How to protest your property taxes

It’s April… that means your new property tax values (appraised / market and assessed values) will be arriving in the mail shortly. If this year is anything like the last 3-5 your values will likely be higher. The appraised value can go through the roof, but if you have a homestead exemption the ‘assessed’ value is capped (limited) to a max of 10% year over year. It’s ironic, right? Homeowners purchase homes and love that the values are going up but we do not like to pay the taxes for the assets new ‘value’!
Below are some basics, tips and steps to take if you don’t agree with the new value.

Basics:

  1. New Appraised Value notices go out as early as April 1st (no it’s not an April Fool’s day joke)
  2. You must protest your tax appraised / market value no later than May 31st (date stamped copy for in person delivery).
  3. Online protests may begin as soon as they receive the letters of protest

Tip: When protesting online or in person – ask for a copy of the “Taxpayer Evidence Package”. That package is the list of at least 10 ‘neighborhood’ homes they used as examples to drive the new value. Note – “neighborhood” in this instance is not necessarily your next-door neighbor – ‘neighborhood’ is defined as a like property and may be in a different subdivision! It should however, be of similar age, similar size, similarly updated or not updated.

Easy wins:

  1. Were you a recent sale (e.g., in the last 15 months)? If so and if you purchase price was below the new appraised value you may be able to simply make a copy of the closing disclosure (closing documents from the Title company) and have your value adjusted down. An online protest should suffice in this case.
    1. If your purchase price was higher than the new appraised value – you may want to remain quiet!
  2. Is it the right size? Check to make sure the county’s description is correct – for example, living space in SF, # stories, if there is a pool included in error, etc. If the county has your living space as 2300 and it’s really 2000, and you can proof it via appraisal or measure – an online protest may suffice.
  3. Do you have a legitimate reason to discount your value versus the appraised value from the county? For example, does your property have foundation issues that could cost thousands of dollars to repair. If so, be prepare to show the county that your house has significant maintenance issues versus the comparable properties – that should lower your overall value. This is a more difficult protest than those above

How to file:

There are three protest avenues.

  1. E-File online.
  2. Informal protest with a county representative.
  3. Formal protest hearing in front of a panel.

Sometimes you are allowed an informal hearing after an e-file, sometimes not. E-Filing is best for easy disputes. Some informal hearings are necessary and you can win (if you have good proof to back up your argument). However, if you don’t win in an e-file or informal… and they recommend you go to formal hearing – you may be swimming upstream. A formal hearing puts you in front of 3 “reasonable” citizens (note the citizens may be home builders, architects, appraisers, Realtors® or others with industry experience – and they are being paid by the county for their time). ** The county does not like to lose ‘formal hearings’.

What type of tax protest are your pursuing?

There are two main protests… 1) market value and 2) unequal appraisal.

Your new appraised values will arrive with a protest form. Which box(es) you select will impact how you can dispute your value so pay attention!

  1. Box #1 suggests that the property value is over market (this is a market value approach).
  2. Box #2 on TCAD’s form or Box #3 on the Comptroller’s form is an ‘unequal appraisal’ approach. An unequal appraisal approach would apply if (for example) comparable homes ‘appraised’ values were uniformly lower than yours. That’s not ‘equal’ or fair.

The Informal Appeal:

Your attitude counts. Be cordial, consistent and prepared. If your concern is market value, you may discuss improvements or land individually but only as you feel they are skewing the total market value. Both sales and unequal appraisal comparable examples should be ideally similar in age and size.

a) Market appeal –
a. Use MLS sheets with TCAD assigned six-digit property identification numbers (PIDS)
b. Review TCAD sales grid in the evidence package. Indicated ‘median’ value is what they are looking for versus the highest or lowest.
c. Fee appraisals are good, but not always accepted by TCAD.
b) Equity appeal –
a. Add the property identity # (PID) of each comp.

Tip: Regardless of your protest approach, focus on the Appraised or Market Value – not the Assessed Value. Appraised or Market Value is the top #. Assessed Value is after ‘exemptions’ which is property owner specific and may not apply to your situation (e.g. senior exemption, disability, homestead).

c) Characteristics – be prepared to leave behind relevant photos that are representative of the interior or exterior of the home. Note these photos may be used against you! Take broad photos of problems and bids for repair – not close-ups of peeling paint.

Tip: Remember to be consistent… do not mix your market value dispute with unequal appraisal arguments.

The Formal Appeal:

1) Bring five (5) copies of all evidence to be considered – one for you, one for the county rep, and one each for the 3 citizens on the panel.
2) The formal hearing panel’s conclusion could be higher than an informal finding – so be prepared if you go to formal protest.
3) The arbitration deadline is 45 days after receipt of the Board order
4) When arbitrating – withdraw the protest you’re not making at the ARB check in. If you are protesting equity, withdraw the market appeal to help focus the panel on your talking points.
5) Items to avoid saying…
a. Price per square foot (to narrow a view)
b. CMA (may not include appropriate neighborhood or like homes)
c. Cracks in the driveway (not relevant)
d. My yard slopes (not relevant)
e. I have a messy neighbor (see above)
f. I’m a Real Estate Agent or Attorney (be cordial not contentious or condescending)

Exemptions:

You cannot protest that your Homestead or other exemption was not applied. Exemptions should be filed only after January 1st (after you own the property). If you filed Homestead (for example) in December because you purchased the home in November it will not be accepted. You must wait until January 1st or the paperwork will be trashed.

Hiring a Professional:

Some people choose to hire professionals like Texas Pro Tax to protest values each year. Texas Pro Tax works on a contingent fee of 40% of your annualized tax savings only if they are successful. This may be a good option for someone who is too busy to do the work themselves.

Conclusion:

Well that’s it… if you want to dispute your tax appraised value – you may choose to go e-file, informal or formal protest. You may fight it yourself or hire a professional. It’s up to you!  Just remember to be consistent, cordial and prepared.

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