T
exas lawmakers are set to tackle property taxes again this legislative session, building on last year's $18 billion deal to reduce them. Despite a 10% decline in school district tax collections between 2022 and 2023, many proposals aim to cut property taxes further. The state is entering the budget cycle with a $24 billion surplus, aligning with the interests of top Texas real estate professionals who want to improve housing affordability.
The median sales price in Texas has jumped over 40% in the past five years, making it less affordable for buyers. Matt Menard, owner of Austin Real Estate Experts, says there's bipartisan support for property tax reform, but lawmakers disagree on how to achieve it.
Some proposals focus on property tax appraisals. Rep. Cody Vasut wants to eliminate property taxes altogether, which would cost the state $82 billion annually. Others propose capping annual appraisal increases or finding alternative funding sources. HB 275 suggests using a portion of the state's surplus for schools, reducing the amount districts need to collect from taxes.
A pilot program launched in 2023 capped appraised value increases for non-homestead properties at 20% per year. HB 1622 would make this program permanent, while Rep. William Metcalf proposes expanding it to include commercial property with a market value of $10 million or less.
Legislation targeting foreign buyers includes Sen. Lois Kolkhorst's bill banning citizens and organizations from certain countries from buying land or commercial property if it poses a public risk. HB 191 by Rep. David Spiller would only ban organizations from these countries, while HB 733 proposes limiting home purchases in platted subdivisions to U.S. citizens.
The Houston Association of Realtors' Kiley Rapier cautions that such legislation could violate fair housing laws. Menard believes these bills are more about posturing than affecting the marketplace.
Other proposals address affordable housing development, institutional investor-owned single-family homes, and state-city zoning authority. SB 234 would offer low-interest loans to multifamily developers building affordable housing, while Sen. Bryan Hughes and Rep. Vasut aim to relax local zoning regulations prohibitive for development.
