Prosper Home Values Slipped This Year and Tax Bills Still Rose. Why a Buyer's Bill Isn't the Seller's.
October 29, 2026
October 29, 2026
On Sept. 8, 2026, Prosper Town Council kept the town property tax rate at $0.505000 per $100 of valuation. That's the same rate as the year before. According to town figures reported by Community Impact, the average homestead's market value fell almost 3% at the same time. Even so, the average resident's town tax bill is expected to rise from $3,518 in FY 2025-26 to $3,633 in FY 2026-27.
A falling value, a flat rate and a rising bill can all be true at once because of how Texas caps homestead appraisals. That same mechanism matters most at the closing table. The cap that shields a long-time Prosper owner belongs to that owner, so the tax bill printed on a listing describes the seller's situation, and a buyer's first year usually looks different.
Finance Director Chris Landrum's budget presentation tracked two numbers for the average homestead. Community Impact charted both:
| Average Prosper homestead | FY 2025-26 | FY 2026-27 | Change |
|---|---|---|---|
| Market value | $916,840 | $892,268 | down $24,572 |
| Taxable value | $696,676 | $719,390 | up $22,714 |
| Gap between the two | $220,164 | $172,878 | narrowed by $47,286 |
Taxable value went up about 3.3% while market value went down about 2.7%. Landrum explained that the homestead cap limits how fast taxable value can rise, up to 10% a year. "Even as property values dip slightly, the taxable value cap may still increase as it catches up to property values that increased in previous years." That delay is how a bill can rise even when values fall and the rate stays put.
The bottom row matters most to a buyer. Even after this year's catch-up, the average Prosper homestead is still taxed on about $172,878 less than its market value. Some of that difference comes from exemptions, which a new owner can qualify for too. The rest comes from the appraisal cap, and that part of the cushion is personal to the people who live there now. It doesn't carry over to the next owner.
The rule comes from Texas Tax Code Section 23.23. It limits a qualifying homestead's appraised value to whichever is lower: market value, or the prior year's appraised value plus 10% plus the market value of any new improvements. The limit starts on January 1 of the tax year after the owner first qualifies for the homestead exemption. The previous owner's cap expires when neither that owner nor the owner's spouse or surviving spouse qualifies for the exemption anymore.
Collin Central Appraisal District's homestead cap summary frames it from the owner's side: to get the cap, the current owner must have qualified as the January 1 owner in the prior year. The same summary explains that taxable value is the appraised value after exemptions are subtracted. The Texas Comptroller notes that taxable property is generally appraised at market value as of January 1. Between a capped appraisal and the exemptions, the two figures in the table can move in opposite directions.
Together, these rules mean a buyer generally starts at market value. Their own 10% limit can't take effect until the tax year after they first qualify. The seller's years of capped growth end with the sale.
Here's a deliberately narrow example. It uses only the town of Prosper's rate and leaves out the school district, the county and any exemption a buyer may qualify for.
That $873 is a ceiling for the town line. Any exemption the buyer qualifies for would bring it down, because part of the $172,878 gap is exemptions, not the cap. A full Prosper tax bill also includes other taxing units, each with its own rate. The direction holds either way. A seller who has owned and homesteaded the property for several years is paying tax on a capped appraisal the next owner won't inherit.
The table also shows the gap shrinking, from about $220,000 to about $173,000 in one year. Each year that taxable value catches up and market values hold flat or dip, the difference between the seller's bill and the buyer's bill narrows. A homestead bought recently, or one whose owner hasn't claimed the exemption, may have little or no gap at all. This varies from house to house, and the average only shows how large it can get.
The town's total climbs for a different reason than any one household's bill does, and that reason is new construction. Total property value in Prosper went from $10.8 billion in FY 2025-26 to $11.5 billion in FY 2026-27, and officials expect about $2.7 million in additional property tax at the unchanged rate. As Community Impact reported, Landrum put it plainly: "New construction really is the driver." Town staff also pointed to upcoming commercial projects, including Westfork Crossing, Eagle Crossing Phase 2 and Gates of Prosper Phase 3B. Sales tax is projected at $13.7 million in FY 2026-27, up from $13.2 million.
For a buyer comparing carrying costs, this means the flat rate isn't holding bills down. It's holding steady while the tax base grows. Each new owner enters that base at market value.
At the same Sept. 8 meeting, council passed water and wastewater rate increases. Community Impact reported that the average resident's combined bill goes from $177.70 to $205. In August, the preliminary proposal had put that average at $208.04, with first-year increases of 13.95% for water and 17.96% for wastewater. Landrum tied the increases to the rising cost of water from the North Texas Municipal Water District. "Unfortunately, we've had to pass that on to the consumer," he said, as Community Impact reported in August. Town officials said the money will also help fund infrastructure, including the $269 million expansion of the Doe Branch Water Reclamation Plant.
A seller's twelve months of utility history is useful, but it reflects rates from before this change.
The rate also comes out of a specific vote. In November 2025, Prosper voters approved only Propositions A and F, which total $95.1 million for roads and downtown improvements, out of a $192.3 million package. They rejected funding for police headquarters improvements, a new library, parks improvements and a public works center. Community Impact reported that Mayor David Bristol said the town wouldn't build a stand-alone library for now and that the failed parks proposition would pause major recreational improvements for at least the next three years. In February 2026, Bristol said the town was likely moving toward a pay-as-you-go model and reaffirmed council's commitment to using only voter-approved debt.
The FY 2026-27 capital plan does include street work: widening Teel Parkway from First Street to Freeman Way, repairs on northbound Dallas Parkway, and widening Coit Road from First Street to Frontier Parkway. It also lists park improvements and the first phase of a new parks and public works building. A buyer who pays tax on full market value in their first year is funding that list.
Under Section 23.23, the previous owner's cap expires when neither the owner nor the owner's spouse or surviving spouse qualifies for the exemption. Outside that spousal provision, the statute ties the cap to the qualifying owner.
Texas Tax Code Section 11.13 now sets the mandatory school district residence homestead exemption at $140,000. The Comptroller reports that voters approved the increase on Nov. 4, 2025.
For tax year 2026, eligible non-homestead real property valued at $5,320,000 or less has its annual appraised-value increase limited to 20% plus new improvements, according to the Comptroller. Under the statute, that provision expires December 31, 2026.
This post is general information about how Prosper's taxes and utility rates are set. It isn't legal, tax or financial advice. Please confirm how these rules apply to a specific property with the appraisal district or a qualified tax professional.
When we price a Prosper listing or review one for a buyer, the appraisal district record goes next to the comps, because the gap between market value and taxable value changes how buyers read a home's monthly cost. If you're thinking about selling and want to know how your home's capped bill will look to the next owner, Weidler Group can walk you through it as part of your valuation. Sell a Lifestyle: Request Your Home Valuation.
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