Property Taxes: The Ultimate Guide for Custom Built Homes

Published February 16, 2024

Working with a contractor to build a home that is customized for your unique needs and vision is an exciting, once-in-a-lifetime experience. From choosing the features of your new kitchen to finding the perfect tile for your backsplash, you get to exercise your creativity and control. However, one element of moving into a new home that is not in your control, even if you’re custom building, is the need to pay property taxes. Estimating property taxes for a new custom home involves several steps. Here’s a general process to help you determine your potential tax liability and ways to potentially lower it. 

How to Assess Property Taxes

Determine Your New-Build Home’s Assessed Value

Property taxes are usually based on the assessed value of your home. For new homes, this could be based on the value of the land plus the cost to build or the appraised value upon completion. Local tax assessors often have methods for determining assessed values, and it might differ from market value or appraised value.

Identify the Local Tax Rate

The location of your newly built custom home is just as important as the design and construction of your home. Your local municipality and county set a tax rate, often called a mill rate or millage rate. You can usually find this information on your local government’s or tax assessor’s website, or by calling their office.

Calculate the Property Tax

Once you know the assessed value of your home and the local tax rate, multiply them to get an estimate of your property tax. For example, if your home’s assessed value is $300,000 and the tax rate is 2%, your annual property tax would be $6,000.

Consider Special Assessments and Levies

Some areas might have additional taxes or assessments for specific services, improvements, or local school districts. Make sure to factor these in when deciding where to build your new home.

Look for Exemptions

Many jurisdictions offer exemptions or reductions for certain groups, like seniors, veterans, or people with disabilities. Check to see if you qualify for any when assessing what your property taxes will be on your new custom home.

How to Potentially Lower Property Taxes

Look for Homestead Exemptions

Many states offer a homestead exemption that reduces the taxable value of a newly built home if it’s your primary residence.

Appeal Your Assessment

If you believe your custom home’s assessed value is too high, you can appeal it. The process varies by jurisdiction, but generally, you’ll need to provide evidence, such as a recent appraisal or comparable home sales, that show a lower value.

Monitor Home Improvements

Making significant improvements can increase the assessed value of your home, thereby raising your taxes. If you’re concerned about taxes, be mindful of how improvements might impact your home’s value. Also, ensure permits are properly closed out. An open permit can attract scrutiny from tax assessors.

Seek Green or Energy-Efficient Tax Breaks

Some jurisdictions in Texas offer tax breaks or credits for homes with eco-friendly features or renewable energy installations. Keep this in mind when choosing energy-saving features in your new home. In some areas, having a certain amount of green space or specific types of landscaping can reduce your tax liability.

Check for Errors

Mistakes can happen. Ensure the details about your property, like the square footage and number of bedrooms, are accurate in the tax assessor’s records.

Consult with a Local Expert

Consider consulting with a local tax expert or real estate professional. They can provide insights tailored to your specific location and situation.

While it’s natural to want to minimize taxes, it’s also essential to pay what you owe. Property taxes fund essential services like schools, roads, and emergency services. Always approach the process with integrity and transparency. 

Are you ready to craft your ideal home in the Brazos Valley area? At LaFollette Custom Homes, we are committed to ensuring your dream home is built the way you want it, with the quality and attention to detail you expect. Request a consultation to get started today. 



More Posts

Your dream home is only a phone call away

When you are ready for a builder who understands your family’s dreams and desires, talk to our family at LaFollette Custom Homes. Our team of Custom Home Consultants will guide you through the process from start to finish.