Gentrification is a process of neighborhood change where higher-income and higher-educated residents move into a historically marginalized neighborhood, housing costs rise, and the neighborhood is physically transformed through new higher-end construction and building upgrades. This can displace vulnerable residents and chang the neighborhood’s cultural character.
A core driver of gentrification in the U.S. has been the strong and growing demand for central city living by more affluent households, which in turn drives up housing prices in central city neighborhoods. This broad-scale demographic shift is happening in many Texas cities, including Houston, Austin, and Dallas. City planning, economic development initiatives, and tax incentives fostering redevelopment in central neighborhoods are considered to be additional factors influencing gentrification.
Neighborhoods impacted by gentrification have been shaped historically by decades of discriminatory public policies and private real estate practices that undermined property values, facilitated substandard living conditions, and generated racially segregated housing patterns. These neighborhoods’ lower property values, location in the urban core near good jobs and transit, and historical and cultural character are all factors that are making them more attractive to newcomers and susceptible to redevelopment.
Yes, there may be something you can do to lower your property tax bill.
- You can apply for a homestead exemption. Additional homestead exemptions may be available if you are at least 65 years of age or disabled. There is also a special exemption for veterans who are disabled.
- You may be able to defer your taxes as long as you live in the home. To qualify for this deferral, you must be a senior, a person with a disability, or the surviving child or spouse of a senior or person with a disability. But be careful -- all taxes and fees eventually become due. Also, any tax deferrals may violate your mortgage terms and open you up to immediate foreclosure.
- Seniors can volunteer for city or county government and get a $7.25 property tax credit for each hour worked.
Accessory Dwelling Units: Income is often a main factor in having to move. Some cities have made it easier for homeowners to build rental units on their property and get rental income. These are called "accessory dwelling units."
Community Land Trusts: Some communities have organizations that buy land so they can sell affordable houses to those at risk of displacement. For example, the Houston Community Land Trust has built homes that sell to qualified buyers for around $75,000. Likewise, the Guadalupe Neighborhood Development Corporation helps keep costs down for some East Austin residents. If your neighborhood is threatened with gentrification, you may want to see if there is a community land trust in your area.
Low Income Housing Tax Credit: If you rent, there may be low-income housing available. Many landlords have to provide a certain number of low-income rental units because they benefit from the federal Low Income Housing Tax Credit.
Policy Changes: There have been successful policy efforts on both neighborhood and government levels. To learn more about policy strategies and how community organizations have dealt with gentrification, see the Texas Anti-Displacement Toolkit from the University of Texas School of Law.
A homestead exemption can lower your property tax bill by a lot. It can also help make sure your property taxes do not rise too much in the future.
Go here for information on how to apply for a homestead exemption. Applications are free and you only have to qualify once.
See also the Texas Comptroller's articles on additional homestead exemptions:
Taxpayers with a senior, general disability, or veteran disability homestead exemption are allowed to defer the payment of taxes on their homes until they die or no longer live in the home. There is a five percent annual interest fee on deferred taxes, compared to 24 percent on unpaid taxes that are not deferred. This interest is deferred until the home is sold or the owner dies.
When the owner dies, a spouse can continue benefitting from the deferral if the spouse is 55 or older or otherwise qualifies for an exemption.
If the homeowner’s children or other heirs live in the home upon the homeowner’s death, the deferral transfers to the heirs if they are also 65 or older, disabled, or otherwise qualify for the deferral. This means that qualified heirs do not have to pay back taxes until they die or no longer live in the home.
Tax foreclosure warning: Once the deferral ends, the person, spouse, or heir must pay all accrued taxes, penalty, and interest within 180 days. On the 181st day, the entire amount becomes delinquent and the government may foreclose.
Mortgage foreclosure warning: Those who have an outstanding mortgage should check with their mortgage company to make certain the deferral does not violate terms of the deed of trust. If the home has a mortgage, a deferral may allow the mortgage company to foreclose immediately.
To avoid foreclosure and unexpected payments, it is important that you talk to an attorney or a tax professional before applying for a deferral.
Those aged 65 or older can volunteer for the city or county and get a property tax credit for hours worked. The credit amount is the same as the federal minimum wage ($7.25 per hour).
To get this tax credit, you will need to contact the city or county tax office. Volunteering for the city can help with city taxes, and volunteering for the county can help with county taxes. State law requires you to form a contract that says:
- They type of work you will do,
- Where you will do it,
- How much work you will do, and
- When you will do the work.
See the Texas Tax Code Sec. 31.035 for more details.
One way to raise your income may be to become a landlord yourself. Austin and San Antonio have even made it easier for property owners to build smaller rental units on their property. These units are called "accessory dwelling units."
See here for Austin's rules on building accessory dwelling units. See also The Alley Flat Initiative, a program that helps guide Austin property owners through the process of building accessory dwelling units.
Note that any construction or rental activity must follow all laws.
The Low Income Housing Tax Credit gives landlords a tax break for providing low-income housing to qualified tenants.
You can go to the Housing and Urban Development LIHTC database to see if your landlord gets the Low Income Housing Tax Credit. If your landlord is listed in the database, try asking if there are any low-income rental units available and how you may apply.
The Univeristy of Texas Lawschool has put together this publication on best practices to address gentrification. It includes policy strategies, tips for community organizers, and other options for those facing hardship due to gentrification.