Glossary of Terms

Learn definitions to several common terms related to property taxes in Texas.

A

Abstraction Method

Method of land valuation in the absence of vacant land sales, whereby improvement values obtained from the cost model are subtracted from sales prices of improved parcels to yield residual land value estimates. Can be called residual land technique.

Actual Age

The number of years that have elapsed since the completed construction of a structure; also referred to as historical age or chronological age

Adopted Tax Rate
The tax rate adopted by the governing body of a taxing unit

Affidavit

A written form of an affirmed or sworn statement

Appraisal District

An independent political subdivision in each county whose appraisers appraise all taxable property within the district’s boundaries and prepare an appraisal roll for the taxing units within the county. Districts are referred to as “county appraisal districts” (CADs).

Appraisal Records

Each year’s listing of all taxable property in the appraisal district. The records show the property identification number, owners’ names, appraised value of each property, the value of any exemptions, and other information.

Appraisal Review Board (ARB)

An appointed group of appraisal district residents that hears taxing unit challenges and taxpayer protests. The board also orders corrections to the records and approves the appraisal records to create an equal and uniform appraisal roll for the district.

Appraisal Roll

The appraisal records after the ARB reviewed and approved them. A CAD’s appraisal roll lists all properties within its jurisdiction. A taxing unit’s appraisal roll lists taxable properties and values within the unit’s boundaries.

Appraised Value

The value determined by Section 23 of the Texas Property Tax Code, which states that “all taxable property is appraised at its market value as of January 1. The market value of property shall be determined by the application of generally accepted appraisal methods and techniques.”

Appropriation

An appropriation identifies each agency’s authority to spend public funds as legislated in the General Appropriations Act. An Agency’s legislated purpose is broken down into Goals, Objectives, and Strategies, and each strategy is “budgeted” a specific dollar amount.

Appropriation Budget

The amount of money assigned to an agency by the legislature in the General Appropriations Act.

Assessed Value

The dollar value assigned to a property recorded by the chief appraiser to measure applicable taxes, taking comparable home sales and inspections into consideration

Assessment 

The steps a taxing unit takes to impose a legal property tax. It includes the official act of calculating the taxing unit’s tax base. The general definition of assessment in textbooks sometimes includes appraisal and collection activities as part of assessment, but Texas law does not use this definition.

Authorized But Unissued Debt

Authorized but unissued debt refers to Tax-supported Debt that has been approved by the voters but not yet issued.

B

Budget Year (Appropriation Year)

The year in which a pool of money is appropriated. Every odd-numbered year, the Texas Legislature meets to establish legislation, including the General Appropriations Act. The GAA establishes appropriation budgets for each agency for each of the following two years. The years associated with this legislation are referred to as Appropriation Years.

C

Chief Appraiser

The administrative head of the appraisal district. The chief appraiser supervises appraisal of all taxable property within the district’s boundaries, administers exemptions, approves applications for special-use appraisal and performs other administrative duties.

Computer Assisted Mass Appraisal (CAMA)

A system of appraising property—usually only certain types of real property—that incorporates computer-supported statistical analyses such as multiple regression analysis and adaptive estimation procedure to assist the appraiser in estimating value. Additionally: A system for assessing real and personal property with the assistance of a computer. A computer may be used, for example, in the appraisal process, in keeping track of ownership and exemption status, in printing the assessment roll, in coordinating the work load of real property appraisers and personal property appraisers with respect to the assessment of commercial and industrial properties, and in a number of other areas.

Capital Outlay
Purchases of personal and real property costing more than $5,000 per unit.

Condition

A judgment of the depreciation of an improvement. Note: This is a difficult area of comparison because although the condition of the subject is known, it is difficult to know the condition of the comparable. Differences in condition may justify variances in selling prices of similar properties.

Contiguous

Sharing a property boundary; adjacent

Cost Schedules

Charts, tables, factors, curves, equations, and the like intended to help estimate the cost of replacing a structure from databasing of other factors, such as its quality class and number of square feet.

Covenant

A covenant is a promise written into a legal agreement (such as a deed) that binds the parties to abide by or refrain from certain acts. A deed restriction can also be a special kind of covenant.

D

Debt

Debt can refer to public securities issued or outstanding public securities, including general obligation pension bonds. It does not include long-term liabilities that are not public securities (e.g., unfunded pension and other post-employment benefit liabilities) or are not reported to the Bond Review Board. This term includes both Revenue-supported Debt and Tax-supported Debt.

Debt Issued

Debt issued is the total principal amount of bond debt sold. The amount of debt issued depends on the will of the voters (in the case of tax-supported debt), action of the governing body, market conditions and budgetary needs.

Debt Outstanding

Debt outstanding is the principal owed over the remaining life of all debt issues.

Debt Rate

The component of the adopted tax rate of a taxing unit that will impose the amount of taxes needed to fund the unit’s debt service for the following year

Debt Service

The annual combined principal and interest amount needed to repay all debt on time and in full. This could also include other fees associated with maintaining debt.

Deed Restriction

A limitation to property rights that transfers with the property regardless of the owner

Depreciation

Loss in value of an object, relative to its replacement cost new, reproduction cost new, or original cost, whatever the cause of the loss in value. Depreciation is sometimes subdivided into three types: physical deterioration (wear and tear), functional obsolescence (suboptimal design in light of current technologies or tastes), and economic obsolescence (poor location or overall diminished demand for the product).

E

Economic Area

A geographic area or market area typically encompassing a group of neighborhoods, defined on the basis that the properties within its boundaries are more or less equally subject to a set of one or more economic forces that largely determine the value of the properties in question.

Effective Age

The typical age of a structure equivalent to the one in question with respect to its utility and condition, as of the appraisal date. Knowing the effective age of an old, rehabilitated structure or a building with substantial deferred maintenance is generally more important in establishing value, than knowing just the chronological age.

Effective Tax Rate

The tax rate that would generate the same amount of revenue in the current tax year as was generated by a taxing unit’s adopted tax rate in the preceding tax year from property that is taxable in both the current tax year and the preceding tax year.

To calculate, divide the amount of taxes levied in the prior year by the current year’s taxable value of property on the appraisal roll for both the prior and current years.

Effective Maintenance and Operations Rate

The tax rate that would generate the same amount of revenue for maintenance and operations in the current tax year as was generated by a taxing unit’s maintenance and operations rate in the preceding tax year from property that is taxable in both the current tax year and the preceding tax year.

Exemption

An exclusion of all or part of a property’s value from property taxation. Absolute exemption excludes the total value of property. Partial exemption excludes a part of the total value from taxation.

F

Fee Appraisal

Appraisal of properties one property or client at a time, for pay.

Fiscal Month

The specific reporting month that a transaction affects. The numbering for the State of Texas fiscal months start with 01 for September and end with 12 for August.

Fiscal Year

A 12-month period used for accounting, budgeting and reporting purposes, indicating the period in which the disbursement or other financial transaction occurred. A fiscal year’s beginning and end dates do not necessarily coincide with those of the calendar year. For the State of Texas, the fiscal year begins on September 1 of each year and ends on the following August 31.

H

Highway Construction Capital Outlay

Real property purchases related to construction and land acquisition for highways.

I

Improvement

Anything done to raw or vacant land with the intention of increasing its value A structure erected on the property constitutes one very common type of improvement, although other actions, such as those taken to improve drainage, are also improvements. Although such cases are rarely intentional, “improvements” can conceivably diminish the value of the land; note, however, that easements restricting the use and value of land are not considered improvements.

Interest and Sinking (I&S) Tax Rate

Interest and sinking (I&S) tax rate is the tax rate levied by districts to pay for any bond debt that may have been issued to fund the construction of schools and facilities. Also referred to as debt rate

L

Level of Appraisal

The common, or overall, ratio of appraised values to market values. Three concepts are usually of interest: the level required by law, the true or level, and the computed level, based on a ratio study.

M

Maintenance and Operations (M&O) Tax Rate

The component of a taxing unit’s adopted tax rate that will impose the amount of taxes needed to fund maintenance and operation expenditures of the unit for the following year.

Market Price

The price a particular buyer and seller agree to in a particular transaction; the amount actually paid. Compares to market value..

Market Value

The price at which a property would transfer for cash or its equivalent under prevailing market conditions if:

  • exposed for sale in the open market with a reasonable time for the seller to find a purchaser,
  • both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use, and
  • both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.

Mass Appraisal

The process of valuing a group of properties as of a given date, using standard methods, employing common data, and that allows for statistical testing.

Multicounty Taxing Unit

A taxing unit with territory in more than one county.

N

Neighborhood

(1) The environment of a subject property that has a direct and immediate effect on value. (2) A geographic area (in which there are typically fewer than several thousand properties) defined for some useful purpose, such as to ensure for later multiple regression modeling that the properties are homogeneous and share important locational characteristics.

Neighborhood Analysis

A study of the relevant forces that influence property values within the boundaries of a homogenous area.

O

Other Expenditures

Other miscellaneous expenditures not otherwise classified.

P

Parcel

Any item of real property, regardless of size, that has a single owner or is held in undivided ownership and for which there is a separate appraisal record.

Payment of Principal—Debt Service

Payments of principal on state bonds, tax and revenue anticipation notes and other forms of debt.

Payment Written Date

The date upon which a payment is produced or, in the case of direct deposit, the date upon which a payment is transmitted.

Percent Good

An estimate of the value of a property, expressed as a percentage of its replacement cost, after depreciation of all kinds has been deducted.

Personal Property
Property that is not real property.

Plat

A map intended to show the division of land into lots or parcels. Upon recordation with the appropriate authorities, land included in the plat can thenceforth be legally described by reference to the plat, omitting a metes and bounds description.

Price-Related Differential (PRD)

The price related differential measures the comparative difference in how CADs appraise high-dollar and low-dollar properties.

Public Assistance Payments

Payments for Medicaid programs including nursing homes, rehabilitation services and drugs; trust expenditures for unemployment compensation; child support payments channeled through the Attorney General’s Office; grants-in-aid payments to local governments; and other miscellaneous public assistance programs.

Q

Quality Class

A subjective classification of a structure by an appraiser, intended to describe materials used, workmanship, architectural attractiveness, functional design, and the like. Quality class, or its synonym “grade,” is the key variable in most cost schedules.

R

Ratio Study

A comparison of appraised values to the market values of the same properties in order to determine the accuracy of appraisals. Market values may be indicated by sales prices or appraisals.

Real Property

The Property Tax Code defines real property as: land, improvements, mines or quarries, minerals in place, standing timber, and an estate or interest in any real property.

Rentals and Leases

Expenses for rentals and lease of personal and real property including computers, motor vehicles, aircraft, office buildings, land and other miscellaneous property.

Residence Homestead Appraised Value Limitation (10 Percent Cap)

A residence homestead’s appraised value may be limited to the lesser of either its market value or the sum of the market value of any new improvements and 110 percent of the appraised value for the prior year. The allowance for an annual 10 percent is cumulative: 10% times number of years since the property was last appraised. The limitation only applies to homes that qualified for a residence homestead in the prior year. The limitation expires the next January 1 if neither the owner nor the owner’s spouse or surviving spouse qualifies for the homestead exemption.

Revenue-supported Debt

Revenue-supported debt is secured by non-property tax revenue such as sales tax, tuition, admissions to athletic events, tolls, or water, gas, or electric municipal utility charges. As used in this site, it does not include debt that is also payable from property taxes. Revenue-supported debt generally does not require voter approval.

Rollback Tax

A penalty imposed on a property owner who stops using property in a way that qualified it for special-use appraisal. The penalty recaptures the tax loss the taxing unit experienced as a result of special appraisal during the prior years. Rollback taxes have no relation to rollback tax rate elections or the rollback tax rate.

Rollback Tax Rate

The rate a taxing unit (except for a school district) may not exceed without allowing its voters to petition for a reduced rate. A school district exceeding this rate must hold an automatic rollback tax rate election.

S

Salaries and Wages

Payments of salaries, wages and other special pay to state employees, including higher education employees and faculty.

Sales Data

  1. Information about the nature of the transaction, the sale price, and the characteristics of a property as of the date of sale.
  2. The elements of information needed from each property for some purpose, such as appraising properties by the direct sales comparison approach.

Site improvements

This is a value assigned to a property to account for items that make the land able to support a structure. This may include some or all of the following: grading, landscaping, paving, utility hookups, septic systems, wells, driveways, road base and sidewalks.

Situs

The actual or assumed location of a property for purposes of taxation. In personal property, situs may be the physical location of the property or, in the instance of highly mobile property, the more-or-less permanent location of the property owner.

Special District
All local taxing units that are not cities, counties, or school districts. These units include hospitals, junior colleges, water and fire districts, and more.

Subject Property

The property being appraised

Supplemental Records

Additional records prepared after the chief appraiser submits the original appraisal records to the ARB. These records are subject to review by the ARB and are added to the appraisal roll when the ARB approves them.

T

Tangible Personal Property

Personal property that can be seen, weighed, measured, felt, or otherwise perceived by the senses, but does not include a document or other perceptible object that constitutes evidence of a valuable interest, claim, or right and has negligible or no intrinsic value. Examples include furniture, equipment, computers, and inventory. Business personal property does not include real estate or items such as accounts receivable, goodwill, stocks, bonds, notes, licenses, pensions, and contracts.

Taxable Value

The assessed value minus all applicable tax exemptions, 10% cap, and other deductions

Taxing Unit

Any political unit of the state that imposes property taxes. Counties, school districts, incorporated municipalities (cities), and special districts may be taxing units.

Tax Levy

The total amount of taxes imposed by a taxing unit on taxable property within its boundaries. Levy may also refer to the amount of tax due on specific property.

Tax Rate

The result of dividing the proposed levy by the taxable value of property. The rate is expressed in dollars and cents per $100 of value. The assessor applies the rate to taxable value to compute a tax due on each property.

Tax Roll

All the information on the appraisal roll plus the taxable value and the levy for each property parcel.Top of Form

Tax-supported Debt

Tax-supported debt is backed by a pledge of property taxes levied within the issuer’s boundaries. Some tax-supported debt may be secured by a combination of property taxes and other revenue sources. It generally must be voter-approved (with exceptions for COs, tax notes, school district maintenance tax notes, certain county road bonds and contractual obligations).

V

Voter-Approved Tax-supported Debt

Voter approved tax-supported debt is secured by a pledge of a sufficient property tax dedicated to pay debt service. May be used for school capital projects such as buildings, renovations, technology, athletic facilities, school buses and performing arts facilities or to refund maintenance and operations tax-supported debt.

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Learn the basics about property taxes in Texas.

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