Many El Paso homeowners will see their property tax bills stay flat or even decline slightly this year, thanks largely to an expanded homestead exemption on school tax that Texas voters approved in May.

However, most owners of rental homes – and their tenants – are facing sharp increases in property tax bills.

El Paso’s local governments have finished setting their tax rates for this year. Those governments sharply lowered tax rates, as required by state law, to offset most of the impact of sharply rising property valuations – at least for people who occupy homes they own.

El Paso Matters analyzed the total property tax bill on the average value home in each of El Paso’s three largest school districts in 2021 and the bill due in December 2022. The analysis includes tax bills from the school district, the city, the county, University Medical Center and El Paso Community College.

People who live in homes they own get favorable treatment under Texas property tax law. In El Paso, they receive homestead exemptions on school, county and city property taxes. That means that a certain portion of their property value isn’t taxed by those governments. This year, those exemptions are worth $5,000 for the city and county, and $40,000 or more for school districts.

State law also says that the taxable value of properties with homestead exemptions can’t increase by more than 10% in any year. That protection has been important for El Paso homeowners, when property values for many homes increased by 20% or more each year.

According to the El Paso Central Appraisal District, the average home in the El Paso Independent School District was $168,064 in 2021 and $198,214 this year. In Socorro ISD, it was $168,611 in 2021 and $202,847 in 2022. For Ysleta ISD, the average home value was $130,841 in 2021 and $159,594 this year.

The El Paso Matters analysis shows that the tax bill on an average home will increase by about $170 in Socorro ISD and by about $23 in El Paso ISD. It will decline by about $67 in Ysleta ISD.

This year, the Texas homestead exemption for school district taxes grew from $25,000 to $40,000, which resulted in small savings on school district taxes. Ysleta ISD offers an additional 20% homestead exemption.

Essentially, all of the increase in total property tax bills comes from the city of El Paso. Property tax bills for schools, the county, UMC and EPCC are flat or down for most properties with homestead exemptions, the analysis found.

These estimates are for an average-value home. The individual impact of the new tax rates will depend on the total value of the home and the rate of taxable valuation increase between 2021 and 2022.

Rental properties 

The tax story is much different for the one-third of El Pasoans who live in rental properties, either apartments or single-family homes. Those properties aren’t protected by homestead exemptions, meaning that the full increase in property valuation is subject to taxation each year.

If the average-value home in each school district is a rental property, the owner is facing hundreds of dollars in additional property taxes this year. In EPISD, the new tax rates and valuations will add about $616 to the annual tax bill. In SISD, it’s $739; in YISD, it’s $642.

About half the growth in the total tax bill for the average-value home without a homestead exemption comes from increases in school district taxes. About 30% is from increases in city property taxes, with the remaining 20% coming from the county, hospital and community college.

Although owners of rental properties pay the tax bill, any increases likely will be passed on to tenants in the form of additional rent. That means the rent in an average-value home would need to increase by $51 to $62 a month to cover the additional property tax bill, depending on the school district.

The rising property tax bills on rental property hit low-income El Pasoans at a disproportionate rate.

The Census Bureau reports that the median household income for El Paso renters is just over $32,000 annually, 47% less than the median household income for owner-occupied houses. About 40% of households in rental properties make less than $25,000 a year, according to the Census Bureau.

As with owner-occupied homes, the tax impact on individual property owners or tenants will depend on the valuation change between 2021 and 2022.

The valuation of El Paso apartment complexes in particular rose sharply this year, meaning large increases in property tax bills.

At one East Side complex, for example, the valuation rose from $18 million in 2021 to almost $34 million this year. The total property tax bill for the complex grew from just over $550,000 last year to almost $1 million this year.

The complex has 284 units. The monthly rent on those units would have to increase by $124 on average to cover the increase in property taxes. (Owners could decide to reduce profit margins or cut expenses to limit rent increases, but apartment occupancy rates are routinely above 95%, which has already resulted in sharply rising rent in El Paso.) 

That means that a one-bedroom apartment in the complex, which currently rents for $875 a month, will face a tax increase of more than $1,500 this year – two and a half times the increase for a $660,000, four-bedroom home with a homestead exemption just over a mile away.

Other apartment complexes have seen valuations go up by more than 50% in a year. The impact on individual apartment residents will depend on the increase in valuation of their complex, and the number of their units.

Robert Moore is the founder and CEO of El Paso Matters. He has been a journalist in the Texas Borderlands since 1986.