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Property Tax Protest Tips
Texas property tax appraisal notices are hitting mailboxes all over the state this time of year. Some counties have already mailed them out, while others plan to do so in the next couple of weeks. Property tax appraisals are Ad Valorem, meaning based on a percentage of your property's value, which fluctuates from year to year as market conditions change. Appraisals will be based on activity in the previous year, and 2019 was another year of real estate appreciation. While rising home prices are great news when you decide to sell, it's painful to pay those higher taxes while you're staying put. The good news is that you have the right to dispute the county’s appraisal to potentially bring down your tax bill. When it comes to property tax appraisals, lower is better for your pocket!
This year, the process has changed some, due to the new social distancing recommendations. Check your county appraisal district’s website for updates prior to filing your protest, as deadlines and new processes vary by county. (If you don't know the address, search your county name plus the letters CAD.) Most are handling protests online only this year.
Here are some tips to help bring your county appraised value down (Note that this has no impact on your property’s market value):
1. If you purchased your home within the last 1-2 years, and the county appraised your home higher than your purchase price, include a copy of your contract as evidence. Be sure to include amendments if seller credits were added after the initial contract. Often the county will replace their appraisal with your purchase price. You are NOT required to inform the county of the price you paid or send a copy of your contract, however, if they appraised your property for less than the sales price.
2. If you have previously filed for the General Residence Homestead exemption, or any other tax exemptions, verify they are reflected on your tax appraisal notice. Homestead exemptions cap annual assessment increases at 10% per year, after the first full year with the exemption in place. The appraised value will be based on the market, but their assessment is that appraised value, minus tax exemptions and caps. New homeowners become eligible for a Homestead exemption in Texas, as long as the home was their primary residence on or before January 1st of the application year. There are other advantages as well as the cap, but the favorite is that it reduces the amount used by the county to calculate some of your property taxes. The deadline to apply for the Homestead exemption is April 30th for most counties. If you were eligible and did not get your application in on time, however, contact your county to inquire about late application policies. Most counties will accept late applications for a limited period of time. If you recently turned 65, or became disabled, you may be eligible for new exemptions as well. Contact your county for eligibility and application details.
3. Contact an experienced, trusted Realtor for a market analysis. Be sure to specify that this is for taxes, not resale, as the analyses are typically prepared differently. (Of course, if you'd like both, ask for that, too! We can provide both high and low market values.) When you file your protest, submit the comparables that you’d like to use as evidence that your property has been over valued. Emphasize that there is no guarantee that you would receive an offer any higher than the lowest priced sale. Now if demand has been especially high for your area, sale comps may not offer much help, as demand drives prices up. Keep in mind that the county is looking at sales date from the previous year, not the current year.
GroupWatson professionals are well-trained and knowledgeable about preparing these types of market analyses and are available to assist you. Call us at 972-370-1775 or email us at email@example.com for assistance with comparable reports to be used for tax disputes.
So far, we have not seen much of a change in home sale prices due to the COVID-19 pandemic. Should there be more of an impact as the situation continues, the new prices would impact next year’s tax appraisals.
4. Go to your county appraisal district website and search for similar homes in your neighborhood. Aim for properties in the same community that are no more than a couple hundred square feet different in size (larger or smaller), and within five years newer or older than your house. The more similar to your home, the better. If you find some that are valued lower, submit those as evidence that your property has been over-valued. If you find that the county has your house listed as larger or with more bedrooms than you actually have, be sure to correct that information. Previous appraisal reports from your initial purchase or refinancing would be more accurate sources since appraisers take measurements. Don’t pay taxes for space that you don’t have!
5. If there are condition issues on your property, submit photos of these as evidence in your dispute, and include any written estimates for repairs. Houses on the resale market have usually been fixed up and deep cleaned for showings. Cracking foundations, faded or peeling paint, and needed repairs would cause buyers to offer a lower price for your home, if it were for sale. Therefore, the comparable houses that have sold are not truly equal to your property in value, and you would need to spend money to make your home equal in condition. County appraisers don't tour inside of your home and would never know how the condition varies unless you show them.
6. If you have your taxes and homeowner's insurance escrowed (as most homeowners do), shop around for a lower homeowner’s insurance rate as well. Get quotes every year, even if you are happy with your provider. It won't lower your taxes, but lower insurance premiums could lower your monthly escrow payment as well, if you’re able to find a better rate for comparable coverage.
7. Remember that it is FREE to file a property tax appraisal dispute! There are companies out there that will do this for you, for a fee, but in most cases, there is no need to pay. It is simple to collect your evidence and file. Many counties allow you to submit your evidence online, and in fact, this year that will be the preferred method. If you make a strong enough case, they may approve your claim without requiring you to go before the appraisal review board.
8. Don’t fear the ARB! The Appraisal Review Board (ARB) is made up of citizen homeowners in the county, just like you. They will review your evidence, hear your case, and compare the comps you provided with the county’s to determine the true taxable value. If the board fails to prove your value based on their own evidence, they’ll rule in your favor. Focus on the value of your property and your evidence, and withhold your tax bill complaints. The stronger your evidence, the better your chances!
We hope these tips are helpful! If you have had success disputing your appraisal and did something that is not listed above, feel free to share your story to help your friends and neighbors out!
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Maggie Hernandez lived in various places as a young child, before settling in Carrollton, TX. Maggie graduated from Newman Smith High School in Carrollton, and then attended the University of North Te....