The Tax Bill on a Balcones Listing Is the Seller's. What Changes When the House Is Yours?

One question in the Travis Central Appraisal District's online FAQ is phrased the way a frustrated new owner would say it: "I bought a home earlier this year from someone who had an Over 65 exemption and my property tax skyrocketed. Why did this happen?" The district's answer is short. The exemption stays on the property through the end of the year unless the previous owner asks to have it removed, and "the property's new owner may receive a property tax bill that is higher than estimated."

That exemption is one example of something broader. The annual tax figure buyers see while comparing homes along Balcones Drive and the surrounding streets describes the seller's record with the appraisal district. It reflects how long they have owned the home, which exemptions they have claimed, and how far a state cap has held their appraised value below the market. Very little of that carries over at closing. A buyer's bill starts again from the district's market value and is multiplied by this year's rates, which mostly went up.

One account, three different values

Every residential account at the Travis Central Appraisal District carries three numbers that are easy to mix up. Market value is the district's January 1 estimate of what the property would sell for. Net appraised value is market value after any legal limitations are applied. Taxable value is what remains after exemptions, and each taxing unit multiplies that figure by its rate.

The limitation that creates the gap between the first two numbers is in Texas Tax Code Section 23.23. For a homestead, the appraisal district can raise appraised value each year by no more than the lesser of two amounts. One is the latest market value. The other is the prior year's appraised value plus 10 percent, plus the value of any new improvements. The statute also requires the chief appraiser to record both the market value and the capped amount in the appraisal records. Both numbers are public, side by side, on the property's account.

When an owner has held a home for many years in a part of Austin that appreciated quickly, the capped value can fall well behind market value. A neighborhood of mature lots and long ownership tends to produce exactly those accounts.

The cap stays with the owner, not the address

The same section of the statute explains why the gap closes when the home sells. The cap takes effect on January 1 of the tax year after the owner first qualifies for a homestead exemption. It expires on January 1 of the first tax year in which neither that owner nor the owner's spouse or surviving spouse qualifies. The Texas Comptroller describes it the same way. The 10 percent limit applies only to property with a residence homestead exemption, starts the year after the owner qualifies, and ends once that owner no longer does.

The cap goes with the person who earned it. A buyer gets no credit for the seller's years of capped increases. The buyer's own cap does not begin until the January after the buyer first qualifies for the exemption. Until then, the home is appraised at whatever market value the district assigns.

Exemptions leave with the seller, but not right away

Exemptions follow the owner too, and the timing is what catches people off guard. Under the current Comptroller exemption rules, school districts must provide a $140,000 general homestead exemption, plus an additional $60,000 for qualifying owners who are 65 or older or disabled. A seller who qualified for both has been paying school taxes on a much smaller base than a new owner will.

The sequence after a sale runs like this:

1. The seller's over-65 exemption stays on the account through December 31 unless the seller asks to have it removed, according to TCAD's FAQ. If it is removed partway through the year, the new owner's bill can come in above the estimate.
2. The buyer has to own and live in the home to qualify for a homestead exemption. TCAD says a recent purchaser can file now and the exemption will apply to the year in which they qualify.
3. The Comptroller notes that someone who acquires a home after January 1 can receive the exemption for part of that tax year, but only if the prior owner did not receive the same exemption that year.
4. Once the buyer qualifies, the buyer's own 10 percent cap starts the following January 1.

TCAD directs owners who are surprised by a bill to their title company to review how exemptions were handled at closing. That conversation goes better before closing than after.

The rates on the bills arriving now

The second part of a buyer's future bill is the rate, and the 2026 rates differ noticeably from last year's. As Community Impact reported in its October roundup, four of the five taxing entities on an Austin ISD homeowner's bill raised their rates for 2026. Only Austin ISD lowered its rate.

The City of Austin's published tax rate table lists the city's fiscal 2026-27 rate as the same figure as its voter-approval rate. Community Impact reported that the rate is the highest the city could adopt without an election. Austin Community College adopted its rate on September 14, 2026. Added together, the five 2026 rates come to about $2.12 per $100 of taxable value.

Values went the other way. The Travis Central Appraisal District's 2026 values table lists the countywide median homestead market value at $493,449 for 2026, down from $502,253 in 2025. The district also reported that single-family market values fell 1.8 percent on average in 2026. Inside Austin ISD, the 2026 median homestead was $527,716 at market value but only $376,863 in taxable value. That gap of roughly $150,000 shows how much exemptions and caps reduce the taxable base for the people who currently own these homes.

Running the arithmetic on a Balcones-range home

With a combined 2026 rate of about $2.12 per $100, every $100,000 of gap between a seller's capped value and the district's market value equals roughly $2,121 a year in tax before any exemptions. Here is a simple illustration with made-up figures. If a home's TCAD record showed a market value $250,000 higher than its capped appraised value, a buyer appraised at full market value would owe about $5,300 more a year than the seller's appraised value would produce at the same rates. This is arithmetic using published rates, not a quote for any property. Actual bills depend on each entity's exemptions and on what the district assigns to the home next January.

The figures that make the arithmetic useful for a specific house are the two values the statute requires TCAD to publish. Comparing market value to appraised value on a property's account shows how large the cap gap is. The exemption list on the same record shows what the seller has been receiving.

Falling values in 2026 also matter here. The cap can only hold appraised value below market when market value has been climbing faster than 10 percent a year. In years when values fall, the lesser-of rule means the capped figure and market value can move closer together. Two homes with similar listing prices in the same neighborhood can therefore come with very different tax resets, depending on how long each seller has owned and when they last saw a big jump in value.

How the timing plays out this winter

The calendar affects buyers this season. TCAD says 2026 bills began going out in October. Community Impact reports they are due February 1, 2027, because January 31 falls on a Sunday. A home that closes between now and that deadline already has a 2026 bill based on the seller's exemptions and the seller's capped value. The first bill the buyer receives in their own name will be for 2027, built on a new January 1 appraisal.

That 2027 bill also reflects a larger market. In September 2026, the combined median sale price across Central Austin ZIP codes that include 78731 was $760,000, up from $750,000 in September 2025, based on Unlock MLS data reported by Community Impact. The same report counted 355 new listings that month and 170 closed sales, compared with 339 and 186 a year earlier. With more listings and fewer closings, buyers are comparing more homes at once, so it pays to compare their likely future tax bills as well as their prices.

This post is general information, not legal, tax, or financial advice. Before you rely on any of these numbers, confirm how they apply to a specific property with the appraisal district, your title company, or a tax professional.

A few questions buyers raise

Does the seller's 10 percent cap carry over to me? No. Under Section 23.23, the cap expires once neither the original owner nor that owner's spouse or surviving spouse qualifies for the homestead exemption. A buyer's own cap starts the January after the buyer qualifies.

When can I file for my homestead exemption? TCAD says a recent purchaser who owns and lives in the home can file now, and the exemption will apply to the year in which they qualify. The district also notes that processing can take up to 90 days.

Will lower 2026 values offset the higher rates? That depends on the account. The city, county, Central Health, and ACC raised their rates for 2026 and Austin ISD lowered its rate. A buyer's bill depends on where the district puts that particular home's market value next January.

When I'm helping a client weigh two Balcones homes, I pull up each property's appraisal record before an offer, so the tax comparison rests on the buyer's likely numbers rather than the seller's history. If you'd like to go through a home's TCAD record with someone who has done this many times, Brande Draper is glad to help. Let's Connect.