Property taxes can make or break your returns on a Dallas single‑family rental. If you have ever watched a great cap rate fade after closing, taxes were likely the culprit. You are not alone. Texas appraises non‑homestead properties annually, so your tax line can move faster than your rents.

This guide breaks down how Dallas‑area rental property taxes work, what timelines you need to hit, typical rate ranges to use in underwriting, and a simple modeling framework you can plug into your pro forma. You will also get a practical protest checklist. Let’s dive in.

Dallas SFR taxes at a glance

Property taxes in Texas are set and paid every year. For rentals, there is no homestead cap on annual appraisal increases, so your taxable value can reprice to market each year.

• Appraisals are performed annually by your local appraisal district. In Dallas County it is DCAD; in Collin County it is CCAD.
• Annual property tax equals appraised (taxable) value × combined tax rate.
• The combined rate is the sum of city, county, ISD, community college, hospital district, and any special district rates that apply to your parcel.
• Rates and appraised values both reset annually. Bonds, budgets, and special district levies can change your total.

Where to find your numbers

Appraised value

Start with the parcel record on the local appraisal district website for the county where the property sits. DCAD and CCAD publish current appraised values, property characteristics, and the list of taxing entities tied to each parcel. Check that basics like square footage, year built, and lot size are accurate.

Combined tax rate

Use the taxing entities shown on the parcel record to look up each entity’s adopted rate for the current year on the city, county, ISD, and tax office pages. Prior‑year tax bills also show the exact rates used. Verify for the specific parcel rather than relying on neighborhood rules of thumb.

Common rate ranges

For underwriting, many Dallas‑area SFR investors assume a combined rate in the low‑to‑mid single digits. A conservative working range is roughly 2.0% to 3.5% of value per year, depending on city, ISD, and any special districts. Parcels with hospital districts or MUDs can exceed that. Lower‑rate suburban combinations can fall below it. Always verify per parcel.

Key deadlines and workflow

Spring appraisal notices and protests

Appraisal districts typically mail Notice of Appraised Value in the spring, often April. You can file a protest by May 15 or within 30 days of the date your notice was delivered, whichever is later. Most districts allow an informal review with staff before a formal Appraisal Review Board (ARB) hearing.

Protest process steps

• Receive notice and calendar the deadline.
• Gather evidence: comparable sales, photos, rent and expense data, and any corrections to the CAD record.
• File the protest and request an informal meeting.
• If unresolved, present evidence at the ARB hearing.
• If still dissatisfied, consider further administrative or judicial remedies, noting the time and cost.

Fall tax bills and payments

Counties issue bills in the fall. In Texas, taxes are commonly due by January 31 of the following year to avoid penalties and interest. Check your county tax office for payment options and any installment plans.

Refunds after successful protests

If you paid based on a higher value and later win a reduction for that year, you may be eligible for a refund. Procedures vary by county tax office and payment timing.

Build a pro forma that holds up

A durable tax model separates value growth from rate movement and tests both.

Step 1: Set a baseline

Use the appraisal district’s current appraised value or the seller’s last tax bill. If you only have the purchase price, note that appraised value may differ from price.

• Example baseline: Appraised value $300,000; assumed combined rate 2.5%.
• Baseline annual tax: 300,000 × 2.5% = $7,500.

Step 2: Model appraisal growth scenarios

Non‑homestead properties reappraise annually. Build multiple cases:

• Conservative: 0 to 2% per year
• Base: 3 to 5% per year
• Upside: 6 to 10% per year
• Downside: negative growth for stressed markets

Step 3: Model tax‑rate movement

Keep rate assumptions separate from value growth.

• Constant rate: hold the combined rate flat.
• Gradual increases: add 10 to 30 basis points per year.
• Step changes: include a one‑time bump, such as +0.25%, if bonds pass or a new district is added.

Step 4: Convert to cash flow

Annual tax equals last year’s appraised value grown by your assumption, multiplied by your assumed combined rate. If you acquire mid‑year, taxes are commonly prorated at closing. Align your escrow schedule to the bill timing so you are not surprised at year end.

Step 5: Test return sensitivity

View taxes as a percent of effective gross income and as dollars per unit. For bank covenants, run at least one downside where taxes rise faster than rents to confirm DSCR holds.

Short example

• Purchase/appraised value: $300,000; base rate 2.5%.
• Year 0 tax: $7,500.
• Scenario A, Base: 4% annual appraisal growth, rate flat.
  • Year 1 appraised $312,000 → tax $7,800.
  • Year 2 appraised $324,480 → tax $8,112.
• Scenario B, Value‑add: Year 1 reappraisal +20%, then 4% per year; rate flat.
  • Year 1 appraised $360,000 → tax $9,000.
  • Year 2 appraised $374,400 → tax $9,360.

Value‑add and mid‑year improvements

If you plan heavy renovations, include a revaluation risk overlay. A large step up in taxable value in the first year after improvement is common. For new construction or substantial additions completed mid‑year, expect some appraisal impact during the year of completion and plan for a full reset the following year.

Special districts that move the needle

Municipal Utility Districts and other special districts can add meaningful tax components. Identify special district exposure during diligence because the added levies can shift your cash flow and your cap rate. Include a contingency or explicit upside case for special district changes in your model.

How to protest like a pro

When to protest

Protest if the appraised value exceeds market evidence, if the CAD’s property data contain errors, or if condition issues are not reflected in the record. You can also protest when comparable sales indicate a lower value.

Evidence that works

• Comparable closed sales adjusted for size and condition.
• Income approach data: actual rents and expenses to show market income for SFR investments.
• Photos that document condition, deferred maintenance, or damage.
• Proof of CAD data errors, like square footage, bed/bath count, or lot size.
• Documentation for exemptions or proper classification if misapplied.

Likely outcomes

Many protests settle with a modest reduction. Larger reductions happen when clear data errors exist or strong comps support a change. Even an unsuccessful protest can inform future strategy by revealing how the district weighed evidence.

Professional help

For complex or high‑value assets, many investors retain local tax consultants or appraisers with experience in the specific appraisal district. For portfolios, a tax appeals specialist can centralize data and scheduling.

Diligence checklist for Dallas SFR deals

Use this quick checklist to avoid surprises:

• Pull the parcel record from DCAD or CCAD for appraised value, property details, and taxing entities.
• Retrieve the last three years of tax bills to spot trends in value and rates.
• Identify adopted city, county, ISD, and special district rates for current and prior years.
• Confirm special district status such as MUDs, PIDs, or hospital districts.
• Check CAD data for errors in square footage, lot size, year built, and condition.
• Decide protest ownership and process: in‑house or external consultant.
• Run a 3×3 sensitivity: low/base/high appraisal growth crossed with low/base/high rate movement.

Portfolio tactics for Dallas‑Plano‑Irving

If you operate across Dallas and Collin counties, model at the county and ISD level. Centralize appraisal tracking so you see all notices and deadlines in one place. Apply uniform assumptions across similar submarkets, then adjust for special districts at the parcel level. Assign protest responsibilities in advance so nothing slips past the May 15 or 30‑day window.

Common pitfalls to avoid

• Using purchase price instead of the CAD appraised value when better data are available.
• Assuming homestead protections apply to rentals. They do not.
• Holding the combined tax rate flat in a multi‑year model without testing changes.
• Ignoring special districts that add significant millage.
• Missing protest deadlines because multiple parcels sit in different appraisal districts.
• Underestimating the step change after value‑add improvements.

Your action plan

• Verify today’s appraised value and taxing entities on the CAD parcel page.
• Build a two‑axis tax model: appraisal growth and rate changes, each with at least three scenarios.
• Add a revaluation overlay for renovations and a small contingency for unexpected levies.
• Calendar the protest deadline and assign accountability.
• Track taxes as both dollars and percent of EGI to see DSCR impacts early.

If you want off‑market SFR inventory that pencils even after you model taxes conservatively, partner with a team that underwrites like you do. For disciplined deal flow and a smooth path from contract to close, connect with the Pintail Real Estate Group.

FAQs

How are Dallas rental property taxes calculated?

• Your annual bill equals the appraised taxable value multiplied by the combined rate from all taxing entities that levy on your parcel.

When are property taxes due in Dallas County?

• Tax bills are issued in the fall, and payment is commonly due by January 31 of the following year to avoid penalties and interest.

Can I cap appraisal increases on a Texas rental home?

• No. The 10% annual cap applies to qualified homestead residences and does not protect non‑homestead rental properties.

What is a typical combined tax rate in Dallas‑Plano‑Irving?

• Many residential parcels fall roughly in the 2.0% to 3.5% range, with higher or lower totals depending on city, ISD, and special district exposure.

What evidence helps reduce my appraisal in a protest?

• Strong comparable sales, accurate property data, photos showing condition, income and expense records, and documentation of appraisal district errors are commonly effective.

How do special districts affect my SFR pro forma?

• MUDs, hospital districts, and similar levies can add meaningful millage, so identify them during diligence and include them in your rate assumptions.

Should I model taxes from purchase price or CAD value?

• Base your model on the appraisal district’s reported appraised value when available, and then layer in appreciation and rate scenarios to test outcomes.