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Renters Bear Massive Property Tax Burdens

By Urban Reform Staff | Apr 28, 2019

Renters in Texas bear big property tax burdens, yet when local or state government officials talk about property taxes, they seem to only focus on single-family homeowners and commercial property owners. That’s probably because they are the most vocal.

Many renters don’t know that baked into their rent is a portion of the property taxes levied on that property. Unlike single family homes, renters don’t get to take advantage of the tax breaks that owners do, like homestead exemptions. This also goes for exemptions for the disabled, veterans, and senior citizens.

Even worse is that while appraisal increases are capped on homesteads, or homes that are occupied by the owners, they are not capped on rental properties. This means that someone renting a home from an owner faces higher property taxes due to unlimited appraisal increases. Some owners have even said appraisals on rental properties they own have increased by 90 percent in a single year, and that cost is directly passed on to the renter.

Complex owners have shared similar sentiments.

The Landing at Centreport is a 318-unit apartment complex owned by Jason Busboom and Thao Te. Busboom said that in the complex, which has units ranging from $1,400 to $2,800, roughly $400-500 of a tenant’s monthly rent is just for their “share” of the building’s property taxes.

According to the Harris County Appraisal District, between 2009 and 2018, the average taxable value on single family homes increased 41 percent while the value on multifamily homes increased a shocking 129 percent, more than three times as fast.

When compared to the median household income, it’s even more alarming.

Multifamily values have increased four times faster than median household incomes have. This means the large majority of city dwellers, who rent out of choice or necessity, are crushed under the property tax-driven rental rate increases.

The 38 percent of renters in Texas bear the biggest property tax burdens and would benefit the most from local and state relief.

It is those government entities that deserve the blame for the burdens, not the property owners. Property management companies and owners enter the housing market for profit and it serves as a benefit to them and to the public because they increase and diversify the housing stock. But they can’t be expected to stay in an industry that isn’t profitable, as such they pass on the tax increases to their tenants.

Local governments already drive up the cost of housing by limiting what can be built and where, what the buildings can be used for and at what rate development can occur. Parking minimums and minimum lot size regulations, to name a few, drive up the cost even further. Property tax increases are just another way government officials have made housing less affordable all while campaigning on affordability and economic development.

It’s time for renters to understand their role in the property tax system, the power they have, and to realize that they have the most to complain to their local governments about.

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