There’s one thing that catches buyers off guard more than almost anything else when they’re purchasing new construction in the Conroe and North Houston area — property taxes. Not because they don’t know property taxes exist, but because new construction in Texas is taxed differently than resale homes. And if you’re budgeting based on your lender’s estimate or what the model home sales rep mentioned, there’s a real chance your monthly payment is going to look different six to twelve months after closing.
Let me break this down in plain terms so you go in knowing exactly what to expect.
Why New Construction Gets Taxed Differently at First
When you close on a brand-new home, the county appraisal district usually hasn’t caught up with the full assessed value of your completed home yet. In year one — sometimes into year two — your home may be assessed at land value only, or at a partial-completion value based on wherever construction was when the county took its snapshot.
That can feel like a win when your first tax bill comes in lower than expected. But here’s where buyers get into trouble: once the Montgomery County Appraisal District does a full reassessment of the completed structure, your taxable value jumps significantly. If your mortgage servicer set up your escrow based on year-one taxes, your account will come up short. You’ll either owe a lump-sum catch-up payment, or your monthly mortgage payment will go up to cover the difference going forward.
I’ve seen this surprise buyers who thought they were in great shape financially, and it’s completely avoidable if you know to plan for it ahead of time.
Understanding the Full Tax Rate — Including MUD
In Montgomery County, your total property tax rate is built from several pieces stacked together. There’s the county rate, the school district rate (most communities in Conroe fall under Conroe ISD), and in many new construction areas, a MUD rate on top of both of those.
MUD stands for Municipal Utility District. Developers create these districts to fund the water, sewer, and drainage infrastructure that gets built before a city is able to take over service. They’re extremely common in new construction communities throughout North Houston, and the rates can add anywhere from 0.5% to more than 1.0% to your total tax burden.
When you add everything together, most buyers in new construction communities around Conroe end up with an effective rate somewhere between 2.2% and 2.7%. On a $400,000 home, the difference between those two ends of the range is about $2,000 per year — or roughly $167 more per month. That matters when you’re building a budget.
Before you go under contract, ask the builder’s sales rep for a full tax rate breakdown that includes the MUD rate. Get it in writing. If you’re still trying to wrap your head around what a home actually costs month to month beyond the mortgage, I put together a breakdown of what income you need to buy a $500k home in Conroe that walks through all of it.
The Homestead Exemption: File It and Don’t Forget
Texas offers a homestead exemption that does two things for you. First, it reduces your taxable value — for most homeowners, the general exemption knocks $100,000 off your taxable value for school district purposes. Second, it caps how much your assessed value can increase year over year at 10%, which protects you from big jumps in a hot market.
To get it, you have to apply — it’s not automatic. And you can only file after January 1 of the year following the year you closed. So if you close in August 2026, you’re filing starting January 1, 2027. The application goes directly to the Montgomery County Appraisal District. It’s free, it’s online, and you don’t need to hire anyone to do it for you.
Put a reminder in your phone right now. I mean it. Missing the window means going another full year without your exemption — and that’s real money left on the table.
Questions to Ask the Builder Before You Sign
New construction sales reps are generally good people, but they work for the builder, not for you. There are a few specific things you want to nail down in writing before you put pen to paper:
- What is the current MUD tax rate for this section specifically — and is it expected to change once the district is paid off?
- Has this community been annexed into the city of Conroe, or does it still sit in unincorporated Montgomery County?
- What were comparable homes in this section assessed at last year?
- Are there any pending tax rate changes in this MUD?
If you want a broader look at what to watch for in new construction contracts overall, my post on builder contracts in Montgomery County covers a lot of ground that most buyers don’t think to ask about until they’re already signed.
Comparing Across County Lines
If you’re looking at communities in different counties — say, comparing something in Conroe to a new development in Katy or Sugar Land — keep in mind that tax rates vary by county too. Fort Bend County buyers deal with the Fort Bend Central Appraisal District, and Harris County buyers work with HCAD. The rules work similarly across the state, but the actual rates and exemption amounts can differ meaningfully.
If you’re relocating from out of state, this county-by-county variation can feel confusing. The short version: always ask for the specific tax rate disclosure for the specific section you’re buying in, not a general county average. For more on what it’s like to move into this part of Texas, my post on buying a home remotely covers a lot of the logistics that out-of-state buyers run into.
You Can Protest Your Appraisal Every Year
Here’s something a lot of Texas homeowners don’t realize: you can challenge your property tax appraisal every single year. If the county values your home higher than what you believe it’s actually worth — or higher than what comparable homes nearby sold for — you can file a protest with the appraisal review board.
For Montgomery County homeowners, this goes through the Montgomery County Appraisal Review Board. You can often handle the informal hearing yourself online, without hiring a property tax consultant. Bring a few printed comparable sales from your neighborhood, show up ready to have a calm conversation, and you might save a few hundred dollars a year just like that. It takes maybe two hours total and costs nothing.
The Bottom Line
Buying new construction in the North Houston area is a smart move for a lot of buyers right now. The communities are well-planned, the warranties are real, and you get to make the space truly yours from day one. But go in with clear eyes on the tax picture — because that monthly payment will look different once the county does a full reassessment, and surprises at escrow reconciliation time aren’t fun.
If you’re buying new construction and want to run through the actual numbers before you commit to anything, that’s the kind of conversation I have all the time with buyers. Give me a call or send a text to (936) 260-3019 and we’ll work through it together. You can also book a time that works for you here.
— Allie
