Now That Texas's 20% Appraisal Cap on My Craig Ranch or Stonebridge Ranch Rental Is Expiring, Should I Sell Before My 2027 Tax Bill Spikes?

Now that Texas's 20% appraisal cap on your Craig Ranch or Stonebridge Ranch rental property is expiring, should you sell before your 2027 tax bill spikes? Not necessarily - but every investor holding non-homestead property in McKinney or Collin County should be running the numbers now, before that temporary cap sunsets.

In 2023, Texas lawmakers created a temporary circuit-breaker that caps annual appraisal increases at 20% for non-homestead properties, including single-family rentals, valued at $5 million or less. That protection applies to the 2024, 2025, and 2026 tax years - and as it currently stands, it's scheduled to expire after that, meaning your 2027 appraisal could reset closer to full market value with no cushion at all. If your Craig Ranch townhome or Stonebridge Ranch rental has appreciated well beyond that 20% cumulative cap since you bought it, a catch-up appraisal could mean a real jump in your property tax bill.

That doesn't mean every landlord in McKinney should rush to list. Whether selling now makes more sense than riding out an uncapped reappraisal depends on your rent roll, your cost basis, how long you plan to hold, and what the Texas Legislature ultimately does with this cap when it reconvenes. This post walks through what's actually expiring, how it could affect your holding costs, and the questions worth answering before you decide whether to sell or hold a rental property in Collin County.

What Is the 20% Non-Homestead Appraisal Cap, and Why Is It Expiring?

Texas has long capped annual appraisal increases at 10% for owner-occupied homesteads. Rental properties and other non-homestead property never had that protection until 2023, when the legislature passed a temporary 20% cap as a pilot program for properties valued at $5 million or less. It was written to apply to the 2024, 2025, and 2026 tax years only, with a built-in sunset unless lawmakers act again to extend it.

That's the key thing to understand: this was never a permanent fix. It was a bridge, and the bridge is scheduled to end. Unless the legislature renews or replaces it during its next session, your 2027 appraisal notice from the Collin Central Appraisal District could reflect a much larger jump than what you've seen the last few years, especially if your rental's market value has climbed faster than the capped assessed value.

How a 2027 Reset Could Hit Your Craig Ranch or Stonebridge Ranch Rental

Think about the gap that may have built up. If your rental's true market value rose 30-40% since 2023 but the appraised value for tax purposes was held to 20% cumulative growth under the cap, there's a difference sitting there waiting to be captured. When the cap lifts, the appraisal district isn't required to phase that gap in - it can move straight to market value in one year.

For owners of investment property in Craig Ranch or Stonebridge Ranch, where home values have generally trended upward, that gap could be meaningful. A larger appraised value means a larger tax bill, which directly affects your net rental yield - especially if rents in your part of McKinney haven't kept pace with the tax increase.

Should You Sell Now or Hold Through the Uncapped Reappraisal?

There's no universal answer here, but a few factors should drive your decision:

• How far below market your capped appraisal currently sits. A bigger gap means a bigger potential jump in 2027.
• Your rent-to-expense margin. If your rental is already running thin after mortgage, insurance, and maintenance, a higher tax bill could push it into negative cash flow.
• Your basis and expected capital gains exposure. Selling now versus later changes your tax picture on the sale itself, separate from the appraisal cap issue.
• Demand for your property type right now. Rentals in walkable, amenity-rich pockets of Craig Ranch have been moving quickly on the resale side too, which can work in your favor if you decide to list.
• Legislative uncertainty. The cap could be extended, modified, or allowed to expire outright - nobody can promise which way that goes.

If you're financing a Collin County rental or considering acquiring another one before rates or appraisal rules shift again, it's also worth understanding how lenders view rental income and qualification today - our post on DSCR loans for Craig Ranch and Trinity Falls rentals covers that in more detail.

What This Means Beyond McKinney - Collin County Investors Take Note

This isn't unique to Craig Ranch or Stonebridge Ranch. Any non-homestead property across Collin County, from Allen to Frisco to McKinney proper, is subject to the same sunset timeline. If you own multiple rentals spread across the county, it's worth pulling appraisal history on each one to see how much of a gap has built up under the cap before deciding whether a coordinated sell-off or a hold-and-refinance strategy makes more sense.

Buyer demand for rental-friendly product in areas like Craig Ranch has stayed strong, partly because institutional buyers have faced new restrictions recently - a shift we covered in our post on institutional investor competition in Craig Ranch and Stonebridge Ranch. That demand could work in your favor if you decide selling ahead of a 2027 tax reset is the right move.

For the most current appraisal figures and cap status on your specific property, the Collin Central Appraisal District is the authoritative source to check before making a final decision.

Frequently Asked Questions

Will the 20% appraisal cap on rental properties definitely expire in 2027?

As written, yes - the cap was passed as a temporary measure covering the 2024-2026 tax years only. It would take new legislative action to extend or replace it, and that hasn't happened yet, so treat 2027 as the likely reset point until you hear otherwise.

Does this cap apply to all rental properties in McKinney?

It applies to non-homestead residential and commercial property valued at $5 million or less, which covers the vast majority of single-family and small multifamily rentals owned by individual investors in Craig Ranch, Stonebridge Ranch, and the rest of Collin County.

How do I find out how much my appraisal has been capped versus true market value?

Your annual notice of appraised value from the Collin Central Appraisal District shows both the capped assessed value and, in many cases, the market value estimate side by side. Comparing those two numbers over the past few years will show you exactly how much of a gap could be released once the cap expires.

Own a rental in Craig Ranch, Stonebridge Ranch, or elsewhere in Collin County? Let's run the numbers on selling now versus riding out the uncapped appraisal. Reach out to Jane Clark with Keller Williams McKinney for a straightforward look at your specific property and market timing.