Austin regret · Property tax

Property tax creep:
the Year-2 surprise
that hits most new buyers.

Travis County property tax tracks the market, not the price you paid. New buyers reset to market value at purchase. The Year-2 mortgage statement can be hundreds to thousands of dollars per month higher than Year-1 closing escrow. The mitigation is one form, filed in Year 1.

Quick answer

Why does my Austin property tax go up so much in Year 2?

Texas appraises property at market value, not at purchase price. When you buy, the previous owner's appraised value (which may have been capped under the homestead exemption for years) resets to the price you paid plus market appreciation. Your Year-1 mortgage escrow is calculated on the previous owner's tax bill. Your Year-2 escrow catches up to your actual tax bill. The catch-up can run $200 to $1,500+ a month.

The single mitigation that matters: file the homestead exemption with Travis CAD in your first year. It caps year-over-year assessed-value growth at 10 percent and reduces your taxable value by an additional $100,000 (the Texas state homestead amount as of 2025).

Editor's note

The Texas property tax mechanic is technically simple and emotionally surprising.

Most Austin homebuyers have lived in states where property tax bills are stable from one year to the next, or where Proposition-13-style caps prevent large reassessments. Texas does neither. The state writes the rules; Travis CAD enforces them. The system works as designed; it also produces the single most-cited financial regret in Austin Reddit threads from new homebuyers.

The thread that captures this best is a May 2025 r/Austin post from u/cbatt929 (340 ups). The OP added a backyard pool, the appraisal jumped, the mortgage statement went up $1,100 a month. The thread's reply pattern: half explaining the mechanic, half empathizing with the surprise.

Nathaniel Peters, Founder & Editor

The mechanics

Three numbers that determine your tax bill.

1. Appraised value. The Travis Central Appraisal District (TCAD) assesses every property annually as of January 1, based on market-value comparables in the surrounding ZIP. The appraisal often does not match the price you paid. Either way, the appraised value is what your tax bill is based on.

2. Effective tax rate. The combined tax rate is the sum of city, county, school district, and special district rates. Travis County effective combined rate runs 1.81 percent of appraised value. A $700K appraisal produces a $12,670 annual tax bill before exemptions.

3. Homestead exemption. If the property is your primary residence, you can file for the Texas state homestead exemption. The exemption (a) reduces your taxable value by $100,000 of the school-district portion (Texas Tax Code §11.13), and (b) caps year-over-year increases to your appraised value at 10 percent (Texas Tax Code §23.23). Without the homestead, both protections are gone.

The Year-2 surprise is almost always one of two things. Either the homestead exemption was not filed (and the appraisal jumped to market value), or a cap-busting improvement was made (a pool, a major renovation, an addition) and the appraised value reset upward. Both have specific TCAD procedures with specific deadlines.

The mitigations

Four things that work.

1. File the homestead exemption in Year 1. Submit Form 50-114 to Travis CAD between January 1 and April 30 of the year after you take occupancy. The form is free; processing is automated. Most title companies remind buyers about this, but not all.

2. Buy at 75 to 85 percent of your pre-approval, not the full amount. The mortgage you can afford and the mortgage you should take are not the same. The Year-2 escrow catch-up can add $200 to $1,500 a month to your housing line. Buying at 80 percent of pre-approval gives you the buffer to absorb that without distress.

3. Protest your appraisal in Year 1 if the comps do not support it. Travis CAD's online protest portal is free. The deadline is May 15 of the appraisal year. The protest does not always win; when it does, it can save $500 to $5,000 a year.

4. Avoid cap-busting improvements until Year 2 or later. Any improvement that requires a permit (pools, additions, ADUs, garage conversions) triggers a TCAD reassessment of that improvement at market value. Doing both at once can double the property-tax shock.

I just received my most recent mortgage statement and it went up $1,100 a month! Once I picked my jaw up off of the floor, I started digging.

u/cbatt929 · r/Austin · May 2025 · 340 ups on the property-tax-and-pool double reassessment.

Public threads.
Primary data.
Named editor.

That’s Landed.

Closing

The mechanic is real. The mitigation is one form.

The Travis County property tax system is uniformly higher than what most California, Northeast, or Pacific Northwest transplants are used to. The Year-2 catch-up is the single biggest financial surprise most new homeowners experience. Almost every case of regret can be avoided by filing the homestead exemption in the first eligible window after closing, buying below pre-approval, and protesting the appraisal when comps do not support it. Read the full regrets analysis, run the cost calculator, and check the cost-of-living property-tax breakdown.