As a rural property home buyer, you should be aware that there could be the potential of annexation and with it increased taxes and regulation. Where you live is very important in terms of the taxes you pay, the schools, land use and the services you receive.
You should independently verify the city limits, ETJ (Extra Territorial Jurisdiction), school districts, building permit process and the provided services.
This is a video discussing Annexation and how some people felt about it in Frisco, Tx.
Taking the City of Van Alstyne for example, buying or having a $200K home annexed into the city limits will cost you an additional $1,225 per year or $102 more per month due to the .612639 city tax rate. Of course there are city services that you will receive so you have to weigh the importance of this and the particular home you are considering.
Other Grayson County cities in the area have similar rates. This is just to show how living in an unincorporated area affects your mortgage payment positively and why you should be concerned about any possible annexation.
In the big scheme of things, annexation doesn’t happen very often but when you have high growth cities consider expansion of the tax base. Be aware of the ETJ as property in it will be the first subject to annexation and can affect your current use.
Basically, it gives cities the right to exercise some control over land adjacent to the city limits from a minimum of one-half mile up to five miles away depending upon the city’s population. At least they don’t have taxing authority in the ETJ. You might be interested in the Texas Landowners Bill of Rights.
Most home buyers only look at the purchase price and interest rate without considering how the tax rate or how any future annexation could affect their mortgage payments.
This is an example I did showing how the tax rate affects the Collin County cities of McKinney, Frisco, Little Elm and Prosper.
When considering your new home’s location, work with a knowledgeable Realtor and learn how future growth and tax rates can have an effect on your monthly payment. For more general information for buyers check my past articles or request a copy of TAR 1506, General Information And Notice To A Buyer.
