AUSTIN — Rising property values and rising taxes burden many of the homeowners in Austin.

Businesses struggle to keep up.

The property appraisal notice you have in the mail does not always represent the taxes you pay.

Austin unaffordability: How to fight your rising property values

Fighting the value is important, but it does not mean you’re fighting taxes.

To have a conversation about affordability, we need to understand key terms.

Austin unaffordability: The good, the bad and the ugly for homeowners

In all, there are six key terms. Three fall under the appraisal district: Market value, assessed value and taxable value. These determine the value of your property and how much can be taxed.

Austin unaffordability: The good and bad for local businesses

The remaining three fall under the taxing unit and elected officials: Effective rate, rollback rate and adopted rate. These determine how much you pay in taxes compared to last year.

How you're appraised:

Market value: How much the property is worth if sold. This is reflected in what other similar properties sold for in the last year. The value is set fresh each year as of Jan. 1. There is no limit on the increase or decrease in market value. This is what you can protest.

Assessed value: This is a limited value for homeowners. It is the same as market value for your first year. Then, it can only increase up to 10 percent each year, but never above market value.

Taxable value: This subtracts any other exemptions from the assessed value. Different taxing units have different exemptions.

How you're taxed:

Effective rate: This is a bottom line for taxing units such as cities, counties, school districts and hospital districts. This is the amount they can charge in taxes to make the same amount of money as the previous year. This is determined after 95 percent of protests are complete. As appraised values go up, the effective rate goes down. As appraised values go down, the effective rate goes up.

For example, if a home has an assessed value at $200,000 at a .05 cent rate per $100 valuation, the tax would be $100. Then, if the next year, the assessed value jumped to $220,000 (10 percent maximum increase), then the effective rate would drop to .045 cents per $100. That way, the taxing unit would still make $100, leaving taxes unchanged.

The problem: Taxing units rarely use the effective rate.

Rollback rate: This is the maximum rate a taxing unit can charge without the public able to petition to have it lowered. If the entity does exceed the rollback rate, the public can elect to roll back to this rollback rate. It’s the effective rate plus 8 percent.

In Austin last year, the city decided to increase taxes above the rollback rate. Seven members from the public spoke at the required public hearings.

Adopted rate: This is the tax rate we pay. Tax rate x taxable value = tax bill.

Bottom line, any rate above the effective rate is a tax increase.

Prior to adopting a new tax rate, all units must publish an ad with the effective, rollback and proposed tax rates. Taxpayers can weigh in during public hearings.

The inequality:

If a property increases at a faster rate than the average, that property is subject to a higher tax burden.

Here's an example:

Let’s say the tax collected is $100 from two homes. One home has an assessed value of $200,000 and the other home is assessed at $500,000. The rate for each would be .01428571 cents per $100 value. "Homeowner one" pays $28.50. "Homeowner two" pays $71.50.

The next year, the property value for homeowner one increases much higher than that of homeowner two. Now, homeowner one’s market value is capped at the assessed homestead rate of $220,000. Homeowner two’s assessed value increased, but not as much. It’s assessed value is $520,000. If the tax collected is still $100 collectively, the effective rate falls to .01351351 cents per $100 valuation. However, homeowner one now pays $29.73 and homeowner two pays $70.27.

Let’s fast-forward five years from year one. Each year, the $200,000 home increased to the maximum 10 percent. It’s now assessed at $292,620. Homeowner two’s market only increased 4 percent year after year and is now $584,929.28. As the gap between the two closes -- even if the effective rate is the adopted rate -- the tax burden increases for the homeowner living in the cheaper home faster than the burden in the more expensive home. Homeowner one roughly pays $33.35 and homeowner two pays roughly $66.65 with the effective rate of .01139538 cents.

As taxing units go above the effective rate, the burden grows for both homeowners.

So, as home values shoot up in certain parts of Austin, those growing the faster than the average will feel the burden the most.

Therefore, protesting to make sure your value is assessed properly is important.