Carrollton Commercial Mortgage: What Changes in the 2027 Tax Year

By Michael McGovern, Founder | 25+ Years in Commercial LendingCommercial Mortgage Connection · Lending in all 50 states Published 25 September 2026 · Facts verified 24 September 2026

The Texas cap that disappears on 31 December 2026

In 2023 the Texas Legislature added section 23.231 to the Tax Code, a circuit breaker on the appraised value of real property that is not a residence homestead. For a qualifying property, an appraisal district may not raise the appraised value by more than 20 percent in a year, plus the value of any new improvements. It was written as a three-year pilot, and subsection (k) is one sentence long: this section expires December 31, 2026.

The value limit that decides whether a property qualifies is adjusted each year for inflation by the Comptroller.

Two details decide whether this matters to your building. The limitation never applied to new improvements, so a recent addition was always appraised at full value. It also does not apply to land under a special appraisal, such as agricultural or timber land. And it only starts in the tax year after the first year you owned the property on 1 January, which is why a property bought in 2025 may never have been capped at all.

If your appraised value has been capped, the appraisal district has been carrying a market value that is higher than the value you were taxed on. That difference is not forgiven. It is simply a number that the cap kept out of the tax bill, and from the 2027 tax year the cap is gone.

One city, three appraisal districts

Carrollton is unusual, and it catches out-of-town buyers constantly. The city says it on its own tax page: the City of Carrollton resides in three counties, Dallas County, Denton County and Collin County. The county your property sits in determines who appraises it and where you pay.

The dates run the same way everywhere in Texas. Property is appraised as of 1 January each year, notices usually go out in April, and the protest deadline is 15 May or 30 days after the appraisal district mailed the notice, whichever is later. The city warns owners that the appeal is due roughly 30 days after the notice arrives, and that the deadline is printed on the notice itself.

The rate is a stack, not a single number. The City of Carrollton adopted a rate of $0.537000 per $100 of valuation for fiscal year 2027, the thirteenth consecutive year it has cut the rate, on a total taxable value of $24.1 billion. The county, the school district and the college district add their own lines on top, and those differ depending on which of the three counties holds the parcel. Two similar buildings a mile apart in Carrollton can carry different total rates.

One more practical point. The city contracts the Dallas County and Denton County tax offices to bill and collect, so the statement that arrives in October comes from the county, not from the city. If you are setting up a tax escrow with a lender, use the county figure.

What the 2027 reset does to a loan

Here is the arithmetic, because this is where the cap stops being a tax topic and becomes a lending one.

Take a Carrollton flex building held since before 2023, appraised then at $2,600,000. Under the circuit breaker the appraised value could rise 20 percent a year: $3,120,000 in 2024, $3,744,000 in 2025 and $4,492,800 in 2026. Suppose the appraisal district carries its market value at $5,200,000, still under the 2026 threshold. The gap the cap has been holding back is $707,200. From the 2027 tax year, there is no 20 percent ceiling on that value.

Confirm your own combined rate with the county tax office, because the total depends on the county and school district, not on the city rate alone.

How that lands depends on the leases. On a gross lease the owner absorbs the increase, so net operating income falls by the full amount and the loan shrinks with it. On a triple net lease the tax is reimbursed by tenants, which protects net operating income but raises their total occupancy cost, and that shows up later as renewal risk, a longer downtime between tenants or a concession at the next lease. Underwriters look at both.

The practical instruction is short. Underwrite the 2027 tax line, not the 2026 one. Ask the appraisal district for the market value as well as the appraised value, treat the difference as the amount that can be restored, and run your coverage with the higher tax figure before you agree a price. Lenders escrow taxes monthly and re-estimate them, so a surprise here shows up in your payment, not only in your return.

Carrollton apartment loans and what Texas does not regulate

Carrollton apartment loans are the second most common request we see from this market after small industrial and flex. Multifamily has the deepest lender pool in the country, and Texas adds one structural advantage: there is effectively no rent control.

Under section 214.902 of the Texas Local Government Code, a municipality may establish rent control only if its governing body finds that a housing emergency exists because of a disaster, and the governor approves the ordinance. Nothing about ordinary market conditions qualifies. For an underwriter, that means the rent roll is read as a market document, with no regulated ceiling and no stabilized base to reconstruct.

That is the opposite of the argument in a regulated market. Our NYC commercial mortgage guide covers the version of this conversation where a rent-stabilized unit caps the income the lender will credit. In Orlando, as our Orlando commercial mortgage page explains, the swing line is insurance. In Carrollton it is the tax line.

Freedom to set rents does not mean a lender will credit the rents you hope for. Expect the underwriter to test the rent roll against leases actually signed in the last several months, to apply its own vacancy and collection loss rather than yours, and to look hard at concessions, because a free month on a twelve month lease is real money the pro forma often hides.

How a Carrollton commercial mortgage gets sized

Two tests run at the same time and the lower answer wins. Debt service coverage asks whether net operating income comfortably exceeds the annual payments, most often at a minimum of 1.25x. Loan-to-value caps the loan against the appraised value, commonly 65 to 80 percent depending on the property and the program.

A plain example. Say a Carrollton property nets $310,000 a year after real Texas expenses, including the 2027 tax estimate rather than the current bill. At 1.25x coverage, annual debt service can be no more than $248,000, about $20,667 a month. At an example 7.00% rate on a 25-year amortization, that payment supports a loan of roughly $2,924,000. Against a $4,200,000 price that is about 70 percent, so in this case coverage and leverage land in the same place. Had you used the 2026 tax bill instead, the same building would have appeared to support $140,000 to $160,000 more debt than it can carry.

Our guide to the loan-to-value ratio on apartment loans covers the second test in detail, and the commercial mortgage rates page explains how pricing and term interact.

Loan options for a Carrollton property

Most Carrollton requests land with one of five kinds of lender. Which one fits depends on the property type, its condition and how long you intend to hold it.

Bridge debt is common across this metroplex, and we have written about how it is structured locally in our guides to bridge loans for mixed-use properties in Dallas and fast-closing Dallas bridge loans. For apartment programs compare the options on our apartment building loans page, or the broader commercial mortgage overview for retail, office and industrial.

What a Texas lender will ask you for

A complete package moves faster than a strong one that arrives in pieces. For a Carrollton property, expect this list.

• The appraisal notices for the last three years, showing market value and appraised value separately. This is the single most useful document in a Texas file right now.
• The current tax bill from the county tax office, not an estimate, plus the account number and the appraisal district that holds it.
• Any protest history, including appraisal review board results and whether a value was settled or litigated.
• Current insurance quotes, with the wind and hail deductible written out, since in North Texas that deductible is often a percentage of value rather than a flat sum.
• Rent roll and trailing 12 months of income and expenses, plus the last two years of statements and a copy of every lease over a meaningful size.
• Property condition and environmental reports as the lender requires them.
• Borrower package: schedule of real estate owned, net worth and liquidity after closing, and credit for every key principal.

When a Carrollton deal does not pencil

Some files should not be forced. If the numbers only work on the 2026 tax bill and fail on a 2027 estimate, the price is wrong, not the loan. If the building sits at the top of a rent range that was set during a stronger leasing year, underwrite the range, not the peak. If there is no cash left after closing, wait, because the first tax statement after a reset is not the moment to discover that.

The fix is usually one of three: a lower price, a partner who brings liquidity, or a bridge loan with a written refinance plan instead of a permanent loan the property cannot yet support.

The goal is not simply to close a Carrollton commercial mortgage. It is to close one the property can still carry in 2028, after the tax line has reset and the leases have turned over once.

Carrollton commercial mortgage FAQ

Which appraisal district covers my Carrollton property?

It depends on the parcel, because the City of Carrollton lies in Dallas, Denton and Collin counties. Your property is appraised by the central appraisal district of the county it sits in, and that district sets your notice date, hears your protest and determines part of your total tax rate. Check the account before you underwrite, not after.

What happens to Carrollton property taxes in 2027?

The state circuit breaker that limited annual increases in appraised value to 20 percent applied only to the 2024, 2025 and 2026 tax years, and the statute expires on 31 December 2026. If your appraised value was capped below market value, that difference can be restored in the 2027 appraisal. Your appraisal notice shows both figures, and the gap between them is the amount at risk.

Do I need a lender based in Dallas or Carrollton?

No. A commercial loan is decided on the numbers of the property and the strength of the borrower, and lenders across the country finance Dallas-Fort Worth property every week. What matters is that the lender models the Texas tax line correctly and understands which appraisal district holds the account. A broker with a national lender network can compare local banks against agency and portfolio options side by side.

Is there rent control on Carrollton apartments?

No. Texas law allows a municipality to establish rent control only when its governing body finds a housing emergency caused by a disaster and the governor approves the ordinance. In normal conditions rents are set by the market, so lenders underwrite the rent roll against recent signed leases rather than against a regulated ceiling.

How much do I need to put down on a Carrollton commercial property?

Plan on 20 to 35 percent of the price, with the exact figure set by whichever test binds first, coverage or loan-to-value. Stabilized apartment buildings sit at the lower end, while office and special-purpose property sit at the higher end. Lenders also want to see cash remaining after closing, which is often what decides a file rather than the down payment itself.

Sources

• Texas Tax Code, section 23.231, Circuit Breaker Limitation on Appraised Value of Real Property Other than Residence Homestead. The 20 percent limitation, the inflation-adjusted value threshold, and subsection (k), which states that the section expires December 31, 2026. Checked 24 September 2026.
• Texas Comptroller of Public Accounts, Valuing Property. Circuit breaker thresholds of $5,000,000 for 2024, $5,160,000 for 2025 and $5,320,000 for 2026, and the exclusions. Checked 24 September 2026.
• Texas Comptroller of Public Accounts, Property Tax Protests and Appeals. The 15 May deadline, or 30 days after the appraisal district mails the notice, whichever is later. Checked 24 September 2026.
• City of Carrollton, Tax and Revenue Collection. The city lies in Dallas, Denton and Collin counties; appraisal on 1 January; notices in April; billing by the county tax offices. Checked 24 September 2026.
• City of Carrollton, Budget, Fiscal Year 2027. Adopted tax rate of $0.537000 per $100, the thirteenth consecutive reduction, and total taxable value of $24.1 billion. Checked 24 September 2026.
• Texas Local Government Code, section 214.902, Rent Control. Rent control requires a finding of a housing emergency caused by a disaster and the approval of the governor. Checked 24 September 2026.
• Fannie Mae Multifamily, Small Mortgage Loan Program Term Sheet. Loan amount, term, maximum LTV and minimum DSCR. Checked 22 September 2026.
• US Department of Housing and Urban Development, Descriptions of Multifamily Programs, Section 207/223(f). Mortgages up to 35 years, 83.3% of value for market-rate projects, and the requirement that the property was completed or substantially rehabilitated at least 3 years before application. Checked 24 September 2026.

Michael McGovernFounder, Commercial Mortgage Connection. Michael wrote and reviewed this guide drawing on a career that began at Bear Stearns & Co. in 1997, ran through structuring billions of dollars in CMBS and MBS in the F.A.S.T. group at Bear, and selling mortgage product at Lehman Brothers, and now spans more than $1 billion in originated mortgages.

Facts on this page were verified against the cited Texas, Fannie Mae and HUD sources on 24 September 2026. Tax rules, appraisal practice, program limits and lender appetite change, and the example rate and figures on this page are illustrations, not offers or quotes. Nothing on this page is a loan offer, a rate quote, legal, tax or insurance advice, or personalized financial advice; all financing is subject to lender approval, credit review and property underwriting, and no approval is guaranteed. Broker licensing and closing rules vary by state. Commercial Mortgage Connection is a commercial mortgage brokerage, is paid when loans close, and sells the service described on this page. Equal Housing Opportunity.