Momentum - Business to Business Online Magazine MOMENTUM January 2020 | Page 18

INDUSTRY SPOTLIGHT - REAL ESTATE CHERYL E. JOHNSON, PCC Galveston Co. Tax Assessor Collector [email protected] PROPERTY TAX IMPACT (On You & Government) P roperty taxes, like death, are unavoidable. Own real estate – pay taxes. Rent and the tax is included by the owner (along with other costs such as maintenance). The only escape may be to live in a motor home and, if a small business with no inventory valued at less than $500 – you would escape all property taxes! Texas property taxes are based on the January 1 value. The system includes four phases – appraisal, equalization, assessment and collection. Appraisal (the process of locating, listing and determining the market value) and equalization (value notices mailed and owners provided opportunity to object/ protest) is performed by county appraisal districts. Assessment (calculation of value into revenue with governments adopting tax rates to support budgetary needs ending with bill preparation) and collection (no explanation necessary) is performed by tax assessor collectors. The combination of value and rate on a property owner results in the following calculation. Although the average home in League City is closer to $200,000, the example provides the calculation per $100,000 of value. This occurs at both the equalization (when protesting) and assessment (speaking up at government tax rate hearings) phases. Recent Legislative changes will result in much improved transparency for all property owners beginning in 2020 (again, another story all together). Absent a tax rate reduction or exemption increase, when property values rise, government revenues increase creating a burden for all property owners. This system is regressive in that it lacks predictability but it is also costly to implement and punishes those living in a growing a community as values respond to growth. For local governments, growth in population necessitates the need for more roads, schools, police and fire protection, regulation, etc. – all putting upward pressure on tax needs. The good news in League City is that it is a great place to live and raise a family. It has good schools, a variety of home price ranges, shopping, restaurants, medical facilities and employment opportunities are all plentiful. Although changing constantly (take a drive down I45 and FM 646), a diversified tax base (equally commercial and residential) is beneficial but impacts the overall “hometown feel” which is a consideration for families moving to an area. This places pressure on government leaders to provide a vision that maintains that “feel” as it seeks to balance the tax base. As of last summer, the appraisal district category breakdown of market values in League City are included at the right. With nearly 74% of all property value included in the single family category, the greatest tax burden falls on homeowners. X A T Y T R PROPE FORMULA: [(Value—Exemptions) ÷ $100] x Tax Rate = Tax Levy How the value is determined is another story altogether as is the equalization/protest process. Embodied in the Texas Constitution and the Tax Code are requirements that property owners be notified along the way and be provided the opportunity to provide input. 16 MOMENTUM | 2020 Year of Small Business