When Emily Joseph bought her first house, in the Kidd Springs Park area earlier this year, she expected the annual property tax to be about $4,000, based on 2019 valuations.
But by the time she closed on the purchase in May, the annual tax had doubled to about $8,000, adding $300 more than expected to her monthly house payment.
“I didn’t think it would be exactly the same number, but it doubled in three years,” she says.
The 29-year-old, who is a bartender and marketing director, says she’s now looking for a roommate to help afford the home’s property taxes.
Property tax valuations in Dallas County totaled almost $40 billion more in 2021 compared to 10 years previously, despite moderate increases in population and housing in the same timeframe. That contributes to the affordable housing crisis by causing house payments and rents to become less affordable for many Dallas residents. Even though the City of Dallas reduced its property tax rate this month, ever-increasing property valuations mean Dallas residents pay higher property taxes each year than ever before.
Homeowners who take the time to challenge their Dallas Central Appraisal District valuations can sometimes get their home’s value lowered, but that yearly ordeal only helps so much.
Melissa Wynne, a mortgage loan officer, bought her house in Wynnewood in 2019, when it was valued for tax purposes at $365,000.
In 2020, the taxable value jumped to $415,000. The latest valuation was $485,000. By protesting the property’s value and citing comparable sales in her neighborhood, she convinced the appraisal district to lower the taxable value to $445,000.
Illustrations by Jessica Turner and Jynnette Neal
The 2,000-square-foot house, which she shares with her husband and their 19-month-old daughter, has two bedrooms and two bathrooms.
“A half a million dollars is just insane,” she says.
Valuations are based, in part, on comparisons to nearby properties, and Wynne says her house doesn’t compare to the fully renovated, large square-footage Wynnewood homes the appraisal district stacked up next to hers. That argument, along with evidence of structural damage to their garage, helped her win a lower valuation, though she thought the ultimate taxable valuation should have been even lower. She says she kept pushing until her only remaining alternative was to sue the appraisal district.
“That’s when you have to say, ‘Is the decrease in value worth the time and expense it’s going to take to fight this?’” she says.
High property taxes can cause buyers to lose out on purchasing homes and sellers to lose out on selling them, she says.
“They’re in such a tight debt-to-income ratio that the increase can make them not qualify for the home they’re buying, and we’ve definitely seen that happen,” she says. “Or they can’t afford to live there anymore.”
That is the struggle for middle-class people. In low-income neighborhoods, high property taxes threaten displacement.
“Most neighbors in West Dallas have fallen behind in taxes and are at risk of displacement,” says Shellie Ross, executive director of the Wesley Rankin Community Center, which has offered workshops on protesting property taxes.
“The West Dallas area has really skyrocketed in its costs, and for many, their jobs aren’t paying more to cover it.”
The landlord’s dilemma
Higher taxes also mean higher rent. Those living in homes they own at least can take a homestead exemption to reduce their property tax somewhat and put an annual cap on valuation increases. Not so for commercial property, though: Renters shoulder the burden of tax increases on rentals.
AJ Ramler of Proxy Property says his company owns about 50 rentals.
The company bought a duplex in 2015, when the property taxes were $2,700 a year, or about $225 a month. Back then, the combined rents for two units was $1,400, and taxes ate about 16% of that amount.
For the same duplex in 2021, the taxes cost $8,500 a year, or about $700 a month. The two rents now total $1,900, and 37% of that goes to tax.
The duplex is now operating at a loss, and income from other properties absorbs the difference, he says.
“I know this guy can’t afford to pay $1,100 a month rent, but I know I can lease it for $1,100 a month,” Ramler says. “So I have to operate at a loss or increase the rent.”
Rent hikes can be difficult decisions for small landlords because long-term tenants who pay their rent on time and don’t cause trouble are worth keeping. And turning over a rental can be costly, with renovations and lost rent between tenants.
Ramler’s dad, who lives on Social Security retirement and income from three rental homes, recently took a $10,000 ding on higher property taxes, cutting his rental income in half.
The property tax for Proxy Property’s office on Singleton Boulevard increased 782% in a single year, 2021, Ramler says.
“It’s a punch in the gut when they come back with that,” he says. “That’s a heck of a bump.”
How the state could reduce property taxes
Property valuations are increasing, in part, because the prices people are willing to pay for properties in Dallas are increasing. “Prices for homes in Dallas are accelerating faster than almost anywhere in the United States, despite recent interest-rate hikes,” according to data released in September from S&P CoreLogic.
There doesn’t seem to be much relief in sight, according to Texas state Rep. Jessica Gonzalez, a Democrat whose district includes central Oak Cliff.
Gonzalez’s 2018 campaign included promised efforts to reduce property taxes. She filed several bills in the Texas House of Representatives, including a joint effort with fellow Southern Dallas Democrat state Sen. Royce West.
Those proposals would have allowed property taxpayers to enter deferred payment plans before falling into delinquency and also would have expanded homestead and over-65 exemptions.
But the Texas Legislature is bogged down with issues such as abortion and trans rights, she says.
The biggest contributor to high property taxes are public schools, she says.
“The Texas Legislature isn’t funding public schools the way it should, even though we have this surplus fund,” she says. “Taxes have to be raised to fund schools at the local level.”
A U.S. Supreme Court ruling in June threw open the door to allowing public funds to pay for religious private schools.
Gonzalez says she expects the defunding of education to deepen with proposals for private-school vouchers that would poach funds from public schools.
“People are going to continue moving to Texas, and Dallas is a popular place to be,” she says. “Unless the state puts in their fair share for public schools, it’s going to continue being a problem.”
