Dallas Property Taxes Stay Low, as Houston and Austin Continue to Soar

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Another tax season has passed, and the Dallas Central Appraisal District continues to hold back from aggressively increasing commercial real estate property taxes. For instance, Dallas County property taxes were significantly lower than Houston’s Harris County and Austin’s Travis County by 5 and 6 percent across all markets.

During the past few years, we have anticipated an aggressive increase in Dallas County, but, luckily, owners have yet to see one. Based on data from our clients, Travis County was the leader this year with an aggressive 14 percent average increase across all markets, 1 percent higher than in 2013. Harris County saw a decrease from 22 percent in 2013 to about 11 percent this year. Dallas County had the lowest average increase of 6 percent—a low number even with the multifamily market seeing its largest increase yet of nearly 10 percent.

Dallas has been slowly increasing its property taxes by market each year, but has yet to make a large increase across all markets. What does this mean for commercial property owners? Why hasn’t Dallas seen an increase like other areas in Texas? Perhaps Dallas is waiting to see the reactions from other top Texas markets to prepare for backlash, if and when Dallas County decides to take the plunge. With that, there is still a high possibility that Dallas County will aggressively increase property taxes in the years to come.

This year’s valuation data has shown that the Texas appraisal districts are unpredictable, forcing property owners to stay on their toes. Anticipating a large increase in property taxes will be important as property owners begin budgeting for 2015. It is always better to be prepared than to be struck with sticker shock, especially because property taxes are often the largest line item in operating expenses. Although we cannot predict when it will happen, property owners should take steps to ensure valuations are fair, while limiting the margin of error when it comes to predicting property taxes as budgets are set for next year.

Below is a chart that shows average property tax increases by county and market sector, based on data from our clients.

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