2022 Residential Market Values and Tax Bill Analysis
2022 Valuation Results
The 2021 year was record-breaking for Williamson County property value appreciation due to various national and local factors driving an unprecedented real estate market, and the resulting 2022 appraisal valuations were thoroughly detailed in the Williamson County Market Analysis. As outlined, 2021 sales transactions were used to set January 1, 2022, appraised market values which were mailed to property owners in April. Regardless of appraisal year, initial property owner sentiment to increased appraisal values is an anticipated similar increase in associated tax bills mailed later in the year by the Williamson County Tax Assessor/Collector. While the first opinion that an increase in property value will lead to a similar percent increase in a tax bill is understandable, it is often an incorrect assumption and misinterpretation of tax laws and requirements. Most often, the percent change in a property tax bill from one year to the next is far lower than the property appraisal value percent change from the prior year. The chart below illustrates a stark comparison of the two values for 2022.
Property Tax Savings - Homestead Exemptions
A few factors contribute to how property value appraisals and the resulting bills change by different percentages and explain why many residential properties had record-breaking value increases for 2022, yet the associated tax bills decreased from the prior year.
The Homestead Exemption is the primary way a property owner can save money on a tax bill for the principal residence in which he or she resides, and the savings takes place in two ways. First, depending on the taxing jurisdictions where the property is located, a homestead exemption removes part of a home’s value from taxation. In this instance, the assessed value of a residential property is reduced by a jurisdiction’s exemption amount prior to the application of the tax rate used to calculate that portion of the bill. Please use this LINK to find information regarding Williamson County 2022 exemptions and tax rates by jurisdictions. The chart below provides an example of the difference in taxes for a property with an assessed value of $465,421 depending on whether there was a homestead exemption in place. Savings will vary by property based on the different tax rates by jurisdiction, however, in this instance tax savings for having the homestead exemption are just over $500.
Property Tax Savings - Homestead Caps
The second way a homestead exemption provides tax savings is by capping yearly assessed value increases at 10%. This feature of the homestead exemption is designed to buffer tax increases and protect property owners in times when rapid market value appreciation takes place. For example, if a home that had a market and assessed value of $300,000 in 2021 increased to a market value of $400,000 for 2022, the assessed value for 2022 would be capped at $330,000. An exception to the 10% cap amount is any new improvement value that is added to the property is also added to the cap amount in that year. So, in the prior example, if a pool was added to the property in 2021, the 2022 assessed value would be capped at $330,000 plus the additional new value of the pool. Further detail, explanations of market and assessed values, and examples of the homestead cap benefit can be located HERE.
Data below regarding the group of properties detailed in the first chart in this article illustrates that over 90% of the properties with homestead exemptions had the assessed value cap at the 10% maximum for 2022. With the median market value change hitting 49%, it was beneficial for many residential properties to have the homestead exemption that limited the assessed increase to 10%. The unprecedented real estate increase in 2021 which set the 2022 market values is also evident by the substantial indicated median and average cap amounts in the chart as well. In this dataset, the median and average amount of value between the capped assessed values and the appraised market values of 107,167 properties is over $150,000.
Property Tax Savings - Tax Rates
A final factor in the reason many appraised values increased dramatically for 2022 yet the resulting tax bills decreased is due to requirements beyond the authority of the appraisal district. Yearly certified market and assessed property values from the appraisal district are used in the resulting tax bill calculations, however the often-overlooked portion of the equation is the tax rates. They are set each year by the local taxing jurisdictions and applied to the appraisal district’s values to establish the property tax bills. Due to the yearly changes in the local real estate market, and addition in value to the appraisal roll, the tax rates fluctuate from year to year and sometimes decrease in times when the market values increase. The market value percent increases presented initially in this article were significant compared to prior years and caused reductions to a majority of rates which were evident by many reduced tax bills. The link to the 2022 tax rate information provided earlier illustrates just over 100 taxing jurisdictions within Williamson County. After the 29 that make up the well-known county, cities, and school districts, the rest of the list are Municipal Utility Districts (MUD), Emergency Service Districts (ESD), and Special Districts. The following charts illustrate the 2021 and 2022 rates and percent changes for the county, cities, and school districts.
Taxing Jurisdictions - Rate Information
Many factors are considered when taxing jurisdictions set the rates each year. Two notable components are the jurisdiction’s proposed budget and the value of the property within its boundaries. Regardless of the various factors in the rate determination process, the charts above illustrate the effect of the increased property values for 2022 which resulted in an average and median rate reduction of approximately 6% for those jurisdictions listed. Those rate reductions translated to the considerable amount of 2022 residential tax bills that went down despite never-seen-before market value increases featured initially in this article. To see information relative to 2022 and prior taxes for your specific property, please use this link to the Williamson County Tax Assessor Collector’s website. From there, you can search for your property and see a comparison of yearly total tax bills and payments as illustrated below. In this example, a property with a homestead exemption had the 2022 tax bill decrease from what was paid in 2021 by $227 even though the market value increased by 49.45% and the assessed value increased by only 10% due to the homestead cap requirement explained earlier.