Property Tax Overview: What Rural Buyers Need to Know
Buying property is an exciting step — whether you’re building your dream home, expanding your ranch, or investing in open land. But with new property ownership comes new responsibilities, and one of the most important to understand is property taxes.
If you’re buying in Texas or New Mexico, be sure to check out our handy guides with helpful state-based tips. Understanding how property taxes work and affect your budget will help you make a smart investment that is secure for the long haul. Continue reading to learn more about property tax basics and access our recommended resources.
What Are Property Taxes?
Every land and property has a value. Your county, city, or other taxing entity appraises your property to determine how much in local taxes you will owe on it each year. These funds are very important to local communities. They help support public services like schools, roads, fire departments, and law enforcement.
In both Texas and New Mexico, property taxes are managed at the county level. Both states use either county appraisals or assessor districts, depending on the county where you reside. That means your exact tax amount depends on where your property is located and how much it’s valued according to the local authority.
How Are Property Tax Rates Calculated?
Property tax rates vary by location and are typically a combination of:
- County taxes (roughly 0.50%–2%)
- City, school, or other local district taxes (0.25%–2%)
For example, if the assessor appraises your property for $250,000 with a 1.5% tax rate, you’d owe $3,750 per year in property taxes. But remember tax rates can change each year based on local budgets and elections.
To estimate your property tax, visit your county appraisal or assessor district’s website or consult your county tax assessor.
How to Pay Property Taxes
Depending on the type of mortgage you have, it may be required that your property tax bill is rolled in with your monthly mortgage payment. For instance, if you have a government-backed loan such as an FHA, VA, or USDA loan, you are required to have an escrow account. This is convenient so you don’t owe a large sum of money when the taxes are due and they are paid automatically from the escrow account. If the appraisal is higher than expected, your escrow account may not have enough funds, in which case, you still may owe some money for that tax year.
However, if your mortgage does not include an escrow account, you are responsible for paying your property taxes in full directly to the tax office.
What Property Tax Exemptions Could You Qualify For?
A property tax exemption is a reduction or elimination of property taxes on a specific property or for a particular group of property owners. There are several exemptions that may lower your annual property tax bill if you qualify. Common exemptions include:
- Homestead or Head of Family Exemption: For primary residences, this can remove part of your home’s value from taxation.
- Agricultural Exemption (Open Space or Productivity Valuation): For land used for farming, ranching, or wildlife management.
- Disabled Veteran Exemption: For qualifying veterans and their surviving spouses.
- Senior or Disabled Individual Exemption: Provides a tax ceiling or reduction for homeowners over age 65 or with a disability.
Tax Exemption Resources
Use these links to learn more about exemptions in your state and determine if your property meets the qualifications.
Planning Ahead as a Landowner
Understanding property taxes is part of being a well-informed landowner. And the good news? You don’t have to navigate it alone.
At AgTrust Farm Credit, we work with rural buyers across Texas and New Mexico to structure smart land financing plans — and that includes helping you understand how taxes, exemptions, and appraisals impact your investment over time. Find a branch near you to tap into our local expertise.
Final Thoughts
Taxes might not be the most exciting part of property ownership — but they’re an important part of calculating your expenses so you can set your budget. With the right guidance and preparation, you can take advantage of exemptions, avoid surprises, and protect your long-term investment.