![]() ![]() Although property taxes make up the largest chunk of landlords’ overhead, other costs to run a rental property - like property insurance, labor and maintenance - also get passed along to renters, and those expenses can fluctuate and contribute to higher rent bills. Tax cuts don’t necessarily guarantee that rents won’t climb as quickly, either. And what a tenant would have paid in rent had it not been for tax cuts is difficult, if not impossible, to prove, policy experts acknowledge. “It wouldn’t necessarily happen immediately, but I think it would happen pretty quickly,” said Adam Langley, associate director of tax policy at the Lincoln Institute of Land Policy, a Massachusetts-based think tank.īut tax policy experts agree that it’s unlikely tenants would see their rents fall as a result of tax cuts. That effect will spread to the rest of the market as landlords compete for renters, experts said. If a landlord’s property taxes don’t climb as quickly as a result of tax cuts, the thinking goes, their tenants’ rents won’t rise as fast either. Property taxes make up about 20% of every rent dollar paid by Texas tenants, according to figures provided by the Texas Apartment Association - though that percentage can be higher in the state’s urban areas. It’s difficult to measure how much renters would benefit from compression. That would translate to a “permanent” $4,300 pay bump for teachers, Bryant said. The tax-cut proposal put forth by Democrats also would boost the state’s basic allotment - the base amount the state gives schools per student, which currently sits at $6,160 and hasn’t changed since 2019 - by $1,000. Democrats would set aside money to cut school property tax rates, though not as much as Republicans in either chamber. Homeowners would see their homestead exemption climb to $100,000 or 25% of their home’s appraised value - whichever is higher, though it would be capped at $200,000. Renters aren’t the only taxpayers who would see relief under House Democrats’ tax-cut package. House Speaker Dade Phelan wants to use all $12.3 billion on compression while Patrick wants to use a little more than two-thirds on compression and the rest on raising the homestead exemption. The chunk of $12.3 billion in property tax cuts that should be spent on compression has been a sore spot and key dividing line between the state’s top Republicans. ![]() Some Republicans and tax policy experts have occasionally argued that renters would see relief from rising rent bills if lawmakers send a certain amount of money to school districts so they can lower their tax rates, a break legislators call “tax rate compression.” Dan Patrick and Senate Republicans want to raise the state’s homestead exemption on school district taxes from $40,000 to $100,000. Renters don’t own their own homes, so they can’t claim homestead exemptions, the chunk of a home’s value that can’t be taxed to pay for public schools. Texas doesn’t give an explicit tax break to renters as several other states do - and none of the GOP proposals for property tax relief include anything that unquestionably benefits renters. It wasn’t immediately clear how long the program would last, but spending in the Democratic proposal is capped at $3.8 billion. The comptroller’s office would then calculate the cash rebate, Bryant said. Under the proposals, landlords would submit documents to the state comptroller’s office showing how much tenants paid in rent. John Bryant, a Dallas Democrat who helped craft the package. “You can’t talk about property tax reductions without talking about every Texan, not only homeowners, but also 3.8 million householders who rent their homes,” said state Rep. Under the proposal, renters would get a cash refund equaling up to 10% of the rent they paid the previous year. But this year, GOP lawmakers have all but ignored renters as they tussle over whether homeowners or businesses should get a bigger break on their property taxes.ĭemocrats sought to change that Thursday by making tax relief for renters a pillar of a four-pronged tax-cut package. Renters’ cost of living surged during the COVID-19 pandemic as the state’s housing boom drove rents sky-high. They pay, via their monthly rent, one-quarter of the state’s school property taxes - which are among the highest in the nation. Tenants make up more than one-third of the state’s households. Sign up for The Brief, The Texas Tribune’s daily newsletter that keeps readers up to speed on the most essential Texas news.Īs a deal to cut Texas’ high property taxes continues to evade Republican lawmakers, Democrats in the Legislature unveiled a long-shot tax-cut proposal Thursday that targets relief to a group of taxpayers who have been largely left out of the debate: renters. ![]()
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