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INFORMAL REPORT TO CITY COUNCIL MEMBERS
r To the Mayor and Members of the City Council
X SUBJECT: Analysis of Property Tax Exemption for
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Citizens 65 Years or Older
No. 8763
Date: April 18, 2006
Page 1 of 2
Council Member Carter Burdette recently asked for a comparison of the impact of the $40,000
property tax exemption for Fort Worth citizens 65 years or older from the year it was implemented
until now.
In September 1984, the Fort Worth City Council passed an ordinance (9206) which increased the
exemption for citizens of Fort Worth 65 or older to $40,000 from $23,091. At the time, the tax rate
was $.6765/$100 of appraised value, the General Residence Homestead exemption was 15 %, and
the average home value of a Fort Worth citizen 65 or older was $46,470. Currently, the tax rate is
$.865/$100 of assessed value, the General Residence Homestead exemption is 20 %, and the
average home value of a Fort Worth citizen 65 or older is $99,786. In order to qualify for this
exemption, the citizen must first qualify for the General Residence Homestead exemption.
The following analysis (which includes the General Residence Homestead exemption) shows that
vV-7 he passage of the ordinance in 1984, the average citizen 65 or older paid no property tax. In
t_ issuing years, as property values and the tax rate increased, the amount of the tax bill grew
from $0 to the current $345.52.
Exemption Amount $ 40,000.00
Average Value of
Over 65 Home $ 46,470.02
Tax Rate $.6765/100
Average Tax Bill
For Citizen Over 65 $ 0
It is important to recognize the impact of exemptions currently offered by the City. In Fort Worth, all
owner- occupied homes are allowed a 20% reduction in the assessed value (the Homestead
exemption). In addition, the Over 65 Exemption allows an additional $40,060 reduction of the
assessed value. In the current year, the average home that qualified for the Over 65 Exemption
was valued by TAD at $99,786. After the 20% Homestead exemption and the $40,000 Over 65
Exemption, the average taxable value was $39,829_ This taxable value leads to an average tax
payment of $345 this year compared to the average property tax bill for all residents who qualify
only for the Homestead exemption of $710. Total revenue lost to this exemption in the current fiscal
year is $7.9 million.
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ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS
TE
To the Mayor and Members of the City Council
" SUBJECT: Analysis of Property Tax Exemption for
,lots
Citizens 65 Years or Older
No. 8763
Date: April 18, 2006
Page 2 of 2
As an example, if the exemption amount were increased by 25% to $50,000, revenue would be
adversely affected as shown in the table below. Budgeted property tax revenue due to valuation
increased by an estimated 8.77% this fiscal year. If it can be assumed that the 8.77% growth can
be applied to these categories of homes and if the exemption is raised, then the City will fail to
realize $2,282,043 in new revenue in FY2006 -07. This analysis assumes that in any given year,
the additional properties that qualify for the Over 65 status approximately equals the number of
properties that are no longer eligible (i.e., gains equal losses); therefore, the number of homes is
held constant. It also assumes no change to the tax rate. It should be noted that utilizing these
assumptions provides the most conservative projections.
Revenue:
Current Exemption
Loss due to change
5 -Year
FY05 -06 FY06 -07 FY07 -08 FY08 -09 FY09 -10 FY10 -11 Loss Total
$8,450,416 $9,191,518 $9,997,614 $10,874,404 $11,828,090 $12,865,413
$2,282,043 $2,282,043 $2,282,043 $2,282,043 $2,282,043 $11,410,215
Based on this information, it is recommended that no change be made to this exemption at this
time.
Charles R. Boswell
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS