The council approved at its June 18 meeting increasing its homestead exemption rate by 2%. Over the past four years, the council has increased the rate from 1% to 12%.
With the measure, the taxable value of homes in Keller will decrease by 12% or $5,000, whichever is greater.
With the city's previous homestead exemption rate of 10%, the average taxable value of a home in Keller was $368,646, according to Aaron Rector, director of administrative services with the city of Keller. With the 12% rate, the average taxable value will drop to $361,273.
According to the Texas comptroller, a homestead can be a home, condominium or separate housing structure on owned or leased land. It can include up to 20 acres as long as the acreage is used by a homeowner for residential use.
Taxing units, such as cities, can offer homestead exemptions, which lower the taxable value of a home, and in turn, lower the home’s property tax bill. Under state law, cities can offer exemptions of up to 20%, but whatever the percentage is, the value of the exemption cannot be less than $5,000.
Homeowners receive the exemption automatically and cannot opt out. The exemption does not apply to rental properties.
It does not affect taxes residents pay to school districts, counties or other taxing units.
“It was a choice by council four years ago to start looking at doing homestead exemption work in addition to work they were doing on the tax rate itself because it creates a larger discount for homeowners,” Keller Public Information Officer Rachel Reynolds said. “With [home] value increases that our residents have been seeing, [City Council] thought it made sense to provide more relief than strictly a tax rate decrease.”
In addition to the homestead exemption increase, the city of Keller will look to provide additional relief by lowering its tax rate. Currently, the city’s rate is $0.41325 per $100 value.
How much that rate could decrease will depend on the impact of the homestead exemption on the city’s tax revenue. Rector said the city will have a better idea of the impact of the exemptions in July.
If the city decides to lower the rate, it will be Keller’s sixth consecutive year of tax rate decreases. Keller City Council is set to vote on the city’s fiscal year 2019-20 budget at its Sept. 10 meeting.
Rector said the city has been able to increase its homestead exemption rate and decrease its tax rate due to new residential and commercial properties being added to the city’s tax rolls. Keller has seen valuation increases at those properties, he added.
He also credited the city for maintaining its expenses.