Property Tax Assessment Appeals

As the economy improves, the real estate market improves as well.  On a national level, Texas continues to rank as one of the best state economies.  There are various factors that contribute to the Texas economy but affordable housing and a relative low‐cost of living are prime factors.  Texans reap many benefits to this growing economy.  One benefit is the increasing value of real estate.  As an investor or home owner, you want your asset to gain value; especially if you’re selling.  However, as your real estate asset increases in value, so do the property taxes.  So what can you do to limit these increases?

The most common way to limit the taxable assessment of your property is to file a protest with the Appraisal Review Board (ARB).  On or near May 1st each year, the County Appraisal District (CAD) begins the Equalization phase of the appraisal process.  The CAD will deliver the county appraisal records to the ARB, and mail Proposed Assessment Notices to property owners.  Any property owner who disagrees with the CAD’s proposed assessment may file a protest with the ARB and the ARB will be required to hear it.

A protest can be filed on any action taken by the CAD that affects the property owner.  However, most protests are filed regarding the CAD’s valuation of the property.  The Texas Constitution establishes two specific guidelines regarding the valuation and taxation of property:

  • No single property or type of property should be taxed more than its fair market value. [Texas Constitution Article VIII, Section 20]
  • All property must be taxed equally and uniformly.  [Texas Constitution Article VIII,Section 1(a)]

Consequently, a property owner may file a protest if they believe the CAD’s valuation is either over the fair market value, or the value is not equal and uniform with similar properties, or both.

A fair market valueprotest is based on the property owner’s opinion that the CAD has over‐valued the property based on recent market data such as sales or other value related factors.  The property owner will present evidence to the ARB to support their opinion of the property’s value.  The CAD will present evidence to support their proposed value.  Based on the evidence presented, the ARB will determine the valuation of the property and set the property’s value for that year.

The vast majority of ARB decisions will be either to sustain the proposed value by the CAD, or to lower the assessment due to the property owner’s evidence.  However, it is important to note that the ARB has the power to not only reduce the proposed value; they can increase it as well.  This is a rare situation, but if the ARB feels the evidence presented suggests the fair market value is more than the CAD’s proposed value, they can increase the value to whatever they feel is correct.

An unequal appraisal protest is based on the property owner’s opinion that their assessment is not equal and uniform with similar properties.  This is accomplished by proving the proposed assessment is above the median level of appraisal.  In order to determine the median level of appraisal, a property owner may provide either a ratio study or a comparison of a representative sample of properties, appropriately adjusted, which can be used to determine the median level of appraisal for the neighborhood or property’s area.  The ARB will hear the evidence presented and determine the median level of appraisal.  If the proposed value is above the median, the ARB will lower the value to the median.  Likewise, if the proposed value is below the median, the ARB may increase the value to the median.

Once the ARB rules on the protest, they will send the property owner a written order by certified mail.  If the property owner is dissatisfied with the ARB’s decision, they have the right to request binding arbitration or file an appeal in district court.

Preparing for an ARB hearing can be an overwhelming task for many people.  Today’s busy schedules leave little time to gather the all the necessary evidence to support your protest.  In addition, most ARB hearings take place during normal working hours so the property may need to request time off from work.  It is for these reasons that many property owners choose to hire a property tax consulting firm, like the Hegwood Group, to handle their property tax protests.  A consultant knows the property tax system, and can relieve the stress of preparing for a hearing.

Whether you handle your own protest, or you hire the Hegwood Group, I would encourage all property owners to review their annual property tax assessment.  It’s a large expense in Texas and shouldn’t be overlooked.