Market Value has no cap. It can go as high or low as the market allows.
As an appraisal district we set the Market Value.
10% Homestead Cap:
If someone had a homestead exemption on their property the prior year, and still has a homestead exemption on that same property this year, they are the only ones eligible for a 10% cap*.
Your Homestead Cap will come into effect if the Market Value exceeds 10% compared to the prior year’s Assessed Value.
2021 Market Value is $200,000
2022 Market Value is $300,000
But… the 2022 Assessed Value would be $220,000.
($200,000 x 10% homestead cap = $220,000)
The Assessed Value is the value your taxes are assessed from. You will only pay taxes on $220,000.
The Market Value (what you could sell it for in the market) would stay at $300,000 for 2022.
If you reach an agreement of Market Value with Denton CAD, or get a ruling from the Appraisal Review Board (ARB), higher than your Assessed Value, you will still be taxed at your Assessed Value. In other words, in the example above, if you agree to a 2022 Market Value of $250,000, you will still be taxed on $220,000.
The Assessed Value is a 10% ceiling from year to year, and it will not be impacted unless the Market Value is deemed to be less than the Assessed Value. So in the example above, if you agree to a 2022 Market Value of $210,000, then your new Assessed Value will be $210,000 since it was under the Homestead Cap amount.
*Exception to the rule:
If there is a current homestead on property 123 Main St, and you purchase 123 Main St in 2022 and the previous owner does NOT request to remove their homestead, their homestead cap will remain on that property for the rest of 2022 (until Jan 1, 2023), so you will receive their homestead cap for that year. If they request to remove it, then you will not receive the benefit of their cap and you will have to wait and apply for your own homestead on January 1, 2023. Once you have applied for your own homestead on that property, you will establish your qualification date. The first year you will be able to observe the effect of your homestead cap is 2024. So you would not receive a cap in 2023.
If you would like your individual homestead evaluated, please email email@example.com
ARTICLE: RELIEF FROM RISING VALUES
This is a great article explaining “caps” on revenue growth and how the 2019 Legislative Property Tax Reform is protecting property owners from what is happening in the current housing market. It also explains how the Appraisal District increasing your VALUE (around 25%) to be inline with the market, does not mean they are increasing your TAXES by 25%.