as a type of “report card” for appraisal districts.
The most recent study conducted was this past year, 2024, which included Excelsior ISD, Timpson ISD, and Joaquin ISD. What this means is, a State Appraiser assigned to our county will take a random sampling of properties within a school district to compare the SCAD appraised value with a sale they may have, or their own appraisal. Once those samples have been studied, they determine whether the Appraisal District is valuing properties at 100% of market value. This 100% requirement is per Sec 23.01 of the Texas Property Tax Code.
The 2024 Property Value Study (PVS) for three of the six school districts, determined that the Shelby County Appraisal District (Shelby CAD) did not value those sampled properties at 100% market value. Their results found that our values were much less (in some categories, below 90%). Through this study, it was determined that in 2023, 5 out of 6 schools were outside the confidence interval (or not within 95% - 105% of their determined Market Value) which led to either a “Grace Year” for the school district or “NO Grace” and a reduced state funding amount. The appraisal districts were created in 1980 to ensure equitable value for all entities, including School Districts, statewide. So, when the state determines the local appraisal district is undervaluing properties, it affects the amount of state funding the local school districts receive.
Shelby CAD continues to receive returned mail on less than 2% of the optional sales letters that are mailed out to both the buyers and sellers of all deeded real estate transactions. In previous years, Shelby CAD received multiple-listing sales data from our local Board of Realtors, which helped to maintain the state mandate of 100% of Market Value; however, in 2015, that access was no longer granted by the local board. The state comptroller still receives sales information that they use in their property value study. It is only when a school district has failed the PVS, will the Shelby CAD office have access to those sales and their data used in their study.
The state property value study is conducted every two years unless a school district fails the study and then the PVS is performed each year until the school district passes. Shelby CAD passed the 2019 study for 5 out of 6 school districts but within 2 years (2021) it was determined that our valuations were too low and 5 out of 6 were outside of what the state considers its confidence interval and now, once again, in 2023. Much of this was due to the rise of real estate sales values during the Covid-19 pandemic.
What this means to Shelby County property owners…for the year 2025, most residential properties and landowners, as well as some commercial property owners, will see an increase in their valuations. Acreage has seen an increase in sales within the smaller tracts, 1-20 acres, which required a change to our land schedule for 2025. Waterfront properties have also seen an increase. According to the state and by sales data, these properties have been undervalued.
We want all of Shelby County to remember that every Appraisal District in Texas, appraises on a Mass Appraisal Approach. You may have seen a value increase this year…however, you may think, “my property has serious functional and physical issues!” Please call or make an appointment to visit with an appraiser. Bring current pictures and repair estimates so we can see and know the condition that your property is in. Also, if you have purchased your property within the last 12 to 18 months, and the Appraised Value is more than the purchased amount, please bring your closing statement or fee appraisal and we will take a look.
One last reminder, this fall, Texas voters will vote to approve SB 4 which proposes an increase of the Residential Homestead exemption (the School Tax exemption) from $100,000 to $140,000. In addition, if you are Over 65 or on SS Disability, that additional $10,000 given in the past has been increased to $60,000, giving a total of $200,000 exemption for OV65 and SSD. This will be year two of the Non-Homestead Cap (or Circuit Breaker) of 20% for real properties, which has a proposed increase to $5,160,000 in value.
For those who may not know about the Circuit Breaker… this is for non-Homesteaded properties, now up to $5,160,000, capping the taxable value NOT more than 20% over last year. The Market Value of a property may increase, but the taxable portion will be capped at 20%, for non-Homesteaded properties. There continues to be a 10% Homestead Cap, which will limit the 2025 taxable value increase from the previous year, for those receiving homestead exemptions. The Market Value may increase more than 10%, however your taxable value will not increase more than 10% over last year. There are some exceptions, like adding new structures, square footage, or an ownership change that can affect that cap limit on homesteaded property as well as the new “circuit breaker” cap.
There has always been a longstanding adage concerning property appraisals. We all want our property to be appraised at the highest possible value for a bank loan and the lowest possible value for tax appraisals. At this point in time, the State is telling us there continues to be too large of a discrepancy between the Appraisal District appraisals and the State Comptroller’s appraisals. Please feel free to contact the office if you have any questions.
