Garza Central Appraisal District

Low Income Housing Cap Rate Information

According to House Bill 3546, the Appraisal District shall give Public Notice, including posting on the District’s website, the capitalization rate to be used that year to appraise property under this section.  Pursuant to Section 11.1825(r), Texas Property Tax Code, the Garza CAD gives public notice of the capitalization rate to be used for the 2023 tax year to value properties under this section.  The Chief Appraiser must appraise these properties using the income method; consider the restrictions on who may rent the property and the rent rate.  Also, Low Income Housing contains a high-risk cash flow, property upkeep materials, maintenance, security and taxes.  These can have an effect on the valuation of the property.  An overall capitalization rate between 6.25% and 10.25% will be used to appraise these properties.  Properties can be reviewed on an individual basis and other adjustments will be made when necessary according to information provided to the Garza CAD and Chief Appraiser.  Most cap rates of high-risk real estate typically exceed 7%.