Thinking about buying in Preston Hollow and wondering why your estimated monthly payment keeps changing? In Texas, property taxes carry real weight in your budget, and they vary by parcel. If you understand how appraisals, exemptions, and escrow work, you can shop with clarity and avoid surprises at closing. This guide breaks down the moving parts and gives you simple steps and examples tailored to Preston Hollow. Let’s dive in.
Texas property taxes 101
Who sets the taxes
Local taxing units set property taxes in Texas. There is no statewide property tax. In Preston Hollow, the Dallas Central Appraisal District (DCAD) estimates market value for each parcel. Separate taxing units then apply their rates. Your bill is the sum of those rates multiplied by your taxable value.
Appraised value vs. taxable value
DCAD assigns an appraised value that reflects market conditions. Your taxable value is the appraised value minus any exemptions you qualify for, such as a homestead exemption or special exemptions for over‑65, disabled, or veteran status. Exemptions lower your tax base and your bill. Rules and amounts can change. Confirm current exemption details with DCAD and the Texas Comptroller before you buy.
Combined tax rate basics
Combined property tax rates are shown as dollars per $100 of value or as a percentage. For example, a 2.5% combined rate equals $2.50 per $100. Your property’s combined rate is the total of every taxing unit that applies to that parcel, such as the City of Dallas, Dallas County, Dallas ISD, and other special districts.
How taxes change buying power
Your payment is PITI
Lenders look at your full monthly housing payment: Principal, Interest, Taxes, and Insurance. Annual property tax is taxable value multiplied by the combined tax rate. Divide by 12 to estimate the monthly tax. Higher property taxes raise your total payment, which can reduce the loan amount you qualify for.
Escrow and cash needed at closing
Most lenders require an escrow account for taxes and insurance. At closing, you will pre-fund the escrow with several months of taxes and insurance as a cushion. This is separate from your down payment and other closing costs. Ask your lender for their escrow reserve policy early so you can budget accurately.
Variability and planning
Appraised values and tax rates can change each year. Plan for possible increases when you run scenarios. Federal tax rules can also affect how much of your property taxes you can deduct. The SALT deduction has a cap. Consult a tax professional for the latest guidance.
Preston Hollow specifics to check
Parcel variation inside the neighborhood
Preston Hollow spans multiple zoning and taxing boundaries. Two similar homes can carry different combined tax rates if they sit in different school districts or special districts. Always verify the exact taxing units for the specific parcel you are considering.
Where to verify details
- DCAD: appraised values, parcel history, exemptions, appraisal notices, and protest procedures.
- Dallas County Tax Office: current and prior tax bills, payment options, and combined rate summaries by taxing unit.
- City of Dallas: city tax rate and any special assessments, if the parcel is inside city limits.
- School district: many Preston Hollow parcels fall under Dallas ISD. Confirm which district applies to the address you are evaluating.
What to request from a seller
- The last 2 to 3 years of tax bills for the property.
- The seller’s current exemption status. A homestead exemption does not transfer automatically to you.
- Any known special assessments or pending tax changes.
Deadlines and practical items
- Homestead exemption: if you will occupy the home as your primary residence, file with DCAD by the deadline.
- Appraisal notice and protest: watch for your appraisal notice after you buy. The protest deadline is printed on the notice.
- Tax proration at closing: taxes are usually prorated between buyer and seller. Confirm the math with your title company and the county tax office.
Quick estimator: 5 steps
Use this simple framework to estimate the monthly tax impact.
- Find the combined property tax rate for the specific parcel you are considering.
- Estimate the appraised value. Use the list price as a proxy.
- Subtract any exemptions you expect to claim to find taxable value.
- Annual tax = taxable value × combined tax rate. Monthly tax = annual tax ÷ 12.
- Add the monthly tax to your estimated Principal + Interest + homeowners insurance + HOA to see your total payment.
Tip for mortgage math: If you have a target monthly budget, subtract your estimated taxes and insurance first. The remainder is available for principal and interest. Use a mortgage calculator or a lender quote to translate that into a loan amount.
Illustrative examples: price bands
These are examples only to show how taxes affect monthly payments. Plug in the actual combined rate for the specific Preston Hollow parcel you choose.
Assumptions: combined rate 2.5% (illustrative), 20% down, 30‑year fixed, 6.5% interest, insurance and HOA not included.
| Price | Approx. Loan (80%) | Approx. P&I | Annual Tax (2.5%) | Monthly Tax | Est. P&I + Tax |
|---|---|---|---|---|---|
| $600,000 | $480,000 | $3,035 | $15,000 | $1,250 | $4,285 |
| $1,200,000 | $960,000 | $6,069 | $30,000 | $2,500 | $8,569 |
| $2,500,000 | $2,000,000 | $12,644 | $62,500 | $5,208 | $17,852 |
What it means for you: as price increases, the tax component rises proportionally. Even small shifts in the combined rate can move your monthly number by hundreds or thousands of dollars at higher price points. Model a range of rates as you compare homes.
Buyer checklist for Preston Hollow
- Look up the parcel on DCAD. Save appraised values and exemption history.
- Pull the most recent tax bill from the Dallas County Tax Office.
- Ask the seller for the last 2 to 3 years of tax bills and whether a homestead exemption is in place.
- Get your lender’s escrow reserve policy and an estimated monthly escrow amount.
- Run at least three scenarios with different combined tax rates. Try current, plus 0.25%, plus 0.50%.
- If values or rates look high, discuss appraisal protest options after closing and consult a tax professional as needed.
Plan your next steps
Buying in Preston Hollow should feel confident, not confusing. When you understand how property taxes flow into your monthly payment and closing costs, you can set a realistic budget and move fast on the right home. If you want help pulling tax histories, estimating exemptions, or modeling scenarios by address, we are here to guide you.
Ready to explore Preston Hollow with clear numbers and local insight? Connect with the team that blends neighborhood expertise with boutique service at Hewitt+Saucedo Realty Group.
FAQs
How do Texas property taxes affect my monthly payment on a Preston Hollow home?
- Taxes are included in most escrowed mortgage payments. Higher annual taxes increase the monthly tax portion, which raises your total PITI and can lower the loan amount you qualify for.
What is the combined tax rate and how do I find it for a specific Preston Hollow address?
- The combined rate is the sum of all taxing units for that parcel. Check DCAD for the parcel’s taxing units and confirm current rates with the Dallas County Tax Office.
Will the seller’s homestead exemption transfer to me when I buy?
- No. You must apply for your own homestead exemption with DCAD after closing if the home will be your primary residence.
How much will my lender collect for escrow at closing in Dallas County?
- Lenders usually collect several months of taxes and insurance as a cushion. The exact amount varies by lender. Request your lender’s escrow reserve estimate early.
Can I protest my property’s appraised value after I purchase?
- Yes. DCAD mails appraisal notices with a printed protest deadline. You can file a protest with the Appraisal Review Board if you disagree with the appraisal.
Are Texas property taxes deductible on my federal return?
- Property taxes may be deductible, but federal SALT limits apply. Confirm your eligibility and strategy with a tax professional before you file.
