Property tax is one of the biggest and most unpredictable expenses for landlords in Austin, Texas. Staying ahead of rising costs and other trends is critical to keeping your rental property profitable. For 12 years in a row, Austin was the fastest-growing metro in the country, only recently slipping out of that spot to number seven. As its population continues to soar, home prices are increasing right along with it, driving up property tax assessments year after year. 

The purpose of this guide is to help you understand the property tax system in Austin so that you can minimize costs and maximize returns for your investment property portfolio. You’ll also learn about common challenges you may run into as a landlord and gain actionable strategies to help you manage investment property taxes efficiently. 

An Explanation of the Austin Property Tax System

Texas doesn’t collect a state income tax, meaning local governments rely heavily on property tax revenue. These funds support critical programs and services such as Austin ISD, Travis County road maintenance, and police and fire protection. However, this also means that an Austin landlord tends to pay a higher property tax rate compared to investors in other states. 

Your property tax assessment depends on where your rental property is located, and three different appraisal districts manage these assessments. These include: 

• Travis Central Appraisal District (TCAD): TCAD covers most Austin properties, including downtown, South Congress, and The Domain. 

• Williamson Central Appraisal District (WCAD): WCAD manages assessments in North Austin, Cedar Park, and Round Rock. 

• Hays Central Appraisal District (HCAD): HCAD oversees properties in South Austin, Buda, and Dripping Springs. 

Each year, these districts assess the market value of properties as of January 1. The taxable amount is based on this market value, which is then multiplied by the combined property tax rate set by multiple entities, including: 

• City of Austin: Funds local services, infrastructure, and emergency response. 

• Austin ISD and surrounding school districts: The largest portion of your property tax bill.

• Travis County and other regional governing bodies: Includes public transportation, county services, and parks. 

• Central Health and Austin Community College: Local hospitals and community colleges get a share of property taxes to stay operational. 

Once the appraisal district determines the market value of your rental property, the assessed value is multiplied by the total tax rate for its location. In 2024, Austin’s average property tax rate was 1.86% of assessed value, making it one of the highest in Texas. The Travis County Tax Office provides this tool to give homeowners an idea of what their property tax rate might be.

Due to rising home values, Austin landlords should expect their property tax assessments to increase every year, especially in high-growth areas like Round Rock, Cedar Park, and Dripping Springs. 

Common Property Tax Challenges for Austin Landlords

As a landlord, there are a few obstacles you’ll want to be prepared for while navigating property taxes. These include: 

• Higher Property Tax Bills: Over the past decade, Austin has become an attractive city for tech companies, drawing in major businesses like Tesla, Google, and Apple. This has led to an explosion in housing demand, which, in turn, has driven rental property values (and property tax bills) sky-high. 

• Valuation Inconsistencies: Inconsistent property tax assessments are a common struggle for Austin landlords. Due to data entry errors, market fluctuations, and mass appraisal methods, even properties that are relatively identical can get drastically different assessments. 

• Lack of Awareness of Tax Exemptions: Many investment property owners assume that property tax exemptions only apply to homeowners. However, Austin landlords may also qualify for tax reductions, such as historic property tax exemptions, solar energy rebates, grants, or maintenance and depreciation deductions. 

• New Legislation: Since Austin’s property tax rates are among the highest in Texas, lawmakers are working to provide relief. The Governor has proposed $10 billion in new cuts to prevent unchecked tax increases. A proposed one-year tax exemption on home improvements could also benefit investment property owners making upgrades. Lawmakers also want to move property tax elections to November, ensuring higher voter turnout. As these changes are debated, it’s crucial for Austin landlords to stay informed to anticipate how new policies could impact their investment property expenses. 

Tips for Managing Property Taxes for Your Rental Property

Managing property taxes in Austin isn’t always straightforward, especially if you’ve just purchased your first investment property. To set yourself up for success, keep the following tips in mind: 

1. Check Your Appraisal for Errors: Each year, you’ll receive an appraisal notice from TCAD, WCAD, or HCAD. Many landlords overlook these notices, but errors can lead to overpaying, making it essential to check for inaccuracies. Errors in square footage, misclassified renovations, or inflated property values are all possibilities to be on the lookout for. 

2. File an Appeal If Needed: If your rental property is overvalued, you can file a protest with your county’s appraisal district (TCAD, WCAD, or HCAD) online or in person. In Austin, this must be done by May 15 or within 30 days after your notice is mailed. Having strong supportive evidence, like comparable sales, repair costs, or property condition reports, can significantly improve your chances of lowering your property tax bill. Many landlords hire property tax consultants to handle appeals, as the success can lead to big savings. The Texas Comptroller provides information on the appeals process on their website.

3. Budget for Tax Increases: Since Austin’s property tax rates remain high, landlords should set aside a portion of their rental property income for future increases. Adjusting rental rates little by little can help absorb property tax hikes without causing too much financial strain. 

Keeping Up with Rising Property Taxes with Evernest

For Austin landlords, juggling property tax assessments, market changes, and rental pricing adjustments can be overwhelming. With property tax rates rising annually, failing to plan ahead could cost you thousands. A professional property manager like Evernest can take the guesswork out of managing rental property expenses, helping you keep more of your profits while making sure your investment property stays competitive in the Austin, Texas market.