They Inherited Their Family Home in Austin—Then a Tax Bill Changed Everything

A year later Willa Staats and his brother inherited their family home in East Austin and the surrounding area, receiving a combined tax bill of $48,000.

It was about 90% higher than what his father had last paid, and half of Staats’ salary at the time.

On paper, the brothers had inherited something very important: two buildings in a Texas city where home ownership had generated huge fortunes during the violence of the COVID-19 pandemic, and a position in one of the most competitive real estate markets in the country.

But that price came with a catch. Their inheritance gave them equity, not cash—and took away the tax shelters that had helped their father hang on to the property for decades.

As a long-term homeowner, their father benefited from a homestead exemption that increased the annual rateable value to 10%. But when the property passed to his heirs, the taxable value was reset to market rate—just as Austin home values ​​rose.

“We didn’t inherit anything else. There was maybe $15,000 in my dad’s checking accounts. He had no pension, no life insurance,” Staats tells Realtor.com®.

That left his siblings with a lot of real estate wealth on paper, but little money to cover its expenses. Keeping the property would mean taking on a tax burden they could not afford. Selling would mean giving up both their base in Austin and a strong family legacy.

The siblings’ struggle to keep their childhood home captures a growing rift among the generation that will inherit real estate wealth: The family home can be a valuable asset and a financially unaffordable place.

Above the house

Staats’ parents moved to East Austin in 1999, long before the historically Black and Hispanic neighborhood became one of the city’s hottest shopping districts. Over time, they put together something that seems rare in the city: an advanced, unusual, and proud “weird” family combination.

There was a large house, an open back lot, and a commercial parcel that was leased to local businesses for what the Staats said was well below market rate.

After the death of his mother—lawyer and family breadwinner—in 2010, the property also became a way to support the family.

Staats’ father, a photographer and artist, began renting out the main house, often to business clients visiting the emerging tech hub, and reshaping the entire space to become a foil for advanced backyard buildings supported by water pipes from the nearby commercial area.

On weekends in high school, Staats slept in an Airstream trailer while his father slept in the greenhouse.

He describes his home as “as cool as Austin comes,” and it’s easy to see why.

There are mature oak trees, an old boat converted into a beer table for guests, and a hand-built sauna with an onsen feel. It’s bespoke, artistic, and distinctly different from the homogenous style of new construction homes that are so common throughout Travis County.

That was always part of the appeal for visitors. Statistics estimate that his father was making nearly $80,000 a year in short-term rentals—enough to cover living expenses and an average annual combined tax of about $13,000, property records show.

Tax protection was not transferred

But while the Staats family lived creatively, the city and its surroundings were changing. In the 30 years they’ve lived in East Austin, the median home value has increased nearly 640%, according to data from Realtor.com.

That helps explain the first sibling tax, which Staats describes as a “double punch.”

The 90% jump reflected both a sharp rise in East Austin real estate prices and the loss of the protections that had helped his father achieve those increases over time.

“It was a huge jump,” he says. “It’s doubled prices, maybe 30%, and again, dad was protected year after year to grow.”

But the knockout lost the domestic cap.

“A change of ownership results in the loss of any housing exemption in the area,” he explained Cynthia Martinezchief strategy officer for the Travis Central Appraisal District.

Heirs living in an inherited home as their primary residence may still qualify for their homestead exemption by filing an affidavit of inheritance. But, he adds, “because this process is related to the new owner of the property, the benefits of the exemption from the previous owner will be lost.”

Property records show the taxable value of the primary residence jumped 77% the year Staats and his brother took ownership, while the backyard property increased 124%—helping to pay their combined taxes to $48,000.

To ease the pressure at the time, the brothers sold the commercial property for more than $2 million, paying off their tax bills and remaining debts on all three properties.

The region saw progress—but didn’t it?

It’s easy to see those trade-offs and dismiss them as siblings. And in some ways, it was. But the sale came at a great cost.

In addition to losing rent from commercial tenants, it also shut down his father’s temporary rental business.

Because the back buildings’ pipes were tied to commercial property, their sale cut off their water supply—leaving those units without water and making them unusable as rental or residential properties.

So the next year, when the brothers received more than $46,000 in back taxes—including nearly $17,000 in their yard—they were surprised. The big bill made some sense when the lot contained viable temporary rentals, but now those properties were unusable—reduced to the functional equivalent of a shed.

According to the city’s definition, serviced residences need to have “a living area, a full bathroom, a sink or a dishwasher other than a full bathroom.” Therefore, Staats opposes the measure.

“I thought I had an open and shut case,” he said. “I had a slam dunk with my description of the city.”

But in the eyes of the Travis Central Appraisal District, the answer was not so straightforward. In the testing district, the structures were still valued, and the review board eventually agreed, raising their valuation.

In response to a series of follow-up questions from Realtor.com about how detached properties are valued and determined as uninhabitable, the county appraiser responded, “It can vary depending on the features of the development. However, if the property is there, it has value.”

At Staats, the fight revealed how quickly the real life of a building—its history, its true condition, even its perceived compliance with city ordinances—can be turned into a bill.

What happens when a family heirloom is too expensive to keep?

The brothers have now opposed local equalization at least twice—once with the help of a local organization, and with the Staats on their own.

“It was difficult to represent people at these property tax meetings, because we are talking about a greenhouse that has kept all these good memories,” he said.

It is possible that the war also clarified what was to come.

“Maybe I’m the first to see it, that we couldn’t stay here forever,” he said.

This summer, the brothers plan to put the properties on the market. Developers have already expressed interest. So did the neighbors, some of whom urged them not to sell.

But Staats says he won’t be holding the line forever.

“I will not be the last fort here, and I will not be able to control who will sell it next.”

He plans to start over in a new location once they sell. In that sense, an inheritance may end up doing what a homeowner is supposed to do: Give the next generation a fresh start.

But for Austin, the sale marks another kind of legacy story—a city growing rich in land value while growing poor in the family history and local character that made it worth the pursuit.

In Staats’ words, “The reason why you find this place cool is because of its history and its residents. … It feels like their loss. Austin’s loss.”