Buda property taxes can contribute a significant amount to your monthly mortgage payment. Budgeting for property taxes can be difficult because there are two variables: property tax rate and assessed value of the property. Both can change from year to year. The property tax rate varies from neighborhood to neighborhood, so there is no set rate for Buda. Assessed values also fluctuate with the market. Here, we’ll show you how to most accurately estimate your property taxes and caution you why you should avoid using property tax estimates.
In each Buda neighborhood, there are certain taxing entities that are allowed to levy a tax on property owners. If the property is located within the city limits of Buda, the city will assess a tax. If not, it might just be the county that will assess the tax. There are also utility districts, hospital districts and special assessments that might charge a fee as well. All of the rates are lumped together as a total property tax rate.
Depending on which neighborhood you live, the property tax rate can be anywhere from 1.97%-3.2% in November 2022. Sometimes the larger neighborhoods have more than one tax rate, so it’s best to look up the tax rate for the specific home you’re considering. If you’re looking for a ballpark, our Buda neighborhoods guides have the tax rates listed. Tax rates are determined at the end of the year, so they are subject to change every year.
If you consider homes that sold in Buda from 11/1/2021-11/30/2022, the average price is $494,037. The average property tax rate for that same period is 2.66%. If you use average figures, the average property tax payment a Buda resident would make is $13,141 with no exemptions.
The easiest way is to find out the property tax rate for a home you are considering is to head over to our Austin Home Search tool and pull up the house you are considering. Then, scroll down under “Financial” and look for the field that says “Tax Rate”. Here is a screen shot of what you should be looking for.
The easiest way is to estimate the property tax amount is to take the total property tax rate and multiply it by the list price (or sales price) of the house. It will likely be an overestimate, especially if you qualify for exemptions, but it is generally better to have money left over than not enough.
On many home search portals, the property tax rate is omitted. Instead, they give you an estimate of property taxes or what the current home owner has paid. The trouble is, those estimates are pretty inaccurate. Why?
The owner might qualify for exemptions that you won’t. If the seller qualifies for an Over 65 Exemption or a Disability Exemption, their property taxes will be significantly reduced. When you purchase the property and these exemptions drop off, your property taxes will increase substantially.
Another misleading scenario happens when the current owner has owned the property for several years and has a Homestead Exemption filed. Not only does the Homestead Exemption give owners a discount on their property taxes, it also limits the amount the tax assessor’s office can increase the home’s valuation year over year. Owners who bought their homes several years ago generally have much lower valuations than their neighbors.
In the graphic above, you’ll see this home is listed at $455,000 and is currently assess for $210,364. This tells me the owners had some exemptions on it and owned it for a long time. If you use the estimated taxes of $6,156 (also pictured above), that is going to be at least 30-50% less than what you’ll actually pay when the tax assessor re-assesses the property when it changes ownership. Each time a property changes ownership, the tax assessor can reset the value and it usually is reassessed for closer to purchase price.
In both of these instances, the home buyer who used the estimated taxes are going to be very surprised when they receive their property tax bills.
Though this is a less likely scenario, sometimes property tax estimates can be too high. If the owner does not qualify for exemptions and you do, you’ll pay significantly less than they did. If the house is assessed higher than market and the owner has not successfully protested the valuation, you might be able to get the assessed value reduced. Bottom line is property tax estimates are largely inaccurate and should not be used to estimate Buda property taxes.
For the most accurate estimate, use the following formula: Tax Rate * Price = Buda Property Tax Estimate.
Keep in mind, the property tax rate is subject to change and is not known until October or November each year. It always makes sense to overestimate your property tax payment, so you might consider adding a buffer to the payment to account for any increase in property tax rate.
Don’t rely on estimated taxes, actual taxes or what the owner paid last year to budget for your Buda property tax payments. Calculate your own estimate for the most accurate number. Depending on what time of year you are calculating property taxes, the assessment or the tax rate might change, but your calculation will generally be more accurate than the estimates.
We have a combined 60+ years of experience in representing buyers. We know the Buda market well and can help you negotiate the best deal possible. For more information about our team and our unique home buyer program, visit our Buda Home Buyers section. Then, call us at (512) 827-8323, email us at info@11OaksRealty.com or fill out our Buyer Survey to schedule a no obligation consultation.
Rebecca has founded her success in real estate on a commitment to personalized service. Clients appreciate her dedication to not only the success of their transaction, but their very peace of mind. She is particularly adept at creating bridges to make home buying and relocation as seamless as possible.
