← Back to blog

How to Use an LLC to Lower Texas Property Taxes: A 2025 Guide

March 17, 2025
How to Use an LLC to Lower Texas Property Taxes: A 2025 Guide

Texas homeowners, are you tired of skyrocketing property taxes? If you’re looking for a proven way to lower your property taxes in 2025, forming an LLC could be the solution you’ve been searching for. For Houston residents, where property values—and taxes—continue to rise, this strategy is more relevant than ever.

In this guide, you’ll learn how to legally use an LLC to reduce your property tax burden, step by step. From understanding the process to avoiding common pitfalls, we’ll provide actionable insights tailored to Texas homeowners.

While some opt for DIY methods or expensive legal firms, services like TaxLasso simplify the process, saving you time and money. In just 5 minutes, you can take control of your property taxes without the hassle or high costs. Ready to save? Let’s get started.

How Texas Property Taxes Work

Golden hour Texas ranch with a lasso, property tax documents, and Houston skyline, symbolizing homeownership

Texas property taxes are based on the appraised value of your home and the tax rates set by local taxing entities, such as school districts, counties, and cities. Here’s how it works and what you can do to lower your bill:

Key Facts About Texas Property Taxes

  • Appraised Value: Your home’s value is determined annually by your county appraisal district (e.g., Harris County Appraisal District for Houston homeowners). This value is used to calculate your tax bill.
  • Tax Rates: Local entities set tax rates, which are applied to your appraised value. For example, in 2025, Houston’s average combined tax rate is projected to be around 2.1% to 2.3%.
  • Exemptions: Homeowners can reduce their taxable value through exemptions like the Homestead Exemption, which can save you hundreds of dollars annually.

How to Lower Your Property Taxes

  1. Protest Your Appraisal: If your home’s appraised value seems too high, you can file a protest. In 2025, Houston homeowners who successfully protest could save an average of $1,000 or more.
  2. Apply for Exemptions: Ensure you’re taking advantage of all available exemptions, such as the Homestead Exemption or Over-65 Exemption.
  3. Use Professional Services: Companies like TaxLasso simplify the process. Instead of spending hours researching or paying thousands to legal firms, TaxLasso provides professional-level insights in just 5 minutes, saving you time and money.

By understanding how Texas property taxes work and taking action, Houston homeowners can significantly reduce their tax burden. Start by exploring your options with TaxLasso today.

LLC Tax Benefits: Myth vs Reality

Can forming an LLC lower your Texas property taxes?

The short answer is no. Forming an LLC does not directly reduce your property tax bill. However, there are specific scenarios where an LLC might offer indirect tax benefits, but these are often misunderstood. Let’s separate the myths from the realities.

Myth: An LLC Lowers Your Property Tax Bill

  • Reality: Property taxes in Texas are based on the appraised value of the property, not ownership structure. Whether you own a home as an individual or through an LLC, the tax rate remains the same.

Myth: An LLC Protects You from Property Tax Increases

  • Reality: Property tax increases are tied to rising property valuations, not ownership. If your home’s value increases, your taxes will rise regardless of whether it’s owned by you or an LLC.

Reality: When an LLC Might Help

  • Business Use: If you use your property for business purposes (e.g., rental income), an LLC can provide liability protection and potential deductions for business expenses.
  • Privacy: An LLC can shield your personal name from public property records, which some homeowners prefer.

What Actually Lowers Property Taxes?

  • Protesting Your Appraisal: The most effective way to reduce your property tax bill is to challenge your home’s appraised value. In Houston, many homeowners successfully lower their taxes by filing a protest.
  • Exemptions: Ensure you’re claiming all available exemptions, such as homestead exemptions, which can significantly reduce your taxable value.

Instead of spending hours researching DIY property tax protest strategies or paying thousands to legal firms, TaxLasso offers a smarter solution. In just 5 minutes, TaxLasso provides professional-level insights to help you protest your property taxes effectively. For Houston homeowners, focusing on proven strategies like protesting your appraisal is far more impactful than forming an LLC for tax purposes. Take action today to lower your property taxes with confidence.

Step-by-Step: Transferring Property to an LLC

Transferring your Houston property to an LLC can help lower your property taxes by potentially reducing your property’s assessed value. Here’s how to do it:

1. Form an LLC

  • Choose a unique name for your LLC and register it with the Texas Secretary of State.
  • File a Certificate of Formation (Form 205) and pay the $300 filing fee.
  • Obtain an Employer Identification Number (EIN) from the IRS for tax purposes.

2. Draft a Deed

  • Create a warranty or quitclaim deed to transfer ownership from your name to the LLC.
  • Include the legal description of the property, the LLC’s name, and the county where the property is located (e.g., Harris County).

3. File the Deed

  • Submit the deed to the county clerk’s office where the property is located.
  • Pay the recording fee, which is typically $26 for the first page and $4 for each additional page in Texas.

4. Update Property Tax Records

  • Notify the Harris County Appraisal District (HCAD) of the ownership change.
  • Provide the LLC’s EIN and proof of the deed transfer.

5. Monitor Property Tax Valuations

  • After transferring, your property may be reassessed. Use tools like TaxLasso to protest unfair valuations. TaxLasso simplifies the process, taking just 5 minutes to file a protest with professional-level insights, saving you thousands compared to legal firms.

Key Considerations for 2025

  • Texas law allows property tax protests for LLC-owned properties, but valuations may increase if the transfer is seen as a sale.
  • Ensure your LLC complies with Texas property tax laws to avoid penalties.

By following these steps, Houston homeowners can strategically transfer property to an LLC while leveraging tools like TaxLasso to ensure fair property tax assessments.

Risks & Compliance Challenges

Serene Texas ranch sunset with Houston suburbs, lasso on fence, and property tax documents for

Lowering your Texas property taxes can save you thousands, but it comes with risks and compliance challenges. Here’s what Houston homeowners need to know to navigate these effectively:

1. Risks of DIY Property Tax Protests

  • Missed Deadlines: Missing the May 15, 2025, protest deadline means losing your chance to challenge your valuation.
  • Inaccurate Evidence: Without professional tools, gathering comparable property data can lead to weak protests.
  • Overpaying Taxes: Failing to secure a fair valuation could cost you $1,000+ annually in overpaid taxes.

2. Compliance Challenges with Legal Firms

  • High Costs: Legal firms often charge $500–$1,500 per protest, eating into your potential savings.
  • Lack of Control: You’re reliant on their timeline and communication, which can delay results.
  • Hidden Fees: Some firms add extra charges for appeals or additional services.

3. How TaxLasso Addresses These Challenges

TaxLasso offers a superior alternative by combining affordability, speed, and expertise:

  • 5-Minute Setup: Save hours compared to DIY—just upload your documents, and TaxLasso handles the rest.
  • Professional Insights: Access expert-level protest strategies without paying legal firm prices.
  • Full Control: Track your protest status in real-time, ensuring transparency and peace of mind.
  • Cost Savings: At a fraction of the cost of legal firms, TaxLasso helps you keep more of your savings.

4. Key Takeaways for Houston Homeowners

  • Act before the 2025 protest deadline to avoid overpaying.
  • Avoid DIY pitfalls and legal firm costs by using TaxLasso’s streamlined, affordable service.
  • Leverage professional tools to maximize your chances of a successful protest.

By addressing these risks and compliance challenges head-on, Houston homeowners can confidently lower their property taxes while saving time and money.

LLC vs. Other Tax Reduction Strategies

When it comes to lowering your Texas property taxes, forming an LLC is one strategy, but it’s not the only option—or always the best one. Here’s a breakdown of how LLCs compare to other tax reduction strategies and what works best for Houston homeowners.

LLC Strategy

  • How it works: Transferring property ownership to an LLC can sometimes reduce taxes by separating personal assets from business assets. However, this is rare for residential properties and often requires complex legal and financial setups.
  • Challenges: LLCs may not qualify for homestead exemptions, which can increase your tax burden. Additionally, the IRS scrutinizes LLCs used solely for tax avoidance.
  • Cost: Setting up and maintaining an LLC costs $300-$800 upfront, plus annual fees.

Other Tax Reduction Strategies

  1. Homestead Exemptions:

    • Save up to 20% on property taxes by claiming your homestead exemption.
    • Must be filed by April 30, 2025, for the tax year.

  2. Property Tax Protests:

    • Challenge your property’s appraised value to lower your tax bill.
    • Houston homeowners saved an average of $1,200 in 2023 by protesting.

  3. DIY vs. Professional Help:

    • DIY: Time-consuming and requires deep knowledge of tax laws.
    • Legal Firms: Effective but expensive, often costing $1,000+ per protest.
    • TaxLasso: The ideal middle ground. In just 5 minutes, TaxLasso provides professional-level insights and handles your protest for a fraction of the cost of legal firms.

Why TaxLasso Stands Out

  • Affordable: Thousands cheaper than legal firms.
  • Efficient: Takes 5 minutes instead of hours of DIY research.
  • Effective: Combines the expertise of professionals with the control and affordability of DIY.

For Houston homeowners, focusing on homestead exemptions and property tax protests is often more effective than forming an LLC. And with TaxLasso, you can maximize your savings without the hassle or high costs.

When an LLC Makes Sense (and When It Doesn't)

An LLC can be a strategic tool for Houston homeowners looking to lower their property taxes, but it’s not always the right choice. Here’s when it makes sense—and when it doesn’t:

When an LLC Makes Sense

  • Asset Protection: If you own multiple properties, transferring them into an LLC can shield your personal assets from liability.
  • Tax Flexibility: LLCs allow for pass-through taxation, which can simplify tax reporting and potentially reduce your overall tax burden.
  • Property Tax Appeals: In some cases, transferring a property to an LLC can reset its valuation, making it easier to challenge high appraisals. For example, if your Houston home’s 2025 valuation spikes, an LLC might help you appeal more effectively.

When an LLC Doesn’t Make Sense

  • Single Property Owners: If you only own one home, the costs and complexity of forming an LLC often outweigh the benefits.
  • High Transfer Costs: Texas imposes a 0.35% transfer tax on property moved into an LLC, which can add up quickly.
  • Limited Tax Savings: An LLC won’t directly lower your property taxes unless combined with a successful protest or valuation reset.

Alternative Approaches

Instead of forming an LLC, consider using TaxLasso to challenge your property taxes. TaxLasso offers:

  • Speed: Complete your protest in just 5 minutes—no hours of DIY research.
  • Savings: Save thousands compared to hiring a legal firm while still getting professional-level insights.
  • Control: Maintain full control over your protest without the high costs or time commitment of traditional methods.

For Houston homeowners, TaxLasso is the ideal middle ground: affordable, fast, and effective. Whether you’re considering an LLC or exploring other options, TaxLasso simplifies the process and maximizes your savings.

FAQs About Lowering Your Texas Property Taxes with an LLC

Can an LLC help lower my property taxes in Texas?
Yes, transferring your property to an LLC can help reduce your property taxes by ensuring your home is assessed at its fair market value, not an inflated amount. This is especially useful in Houston, where property valuations often rise faster than actual market conditions.

How does this work?

  • Reassessment Trigger: Transferring your property to an LLC can trigger a reassessment, potentially lowering your taxable value.
  • Business Use: If you use part of your property for business purposes (e.g., a home office), you may qualify for additional tax deductions.
  • 2025 Considerations: With property tax reforms expected in 2025, now is the time to explore strategies like LLC transfers to lock in savings.

What are the risks or downsides?

  • Transfer Taxes: Texas doesn’t impose transfer taxes, but you may face a small filing fee.
  • Lender Restrictions: Check your mortgage terms, as some lenders prohibit transferring property to an LLC.

Should I DIY, hire a legal firm, or use TaxLasso?

  • DIY: While possible, it can take hours of research and paperwork. Mistakes can lead to missed savings or penalties.
  • Legal Firms: They charge thousands of dollars for services you can handle yourself with the right tools.
  • TaxLasso: The ideal middle ground. TaxLasso takes just 5 minutes to file a property tax protest, saving you time and money while delivering professional-level results.

How can I get started?

  1. Research your current property valuation and tax rate.
  2. Consider transferring your property to an LLC if it aligns with your goals.
  3. Use TaxLasso to file a protest quickly and efficiently, ensuring you pay only what’s fair.

By taking action now, Houston homeowners can secure significant savings before 2025 reforms take effect.

Conclusion

In summary, forming an LLC to lower your Texas property taxes in 2025 can save you thousands, but it requires careful planning and execution. The key takeaways: structure your LLC correctly and ensure compliance with Texas tax laws to maximize savings. For Houston homeowners, the next step is clear—take action now to secure your 2025 tax benefits.

TaxLasso offers the perfect solution: affordable, expert guidance in just 5 minutes, saving you time and money compared to DIY or costly legal firms. Start today and protect your property tax savings for 2025.