The Property Tax Surprise with New Construction in Texas: What Every Buyer Needs to Know

by Aura Pou

If You're Buying a New Home in Texas, There's a Hidden Cost You Need to Know About

New construction is exciting—modern finishes, builder warranties, and that fresh-home feeling. But many Texas buyers get hit with a property tax surprise in year two or three, and it can make your monthly mortgage payment jump overnight.

If you're buying in popular Houston suburbs like Sugar Land, Richmond, Katy, Missouri City, or Fulshear, understanding how Texas property tax assessments work is critical to protecting your budget and peace of mind.

Why Your Property Taxes Start Out Low (But Won’t Stay That Way)

In Texas, when you purchase a newly built home, your first tax bill is often based on the value of the land only—not the house.

This is called the unimproved lot value, and it’s what gets recorded when the appraisal district hasn’t yet updated your home’s assessment. So in that first year, your property taxes—and monthly mortgage payment if you escrow taxes—might feel refreshingly low.

But after the county catches up?
You’ll get a new property value that includes the structure, and taxes may rise significantly.

👉 Learn how county appraisal districts work

When Will Your Taxes Go Up?

Usually, the property is reassessed within 12–24 months of closing, though it can sometimes take longer depending on when construction is completed and reported.

Here’s a simple breakdown:

Year 1: Taxes often reflect land value only.
Year 2: The county reassesses the improved property value (land + house).
Year 3: Your mortgage servicer adjusts your escrow based on the new tax bill.

If your mortgage payment includes taxes in escrow, you’ll likely receive an escrow shortage notice with a higher monthly note.

👉 Here’s how escrow accounts work

Example: How a Mortgage Payment Can Change

Let’s say your initial payment is $2,200/month.
Your year-one taxes are based on a $70,000 lot value.
After reassessment, your total property value jumps to $420,000.

That could mean a tax increase of $4,000–$6,000 annually, depending on your local tax rate—adding $300–$500/monthto your mortgage.

Ouch. And this is very common in fast-growing areas of Fort Bend County and Greater Houston.

👉 Search your home’s tax records – Fort Bend County Appraisal District

4 Ways to Protect Yourself as a New Construction Buyer

I’ve walked dozens of buyers through this process. Here’s what I always recommend:

💰 1. Set Aside a Monthly Buffer

Start saving an extra $200–$300/month in a dedicated savings account. If you don’t need it for taxes, it’s still a great cushion to have.

📊 2. Request a Full Tax Estimate (Not Just Lot Value)

Ask your lender or agent to estimate taxes based on the fully improved home value. Even better? Look up a few similar, recently built homes in your community and check their current tax bills via the county appraisal district website.

📉 3. Know Your Monthly Budget Ceiling

Don’t just rely on your lender’s preapproval. Instead, ask yourself:
👉 What’s the max I’m truly comfortable spending every month—even if taxes go up?
Build your home shopping plan around that number.

📝 4. Be Prepared to Protest Your Appraisal

In Texas, you can appeal your property’s assessed value if it seems too high. Protests usually take place between April and May each year. Save your closing documents, photos, or comps to help your case.

👉 How to protest your property tax assessment – Fort Bend CAD

Final Thoughts: A Little Planning = A Lot Less Stress

Texas doesn’t have a state income tax, but we do have some of the highest property taxes in the country—especially in new communities with active MUDs or PIDs.

The key is not to panic—but to plan. Buying new construction is still a smart move for many buyers, but you want to walk in with your eyes wide open.

If you're thinking about building or buying a new home in the Houston suburbs, I'm here to help you make a confident, informed decision—from your monthly mortgage planning to your tax projections and everything in between.