Is your Property Tax Bill too high?
For most real estate owners, property tax is the second-highest property expense, and if there is no mortgage, it may be the highest. The only way for owners to effectively lower their property tax liability is to lower the assessed value of the property itself, and that means filing a protest of the proposed appraised value that is issued in May by the appraisal district. This protest must be filed with the Appraisal Review Board for the county in which the property is located. Even if an owner does not receive a notice of appraised value by mail, that owner has the right to file a protest; however, the deadline is generally May 31 of each year. If an owner misses this deadline, there are still remedies available, but they are much more limited.
Property Tax Relief - Based on Market Value or Comparable Properties
In Texas, a property owner can file a protest claiming that the appraised value is either above market value or unequal. Most owners are familiar with the concept of market value, and most understand that the market value can be lowered by identifying comparable sales that indicate a lower value or documenting defects in the subject property that negatively affect the market value. Unfortunately, most owners are not aware that they can also protest the appraised value by claiming that the appraised value is unequal when compared to comparable properties.
Section 42.26(a) of the Texas Tax Code lists the three circumstances in which an owner may obtain relief based on equity, and 42.26(a)(3) describes the one that is most often used: "The appraised value of the property exceeds the median appraised value of a reasonable number of comparable properties appropriately adjusted."
This means that an owner (or the agent or attorney representing the owner) identifies a reasonable number of comparable properties, makes adjustments to the values based on the characteristics that are different, and then determines the median value of those properties. If the subject property is above that median, then the value of the subject property must be lowered to the median. When creating this analysis, it is critical that the owner makes appropriate adjustments because the conclusion will be flawed otherwise, and the owner will not likely receive the reduction that is sought. It is also important to remember that one must identify the median (middle), not the mean (average). For example, to determine the median value in a group of five properties, one must identify the third-highest (or lowest) value. When using an even-numbered group of properties, take the average of the two middle values.
One of the common complaints I hear from property owners is that the district raised the value of their property to match their recent purchase price but did not raise the value of their neighbors. This remedy allows an owner in that situation to obtain a fair appraised value.
About the Author:
Joshua Estes is an attorney at Estes & Gandhi, P.C., a Texas property tax law firm that represents property owners in efforts to lower their property tax liabilities. Josh is a graduate of Southern Methodist University and the University of Texas School of Law has spoken on many subjects related to property tax in Texas, and is a long-time resident of Fort Worth. He can be reached by email at firstname.lastname@example.org