BEAUMONT, Texas — Southeast Texas realtors and homebuyers are calling the passing of Proposition 4 a "game changer."
On Election Day, Texas voters said a resounding yes to property tax relief by approving the constitutional amendment.
Texas has some of the highest property taxes in the nation. Earlier this year, Texas lawmakers approved a $12.7 billion package of property tax cuts that needed voter approval in order to take effect.
The package will send $7.1 billion to school districts so they can lower their property tax rates. School district taxes make up the bulk of a Texas property owner's tax bill. The amendment will also raise the state's school district homestead exemption — or the slice of a home's value that can't be taxed to pay for public schools — from $40,000 to $100,000, at a cost of $5.6 billion.
After four months of searching, listing after listing, Micah Roach finally found his forever home in Beaumont's west end.
"We like to have a lot of living space," he said.
But finding his dream home didn't come without challenges. One of those challenges was property taxes.
"There was a few houses that we narrowed it down to that we absolutely loved, but when you start looking at what the property taxes are and you have to consider what's my payment going to be, and saw it really wasn't feasible," Roach said.
Owner of Shawn SOLD It Real Estate Team, Shawn Webb-Locke, says Prop 4 will save the typical homeowner $1,300 a year.
"Mortgages are made up of principal, interest, taxes and insurance. So taxes play a huge role in their mortgage payments. It will afford them some financial relief in their monthly mortgage payments, which is critical in times like now," Webb-Locke said.
She says in the past year, the Southeast Texas market has slowed with more than 1,000 homes for sale now.
She also says, buyers have more power right now.
"Sellers are more apt to help with closing costs assistance, they can offer home warranties, or even negotiate the selling price," she said.
Roach already has plans on how to spend those extra dollars he'll be saving.
"You can do utilities, groceries, upgrades to the house, you have a little bit of freedom as far as making your forever home yours," he said.
This relief goes into effect with your 2023 tax bill.
Webb-Locke says buyers can reap even more benefits with the homestead exemption once they purchase a home by applying with your county's appraisal district.
The amendment also includes other tax reforms, including a temporary limit on appraisals for commercial, mineral and residential properties that don't receive a homestead exemption that are worth less than $5 million. If voters approve the idea, appraisal districts could not raise the taxable value of those properties by more than 20% each year for the next three years. The limit would expire in 2026 unless lawmakers and voters decide to extend it.
The amendment would also expand the pool of businesses that don't have to pay the state's franchise tax — and allow voters to elect three members to their local appraisal district's board of directors, which are currently appointed.
Here’s the full text of the amendment…
Proposition 4 – HJR 2 "The constitutional amendment to authorize the legislature to establish a temporary limit on the maximum appraised value of real property other than a residence homestead for ad valorem tax purposes; to increase the amount of the exemption from ad valorem taxation by a school district applicable to residence homesteads from $40,000 to $100,000; to adjust the amount of the limitation on school district ad valorem taxes imposed on the residence homesteads of the elderly or disabled to reflect increases in certain exemption amounts; to except certain appropriations to pay for ad valorem tax relief from the constitutional limitation on the rate of growth of appropriations; and to authorize the legislature to provide for a four-year term of office for a member of the board of directors of certain appraisal districts."
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