Why do property taxes double in year two on a new construction home in Texas?

Texas appraisal districts value property based on what physically exists on January 1. If the home was still under construction that day, the district taxes the lot and partial structure rather than a finished house, so the first bill is artificially low. The following January the completed home is valued at full market value for the first time, and the bill catches up all at once. Year one was undercharged, not year two overcharged.

Does the Texas homestead cap protect you from the first reassessment on a new build?

No. The 10 percent homestead cap only begins limiting increases in the second year you hold the exemption. The first year you qualify, the appraisal district is setting your baseline and there is no prior capped value for it to limit. On a new build that baseline is set on the finished home at exactly the moment the value jumps. File the exemption as soon as you are eligible anyway, because it protects every year after that.

Why does my mortgage payment jump when property taxes are reassessed?

Most buyers escrow taxes through their lender, and on a new build the lender sizes that escrow using the low year one tax figure that exists at closing. When the reassessed bill arrives, the escrow account is short and the monthly amount is too small going forward. The servicer spreads the shortage over 12 months and raises the monthly escrow to the new level, which is why the payment can rise by several hundred dollars. Principal and interest never changed.

How do you estimate the real property tax bill on a New Braunfels new build?

Look the address or community up with the Comal County Appraisal District and add up every taxing entity that applies, including county, school district, and any MUD or water improvement district. Multiply that combined rate per $100 of value by your purchase price rather than by the first year assessed value. In master planned communities such as Veramendi the special district layer pushes the effective rate meaningfully above older neighborhoods, and in Veramendi the rate also varies by sub district.

New Build Property Taxes in New Braunfels: Why Year Two Doubles

Drake Carter

Sep 2

8 min read

Why do property taxes double in year two on a new build in New Braunfels?

Because year one was never the real number. Texas appraisal districts value your property based on what physically exists on January 1. If your home was still under construction that day, the district taxes the lot and partial structure, not a finished house. The following January the completed home gets valued at full market value for the first time, and the bill catches up all at once. In Veramendi, Mayfair, and other master planned communities, a MUD or water improvement district rate is layered on top of the county and school rates, which multiplies the jump. You were not overcharged in year two. You were undercharged in year one.

By Drake and Michelle Carter | August 27, 2026

You close on a brand new home. The first full year's property tax bill arrives and it feels almost too good to be true. A few thousand dollars, less than you budgeted. You figure you got a deal.

Then year two shows up. Same house, same square footage, same street, and the bill has doubled.

That is not a billing error, and it is not your appraisal district being aggressive. It is built into how Texas assesses new construction, and almost nobody selling you the house is going to walk you through it before you sign.

We're Drake and Michelle Carter with The Carter Team at Keller Williams Heritage. New Braunfels has a lot of new construction right now, and some of the most popular neighborhoods in Comal and Guadalupe County are new build communities. We have this conversation with clients constantly, usually before they write the offer, because the goal is no surprises after you get the keys.

Here's what's actually happening, what it does to your monthly mortgage payment, and the three steps that turn it into a line item you planned for instead of a surprise you absorbed.

January 1 is the date that decides everything

In Texas, the appraisal district sets your home's taxable value based on what exists on the property as of January 1 each year. That single date drives the whole thing. Drake explains the assessment date at 1:24.

Now think about a new build timeline. You sign a contract. The slab goes down. Framing goes up. The home finishes over a span of months.

If your house is not complete on January 1, the district cannot tax a home that does not fully exist yet. So for that first assessment they often value the lot plus whatever construction is in progress. Not a finished house.

That is why the first bill feels light. You're essentially paying taxes on dirt and a partial structure, not the four bedroom home you're living in.

Then January 1 of the next year arrives. The house is finished. The district values the full property, land plus completed home, at market value. That's your first real reassessment, and it's the moment the bill catches up to reality.

So the framing matters here. People say their taxes doubled. What actually happened is that year one was a placeholder and year two is the first time the home was taxed as a finished product.

The homestead cap will not save you from this one

Plenty of buyers have heard about the Texas homestead cap and assume it protects them from exactly this kind of jump. It's worth understanding why it doesn't, at least not in year two.

When you file for a homestead exemption on your primary residence, Texas limits how much your taxable value can rise to 10 percent per year. That's real protection and it's worth real money over time.

But here's the part that matters: that cap only starts working in the second year you hold the exemption. The first year you qualify, there's no cap yet for it to limit. The appraisal district is setting your baseline. And on a new build, that baseline gets set on a finished home at exactly the moment the value jumps.

The cap doesn't shield you from the initial reassessment. It starts protecting you afterward, limiting future increases on top of that higher number. We walk through the cap timing at 2:34.

None of that is a reason to skip the paperwork. File your homestead exemption the moment you're eligible. If you don't file at all, you get none of that protection going forward, ever. Just don't expect it to soften the first big reassessment.

In Veramendi and Mayfair, there's a second layer on the bill

Your tax bill in a master planned community is not just county and school taxes.

These communities need infrastructure before the homes go up. Water, wastewater, drainage, roads, all of it. To pay for that, Texas uses special districts. You'll hear them called a MUD, a municipal utility district, or in Veramendi's case a water improvement district. The district issues bonds to fund the infrastructure, then levies a tax to pay those bonds back. If you want the full mechanics, our explainer on MUD taxes in New Braunfels covers how the rate is set and how it changes over time.

Veramendi sits in New Braunfels' extraterritorial jurisdiction, the ETJ, which means it doesn't pay a city tax. Instead a water improvement district collects a comparable rate. And Veramendi is large enough that it's divided into multiple sub districts, so the exact rate varies depending on which part of the community your home sits in.

Here's why that compounds the year two jump. The special district rate applies to your taxable value the same way every other rate does. In year one, when the home is valued low, the district tax is small. In year two, when the full home value lands, that same district rate is applied to a much bigger number.

Stack it all together and you're looking at the Comal County rate, the school district rate, which in this area runs north of $1 per $100 of value on its own, plus the water district. That combined rate is what gets multiplied by your new higher value. Drake breaks down the stacked rates at 4:40.

We're not going to quote you one magic number, because it genuinely depends on your sub district and the current year's adopted rates. What we will do is show you how to get the exact figure, which is coming up in a minute.

Shopping new construction in Veramendi, Mayfair, or anywhere in the Hill Country? We run the real tax math with clients before they commit, not after. Schedule a free meeting with The Carter Team and we'll pull the actual combined rate for the community you're considering.

The escrow shortage is what you actually feel

This is where a tax jump becomes a payment problem, and it's the part that catches people off guard.

Most buyers escrow taxes and insurance through their lender. Your monthly mortgage payment includes a slice the servicer sets aside to pay the tax bill when it comes due. Simple enough.

But on a new build, the lender sets up that escrow using the only tax figure that exists at closing, which is the low, land heavy year one number. So all year you're paying a monthly amount sized to a small tax bill.

Then year two hits. The home gets reassessed at full value and the real bill is much larger than what the escrow account has been collecting.

Two things happen at once:

Your escrow account is short. It didn't collect enough over the year to cover the bigger bill.
Your monthly payment has to rise to cover the new annual amount going forward.

So your servicer does both. They spread the shortage over the next 12 months, and they increase your monthly escrow to the new level. That's why people see their mortgage payment jump by several hundred dollars seemingly overnight. Principal and interest never changed. The tax escrow caught up to a bill that doubled. We explain the escrow mechanics at 5:26.

There's a way to soften almost all of it. Many Texas lenders let you choose at closing whether to set your initial escrow on the unimproved value or the estimated completed value. The low option feels great for a year, then it bites. Set your escrow closer to the estimated finished value from the start and your year two adjustment is far smaller, sometimes barely noticeable.

Ask your lender about that before you close. It's one of the most useful questions you can ask on a new build.

Three steps to budget for it instead of getting blindsided

Step one: never budget off the first year's tax bill. Treat that number as temporary. Assume the real number is the full home value multiplied by the combined tax rate for your specific location.

Step two: get the actual combined rate. Go to the Comal County Appraisal District, look up the address or the community, and add up every taxing entity that applies. County, school, water district, and any other extras. That total rate per $100 of value, multiplied by your purchase price, gets you very close to your true annual tax. For a lot of homes in these communities that effective rate lands meaningfully higher than older neighborhoods, precisely because of the special district layer. Buyers coming from out of state should run this alongside our California to New Braunfels property tax math, since the no income tax tradeoff looks different once the district rate is in the picture.

Step three: set your escrow on the finished value and file your homestead exemption the moment you're eligible. That means as soon as you get your license changed to the new address, file the exemption. Those two moves together smooth out the year two adjustment and lock in your long term cap protection.

Do all three and the year two reassessment stops being a shock. It becomes a number you already saw coming, already budgeted for, and already handled. That's the entire difference.

New construction is still a great choice. It just has a tax timeline.

None of this means new builds are a bad move. They're not. There are excellent communities here and for a lot of families a new build is exactly the right call. If you're weighing two of the big ones, our Veramendi versus Mayfair comparison walks through how they actually differ on lifestyle, price, and location.

It just means new construction comes with a tax timeline you have to understand going in, so you're budgeting for year two and not just year one. The same logic applies across the region, including the newer communities covered in our Canyon Lake new construction buyer's guide.

This is exactly the kind of thing we walk clients through before they ever write an offer, because the goal is no surprises after you get the keys. If you're shopping new construction in New Braunfels or anywhere in the Hill Country and you want a realtor who will actually run these numbers with you before you commit, get on our calendar. We'll pull the combined rate for your specific sub district and show you what year two really looks like.

About Drake and Michelle Carter Drake and Michelle Carter are licensed Texas real estate agents and the founders of The Carter Team at Keller Williams Heritage in New Braunfels. They specialize in helping buyers and sellers navigate the South and Central Texas Hill Country, serving New Braunfels, San Marcos, Canyon Lake, Seguin, Spring Branch, Bulverde, and North San Antonio. Follow along on their YouTube channel for honest, no fluff advice on living and buying in the Hill Country.