Hi all,

I purchased my home in March 2003 (last year), and I had a rude
awakening this year when I got my 2004 tax statement from the local
Appraisal District.

When I purchased the house, the tax district appraised it (plus
property) at around $95,000 in 2003, but with the previous owner's
homestead exemption the homestead cap was $80,000. This saved me
about $500 in 2003 for taxes since taxes were based on $80,000 instead
of $95,000.

Now 2004 rolls around and I get my tax statement... and the homestead
cap was gone! I called the appraisal district and they said since I
moved in and refilled the homestead exemption under my name, that
reset the homestead cap to current appraised value, which is $100,000
(appraised value went up $5,000 this year). So... I'm taxed on the
full $100,000. OUCH!

I wasn't familiar with the homestead exemption, and the lady at my
county appraisal district was nice enough to tell me how it works.
She said the homestead exemption creates a homestead cap, which is
what your taxes are based on. This cap can't go up more then 10% in
any given year. So if in 2004 your house is appraised at $100,000 and
in 2005 they reappraise it at $120,000, your cap is $110,000 and
that's what your taxes are based on. In this scenario you basically
get a $10,000 cut on your appraised value for taxes.

This is what happened to my taxes in 2003... I was riding on the prior
owner's homestead cap, but in 2004 it reset for me.

So... is this something that happens to everyone? If the prior owner
lives in a house for 15 years, you buy it, and the taxes double or
more... is this common? Luckily mine only went up from $1400/year to
$1900/year, or about $40/month... but I've heard of others having
their house note double in year two due to this.

I could contest the appraised value, but it's still under what I paid
for the house, plus under what many houses go for in my area... so I
figured I didn't have much of a leg to stand on.

Anyone else ever been in this situation? Just curious.

Take care,

Alex.