Commercial Property Tax

Austin, Texas is well known for its rapidly growing and competitive residential real estate market, but the commercial real estate industry is also booming in the Texas capital. Austin was ranked as one of the Top 10 Commercial Markets of 2021 by the National Association of Realtors. 

Yet, as the demand for and cost of commercial properties rises in Central Texas, so do property taxes. If you own commercial real estate in Austin or are thinking about investing, here is what you should know about commercial property tax rates and how to protest them, if needed.  

What Are Commercial Property Taxes?

Property tax levies on commercial property are similar to those on residential property—but commercial property tends to create a bigger tax bill. That’s because commercial property taxes are based on the assessed value of the real estate—they’re worth more than a home and they generate income, so the property tax bills are steeper.

Texas Property Taxes are Notoriously High

Without a state income tax, local entities in Texas rely on property taxes to fund their schools and local government. As a result, property taxes on commercial property tend to skew higher, since municipalities depend on them to pick up the slack. 

In Austin, Commercial Property Taxes Are Rising
As property values rise, property taxes increase as well—even if the tax rate itself doesn’t change much. That’s because appraisers get more aggressive about assessing value in hot real estate markets—as cities boom, so do commercial property tax rates. In Texas cities—which are going through a rise in property value—commercial real estate tax rates are somewhat higher than the national average, at 1.83% rather than 1.08%.

2020 tax rates  

In 2020, the average effective commercial property tax rate in Austin’s Travis County was a rate of 1.80%. That’s a drop compared to commercial property tax rates in 2017, which showed a citywide rate of 3.33%. But a lower tax rate doesn’t mean lower taxes—as property values are assessed at sky-high values, that brings sky-high taxes alongside them. 

How to Protest Commercial Property Tax Assessments 

Assessor’s values are based on the cost approach, which isn’t alway the most reliable method of appraisal. If you feel that the assessors have over-valued your property—and slapped you with an excessive tax value—you can protest to the county tax office. It is your right to protest your tax rate every year if necessary. 

Questions about property taxes in Austin? Texas Protax is a property tax consulting firm serving Austin, Houston, and Central Texas. Despite the Travis County Appraisal District not changing appraisal values in 2020, we were still able to get reductions for over 70 percent of our clients. Contact us today to learn how we can help you appeal your property tax rate in Austin.