Glossary of Property Tax Terms

Appraisal District

An independent political subdivision in each county whose appraisers appraise all taxable property within the district’s boundaries and prepare an appraisal roll for the taxing units within the county. Districts are referred to as “county appraisal districts” (CADs).

Appraisal Records

Each year’s listing of all taxable property in the appraisal district. The records show the property identification number, owners’ names, appraised value of each property, the value of any exemptions, and other information.

Appraisal Review Board (ARB)

An appointed group of appraisal district residents that hears taxing unit challenges and taxpayer protests. The board also orders corrections to the records and approves the appraisal records to create an equal and uniform appraisal roll for the district.

Appraisal Roll

The appraisal records after the ARB reviewed and approved them. A CAD’s appraisal roll lists all properties within its jurisdiction. A taxing unit’s appraisal roll lists taxable properties and values within the unit’s boundaries.

Appraised Value

The chief appraiser’s estimate of the full market value or productivity value of a property, usually on January 1.

Assessment

The steps a taxing unit takes to impose a legal property tax. It includes the official act of calculating the taxing unit’s tax base. The general definition of assessment in textbooks sometimes includes appraisal and collection activities as part of assessment, but Texas law does not use this definition.

Chief Appraiser

Administrative head of the appraisal district. The chief appraiser supervises appraisal of all taxable property within the district’s boundaries, administers exemptions, approves applications for special-use appraisal and performs other administrative duties.

Coefficient of Dispersion (COD)

A measure of the uniformity of appraisals within a category. The COD expresses numerically the average distance between an individual appraisal ratio in a set and the median for that set of appraisal ratios. For example, a COD of 20 indicates that, on the average, individual appraisal ratios within the set vary from the median ratio by plus or minus 20 percent. To calculate a COD, divide the average absolute deviation by the median ratio.

Effective Tax Rate

The amount of taxes levied in the prior year divided by the current year’s taxable value of property on the appraisal roll for both the prior and current years.

Exemption

An exclusion of all or part of a property’s value from property taxation. Absolute exemption excludes the total value of property. Partial exemption excludes a part of the total value from taxation.

Freeport Property

Goods, wares, and merchandise other than oil, gas, and petroleum products that leave Texas within 175 days of the date they are brought into or acquired in the state.

Interest and Sinking (I&S) Rate

The portion of a taxing unit’s total property tax rate dedicated to retiring the principal and interest on bonded indebtedness. Also referred to as “debt rate”.

Levy

See Tax Levy.

Maintenance and Operations (M&O) Rate

A portion of a taxing unit’s total tax rate for operating expenses minus the amount spent to retire principal and interest on bonded indebtedness.

Market Value

The Property Tax Code defines market value as: “…the price at which a property would transfer for cash or its equivalent under prevailing market conditions if: (A) exposed for sale in the open market with a reasonable time for the seller to find a purchaser; (B) both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and (C) both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.” [Sec. 1.04(7), Property Tax Code]

Median

A statistical measure of central tendency. The middle number in a group of numbers ranked from highest to lowest (or vice-versa). If the sequence of numbers has an even number of entries, the median is the average of the two middle numbers.

Multicounty Taxing Unit

A taxing unit with territory in more than one county.

Parcel

Any item of real property, regardless of size, that has a single owner or is held in undivided ownership and for which there is a separate appraisal record.

Permanent University Fund (PUF) Lands

In the context of this report, only those lands owned by the Permanent University Fund and subject to county taxation under Art. VII, Sec. 16(a), Texas Constitution.

Personal Property

Section 1.04, Property Tax Code, defines personal property as all property that is not real property.

Price-Related Differential (PRD)

The pricerelated differential measures the comparative difference in how CADs appraise high-dollar and low-dollar properties.

Ratio Study

A comparison of appraised values to the market values of the same properties in order to determine the accuracy of appraisals. Market values may be indicated by sales prices or appraisals.

Real Property

The Property Tax Code defines real property as land, improvements, mines or quarries, minerals in place, standing timber, and an estate or interest in any real property. (Sec. 1.04(2), Property Tax Code)

Residence Homestead Appraised Value Limitation (10 Percent Cap)

A residence homestead’s appraised value may be limited to the lesser of either its market value or the sum of the market value of any new improvements and 110 percent of the appraised value for the prior year. The allowance for an annual 10 percent is cumulative – 10 percent times the number of years since the property was last appraised. The limitation only applies to homes that qualified for a residence homestead in the prior year. The limitation expires the next January 1 if neither the owner nor the owner’s spouse or surviving spouse qualifies for the homestead exemption.

Rollback Tax

A penalty imposed on a property owner who stops using property in a way that qualified it for special-use appraisal. The penalty recaptures the tax loss the taxing unit experienced as a result of special appraisal during the prior years. Rollback taxes have no relation to rollback tax rate elections or the rollback tax rate.

Rollback Tax Rate

The rate a taxing unit, excluding school districts, may not exceed without allowing its voters to petition for a reduced rate. A school district exceeding this rate must hold an automatic rollback tax rate election.

School District Number

A six-digit number for a school district, devised by the Texas Education Agency. The first three digits denote the county containing the district; the latter three uniquely identify the school district itself.

Special District

All local taxing units that are not cities, counties, or school districts. These units include hospitals, junior colleges, water and fire districts, and more.

Supplemental Records

Additional records prepared after the chief appraiser submits the original appraisal records to the ARB. These records are subject to review by the ARB and are added to the appraisal roll when the ARB approves them.

Taxable Value

A property’s appraised value minus all applicable exemptions, 10 percent cap, and other deductions.

Taxing Unit

Any political unit of the state that imposes property taxes. Counties, school districts, incorporated municipalities (cities), and special districts may be taxing units.

Tax Levy

The total amount of taxes imposed by a taxing unit on taxable property within its boundaries. Levy may also refer to the amount of tax due on specific property.

Tax Rate

The result of dividing the proposed levy by the taxable value of property. The rate is expressed in dollars and cents per $100 of value. The assessor applies the rate to taxable value to compute a tax due on each property.

Tax Roll

All the information on the appraisal roll plus the taxable value and the levy for each property parcel.