Answer
Owning rental property in Texas means you will pay property taxes on the property at rates set by the applicable taxing jurisdictions (county, city, school district, and special districts). Texas has no state income tax, but property taxes are a significant revenue source for local governments. Rental property does not qualify for the homestead exemption, so the full appraised value (after any other applicable exemptions) is used to calculate the tax bill. Property tax rates and appraised values are reassessed annually.
Explanation
In Texas, property taxes are ad valorem (based on value) and are assessed annually by the county appraisal district. The property's appraised value is multiplied by the combined tax rate of all applicable jurisdictions to determine the tax bill. Owner-occupied homestead properties receive a homestead exemption that reduces the taxable value, but rental and investment properties are not eligible for the homestead exemption. Some other exemptions (such as the general homestead exemption for a property owner who does not live there) may not apply. Texas investors should also be aware that the state's lack of income tax is partially offset by higher property tax rates compared to many other states. This is general information; consult a tax professional for specific guidance.
How to Verify This Information
Follow these steps to confirm property-specific details for your situation:
- 1
Determine the property's appraised value through the county appraisal district (CCAD for Collin County, DCAD for Denton County).
- 2
Identify all applicable taxing jurisdictions and their current-year tax rates.
- 3
Calculate the estimated annual property tax by multiplying the appraised value by the combined tax rate.
- 4
Confirm that the homestead exemption does not apply to a rental property.
- 5
Check for any applicable exemptions or abatements for investment properties.
- 6
Consult a Texas-licensed CPA or tax advisor for investment-specific tax planning.
Official Primary Sources
Last verified: August 2026. Market conditions and regulations change over time. Verify current information through the linked sources above.
General information disclaimer: The information on this page is general in nature and is provided for educational purposes only. It does not constitute legal, tax, lending, or investment advice. Market data, tax rates, school boundaries, and regulations change over time. Always verify current information through official primary sources and consult qualified professionals for decisions specific to your situation. School-district quality claims and neighborhood rankings are not made on this site.
Related Resources
Have a follow-up question?
Eugenia Grajales is available to discuss your specific situation. No obligation, no pressure.