Tax Perspective on Texas Real Estate

Since the property tax in Texas is generally 3%, it is considerally higher than other places in USA and Canada. In many places, the property tax comes at about 1% of the property value.

If we compare the Texas property tax to a 1% property tax, and try to quantify the tax impact, then we can find the 'real' value of Texas real estate.

Tax difference: 3% - 1% = 2%.
Extra Tax for every $100,000 value: 100,000 X 2% = $2,000.

Assume one can get a mortgage at 6%, and interest only, this $2,000 can support a mortgage of 2,000/6% = $33,333.

This is to say, a Texas property owner is paying the equivalent of a $133,333 mortgage for every nominial $100,000 mortgage. Or, he is paying 33.33% more than the nominial mortgage.

It could also say that $100,000 property value in Texas is actually priced at $133,333.

This tax factor becomes a 33.33% drag on Texas property value!