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Understanding Proposition 4 and Its Implications for Property Owners/Homestead Exemptions


Texas Proposition 4, Its implications for PropeOwners in Texasrty

If you're involved in the real estate industry in Texas or a homeowner in the Lone Star State, you've likely heard about Proposition 4, a significant proposal in the upcoming November election. This proposition aims to bring about substantial changes to the Homestead Exemption, potentially affecting Texas homeowners in various ways. Let's dive into the details to understand what these proposed increases could mean for property owners and the real estate market.


Proposition 4's proposed increase in the Homestead Exemption represents a significant development for Texas homeowners and the real estate market. While it could offer substantial property tax savings, it's essential to consider its broader implications for school funding and the overall real estate landscape in the state. As the election draws nearer, staying informed and engaged is key to making the right choices for your property and investments in the great state of Texas.


Here's a detailed breakdown of what Proposition 4 entails:

  • Homestead Tax Exemption Increase: The proposed amendment aims to raise the homestead tax exemption from its current level of $40,000 to a new threshold of $100,000. This increase is slated to come into effect for the tax year starting on January 1, 2023.

  • Annual Appraisal Limits: Proposition 4 grants the state legislature the authority to impose limitations on the annual appraisal increase for non-homestead real properties. These limits are based on either the property's recent market value as assessed by the appraisal entity or 120% (or potentially a higher percentage) of the prior tax year's appraised value. The amendment also allows for the introduction of additional eligibility criteria for this appraisal value limitation, with effectiveness contingent on the law's enactment or from January 1 following the initial year of property ownership, depending on the later date. This particular aspect of the amendment is set to expire on December 31, 2026.

  • Reductions for Elderly or Disabled Homeowners: The amendment mandates that the state legislature must incorporate a reduction in the limitation on property taxes for elderly or disabled homeowners with homesteads. This reduction is calculated as $15,000 multiplied by the 2022 tax rate designated for general elementary and secondary public school objectives. Starting from the 2023 tax year, any changes in the general school district residence homestead exemption for different resident categories must be accompanied by corresponding reductions in the limitation amount for homesteads subject to the previous year's limitation. These reductions should be proportional to the changed exemption and the applicable tax rate for public school purposes.

  • Appraisal Entity Governance: Proposition 4 also authorizes the state legislature to enact laws pertaining to the governing board of an appraisal entity situated in counties with populations exceeding 75,000.

  • Exclusion of State Tax Revenue Appropriations: Under this amendment, state tax revenue appropriations intended for ad valorem tax payments would be excluded from the constitutional appropriations limit.

Impact on the Real Estate Market: Real estate professionals should keep a close eye on Proposition 4's outcome, as it could have a substantial impact on the Texas real estate market. The potential for reduced property tax burdens may make homeownership more appealing and affordable for many Texans.


It's important to note that a "yes" vote supports these changes, while a "no" vote opposes them. The proposed alterations encompass an increase in the homestead tax exemption, limitations on non-homestead property appraisals, reductions for certain homeowners, governance of appraisal boards, and the exclusion of certain state tax revenue appropriations from constitutional limits. The outcome of this proposition could have a substantial impact on Texas homeowners, particularly regarding property taxes and educational funding.



Amanda Allen, Realtor


"In real estate, knowledge is not just power; it's the foundation of informed decisions and successful investments."~~aa






Resources:

https://ballotpedia.org/Texas_Proposition_4,_Property_Tax_Changes_and_State_Education_Funding_Amendment_(2023)

https://www.texastribune.org/2019/10/17/texas-income-tax-proposition-ballot-would-make-it-harder-add-new-tax/

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